Thursday, May 01, 2008

The Inflation Monster?

In cutting the prime rate by 1/4 of a percentage point, the Federal Reserve signalled that this would likely be the final reduction after a series of cuts over several months.

One worries that they may have made one too many. In reacting to the economic woes of the housing sector, they are ignoring, and even worsening, the most crucial problem facing the economy as a whole: rising prices.

The Federal Reserve has done an outstanding job of curbing inflation and sustaining economic growth over the last 25 years. That may have changed.


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