In a speech on Thursday morning, Powell acknowledged the painful lessons of runaway inflation in the 1970’s, but warned that the persistence of low inflation over the last eight years risks new economic difficulties.
“Many find it counterintuitive that the Fed would want to push up inflation,” Powell said. But the Fed chief warned that low inflation leads to declining inflation expectations, which has the effect of “diminishing our capacity to stabilize the economy through cutting interest rates.”
One can see the implications.
They are frightened about the Nixon Shock and cannot speak of it. Thus they cannot discuss the idea of doing a Nixon Shock much better. The result is that we get exactly the same thing as a Nixon Shock as everyone is unprepared for the regularly scheduled devaluation.
It very closely resembles a mass mental illness, a kind of institutional schizophrenia.
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