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The debate over what's causing inflation
Planet Money
Fed Lessons From the Seventies
Jerome powell carriedth lesson into the pandemic when the fed launched a new round of quantitative easing. We will purchase at least 500 million of treasury securities over the coming month. This was the lesson, be very slow and steady with your tightening messages. So then in two thousand and 21, when the american economy is doing surprisingly well and inflation is rising,. te decisions were powells, hints and slow build upto pering had prepared the markets for tapering process.
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Speaker 5
This was the lesson, be
Speaker 2
very slow and steady with your tightening messages. So slow and predictable it's like watching paint dry. And jerome powell carriedth lesson into the pandemic when the fed launched a new round of quantitative easing.
Speaker 8
We will purchase at least 500 million of treasury securities over the coming month. So
Speaker 1
then in two thousand and 21, when the american economy is doing surprisingly well and inflation is rising, te decisions were powells, hints and slow build upto pering had
Speaker 5
prepared the markets a gradual tapering process,
Speaker 1
so that when the announcement finally came in november, it is time to taper, we think, because the economy has there was not a 20 21 equivalent of a taper tantrum. So
Speaker 2
it worked. Lesson learned right? Well, the flipsit of nuts spooking t kets was that in the meantime, inflation grew and grew, to the point that now people are talking about the fed needing to trigger a recession to help bring it down. Cas
Speaker 1
at the type attachment was drompa's first ghost. And a second ghost can be illustrated from the closest that fedon ist would ever get to joining a rock bound tour bus. So it was this road tour in two thousand and 19 called fed lessons. It was this round the country consultation with union members, with small business owners, community college leaders and thow theyr, to hear essentially how america was feeling about the economy and whether the fed should ange how it thought about it. I
Speaker 9
think the fed has been slow to recognize that the dynamics between inflation and the tight labor market are not what they were in the seventies.
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