This segment of What’s Ahead explains why what Federal Reserve policymakers do when they meet next week will start a process that will ultimately shove the economy into a slowdown, if not outright recession, but won’t achieve the goal of sharply curbing inflation.
The problem is that Fed economists continue to misdiagnose the cause of inflation, thinking it’s an expanding economy instead of the debasing of the value of the dollar.
The central bank will be at a loss as to how to reduce its bloated holdings of bonds without strangling the economy.
The Fed is also addicted to the fantasy that it can constructively guide the pace of economic activity, which ends up harming us all.
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