- I will leave the rest of Brainard’s speech for you to read. I disagree with her on key parts, underscoring how far monetary policy is from a reckoning. It is mindboggling that the Fed continues to obsess over inflation expectations when there is no evidence that they are de-anchoring. Surveys show that Americans remain 'Team Transitory.' Yes, the unelected, unaccountable people at the Fed calling the shots and elite macroeconomists have de-anchored. But they’re not representative of Americans.
Listen to the people.
Fiscal policy as a solution is completely missing. We must bring fiscal into the discussion, and it’s not here or in the elite macroeconomic discourse. The current crises are a wake-up call that resilience against inflationary pressures requires fiscal policy too. The Fed is not enough. Only Congress can take key steps, such as green energy investments in the Inflation Reduction Act and the onshoring programs in the CHIPS Act, to protect against spikes in future inflation.
Claudia Sahm chooses to be an Area Substacker rather than working for a big dumb right wing think tank.
I'm not educated enough to go toe-to-toe with her, but I find it strange that she mentions several times that more green energy investment would be a good inflation hedge. The reason that US/Canada inflation has moderated while EU/GB has not is because they have no fossil fuel buffer against the Russia problem. Their over zealous pursuit of a green energy transition has caused them to spend a lot of money for so so results and left them completely reliant on Russian gas to make up for what they can no longer produce domestically. This isn't to say there aren't other good reasons to invest in clean energy sources, but it certainly doesn't appear to be a good short or probably even medium term hedge against spiking energy prices.
strategic petroleum reserves of selected European countries - Spain: 144m barrels - Germany: 70m barrels - France: 65m barrels - Finland: 62m barrels - Czech Republic: 20m barrels - Denmark: 10m barrels (at 7.4 barrels per ton) - UK: working on it - USA: 200m fewer than we started 2022 with The US made a policy decision after the OPEC crisis to never put up with that shit again and the result is that Biden can open the tap if it looks like a war in europe is gonna fuck with the midterms. It also allows us to make Saudi Arabia and Russia fight for scraps if we're in the mood, or starve out Venezuela. Our fossil fuel buffer is very much a geopolitical weapon, not an economic fact, and while it definitely allows us to ignore certain geopolitical realities, it also necessarily centers warfare and geopolitics around petrostates.