View of Cleveland Fed Reserve Bank President Shows Massive Economic Disconnect in Causation

Loretta Mester is the president of the Federal Reserve Bank of Cleveland and appeared on CBS Face the Nation to give her opinion/analysis of the US. economic condition.  The disconnect in her viewpoint is alarming and should signal to everyone how the Federal Reserve Board, just like every institution of government, has become a political agency.

In her mind Ms. Mester appears to believe what she is saying, but the disconnect between her view of our status and the reality on Main Street is alarming.  In this interview Mester says emphatically that current inflation is being driven by consumer demand that is outpacing supply.  Not only is this view of inflation origination wrong, and has been wrong for well over a year, it is dangerous.

Inflation has been driven by spending (dollar devaluation & artificial stimulus), and by massive input changes in the supply side which are predominately being caused by energy policy.  Our U.S. inflation is a self-inflicted supply side wound.  Inflation was not caused by demand side pressure, other than from the injection of COVID cash into consumer spending – which hid the natural contraction that was going to take place in Q2, Q3 and Q4 2021.  WATCH:

Ms. Mester says the Fed will watch the month-to-month inflation change, to determine monetary policy success.  Given the nature of the Biden energy policy, that type of success definition is inherently political.  It’s akin to saying, as the victim’s bones and muscles get used to the constant blows during the beating, the severity of the pain will be less than the initial shock… therefore, the continued beating is less damaging to the victim.   Madness.