{"id":394508,"date":"2022-01-15T16:17:00","date_gmt":"2022-01-15T13:17:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/"},"modified":"2022-01-15T16:17:00","modified_gmt":"2022-01-15T13:17:00","slug":"rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/","title":{"rendered":"#Rex Nutting: Why interest rates aren\u2019t really the right tool to control inflation"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2619ef2f9e9\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2619ef2f9e9\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/#When_the_problem_is_lack_of_supply_the_Feds_tool_kit_is_useless\" >When the problem is lack of supply, the Fed\u2019s tool kit is useless<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/#Not_much_borrowing\" >Not much borrowing<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/#Household_debt_is_growing_slowly_despite_very_low_interest_rates\" >Household debt is growing slowly despite very low interest rates.<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/#Tepid_overheating\" >Tepid overheating<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/#Incomes_and_spending\" >Incomes and spending<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/#Wages_falling_behind\" >Wages falling behind<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/#Wrong_for_the_job\" >Wrong for the job<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/#Surveys_of_expected_inflation_didnt_predict_the_actual_inflation_that_was_unleashed_this_year\" >Surveys of expected inflation didn\u2019t predict the actual inflation that was unleashed this year.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/buradabiliyorum.com\/en\/rex-nutting-why-interest-rates-arent-really-the-right-tool-to-control-inflation\/#Rex_Nutting\" >Rex Nutting<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#Rex Nutting: Why interest rates aren\u2019t really the right tool to control inflation<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"When_the_problem_is_lack_of_supply_the_Feds_tool_kit_is_useless\"><\/span>\n  When the problem is lack of supply, the Fed\u2019s tool kit is useless<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\" role=\"region\" aria-label=\"article body\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000546274\" role=\"document\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000546274\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       With consumer prices rising at the fastest pace in nearly 40 years, the Federal Reserve is signaling that it will soon begin raising interest rates. But the most important question hasn\u2019t even been asked: Would higher rates do anything to quell inflation?<\/p>\n<p> <strong>Breaking <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>:<\/strong> Consumer prices rise 0.5% in December and push U.S. inflation rate to nearly 40-year high of 7%<\/p>\n<div class=\"paywall\">\n       It may be heresy to those who think the Fed is all-powerful, but the honest answer is that raising interest rates wouldn\u2019t put out the fire. Short of throwing millions of people out of work in a recession, higher rates wouldn\u2019t bring supply and demand back into balance, a necessary condition for price stability.<\/p>\n<p>The Fed (and those who are clamoring for the Fed to raise rates im<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>tely) have misdiagnosed the problem with the economy and are demanding the wrong kind of medicine. <\/p>\n<p>The problem isn\u2019t too much demand; it\u2019s too little supply. <\/p>\n<p><strong>Breaking news:<\/strong> Powell paints the picture of a soft landing, says Fed can cool inflation without damaging labor market<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Not_much_borrowing\"><\/span>Not much borrowing<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>The justification for a rate hike now seems to be that cheap credit has allowed spending to overrun the economy\u2019s ability to produce what people want to buy. With credit-fueled demand exceeding supply, prices are rising quickly. By raising short-term rates, the Fed hopes to slow the economy by making it more expensive for consumers and businesses to borrow money.<\/p>\n<p>But does that story hold water right now? No. <\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:53.714285714285715%;\" data-subtype=\"photo\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-465940?width=540&amp;size=1.8604651162790697 540w, https:\/\/images.mktw.net\/im-465940?width=620&amp;size=1.8604651162790697 620w, https:\/\/images.mktw.net\/im-465940?width=639&amp;size=1.8604651162790697 639w, https:\/\/images.mktw.net\/im-465940?width=700&amp;size=1.8604651162790697 700w, https:\/\/images.mktw.net\/im-465940?width=700&amp;size=1.8604651162790697&amp;pixel_ratio=1.5 1050w, https:\/\/images.mktw.net\/im-465940?width=700&amp;size=1.8604651162790697&amp;pixel_ratio=2 1400w, https:\/\/images.mktw.net\/im-465940?width=700&amp;size=1.8604651162790697&amp;pixel_ratio=3 2100w\" sizes=\"(max-width: 639px) 100vw, (max-width: 979px) 620px, (max-width: 1299px) 540px, 700px\" src=\"https:\/\/images.mktw.net\/im-465940?width=700&amp;height=376\" alt=\"\" title=\"\">\n      <\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\">\n<h4 class=\"wsj-article-caption-content\"><span class=\"ez-toc-section\" id=\"Household_debt_is_growing_slowly_despite_very_low_interest_rates\"><\/span>Household debt is growing slowly despite very low interest rates.<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>      <span class=\"wsj-article-credit article__inset__image__caption__credit\" itemprop=\"creator\"><br \/>\n            MarketWatch<br \/>\n          <\/span><br \/>\n  <\/figcaption><\/figure>\n<\/p><\/div>\n<p>        In the past year, as inflation has ignited, credit growth has been anemic despite very low interest rates<br \/>\n        TMUBMUSD10Y,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.000%\" channel=\"\" class=\"\">1.792%<\/bg-quote><span>.<\/span><br \/>\n       Real household debt has increased just 2.2% annualized since the pandemic began while <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.federalreserve.gov\/releases\/z1\/20211209\/html\/d3.htm\" class=\"icon none\">business borrowing <\/a>is growing at the slowest pace in eight years, even after businesses loaded up on cheap pandemic loans early in 2020.<\/p>\n<p>Raising rates would have little impact on the economy because credit growth is already weak. <\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>it doesn\u2019t look as if easy credit is the problem. But something is causing prices to rise\u2014what could it be? Interest rates have been extremely low since 2009, but something has changed recently. I wonder what it could be? Perhaps a global pandemic had something to do with it.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Tepid_overheating\"><\/span>Tepid overheating<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Larry Summers and other economists who want the Fed to hike insist that the economy is overheating. But what a strange kind of overheating it is! Through the third quarter, the economy had grown at just a 0.8% annual pace since the pandemic began two years ago and key sectors show considerable slack, which means the economy could run a lot hotter if the obstacles to growth were cleared away. <\/p>\n<p>The labor market is down 3.6 million jobs from pre-pandemic levels. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bls.gov\/news.release\/empsit.toc.htm\" class=\"icon none\">The labor-force participation rate <\/a>is down 1.5 percentage points, and not all of the people who\u2019ve dropped out are willing retirees. More than 12 million people are either looking for work, or would like to work if they could. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.federalreserve.gov\/releases\/g17\/Current\/default.htm\" class=\"icon none\">The capacity utilization rate<\/a> for U.S. industry is at 76.8%, down from the recent peak of 79.9% in 2018.<\/p>\n<p>These figures don\u2019t indicate that output is too high. <\/p>\n<h6><span class=\"ez-toc-section\" id=\"Incomes_and_spending\"><\/span>Incomes and spending<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Incomes aren\u2019t overheating, either.<\/p>\n<p>Real disposable personal incomes soared during the pandemic from stimulus checks, tax and debt relief, and unemployment payments, but per-capita real incomes are now running at a level just 1.9% higher than when the pandemic began. <\/p>\n<p>Consumers may have a lot of savings tucked aside, but their <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bea.gov\/news\/2021\/personal-income-and-outlays-november-2021\" class=\"icon none\">incomes aren\u2019t growing<\/a> very fast right now. Remember, most of the savings are at the top of the income scale, not at the bottom where people are struggling with not only rising prices, but with hazardous working conditions and spotty arrangements for making sure their children and elderly relatives are well cared for.<\/p>\n<p>Aggregate spending isn\u2019t out of control (it\u2019s up 2.4% annualized since the pandemic began), but the pandemic has steered spending to some industries and away from others. Durable goods are in heavy demand (up 11% annualized), but demand for services such as going to the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/watch-movies-tv-seriess\/\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Watch Movies &amp; TV Series\" target=\"_blank\" rel=\"noopener\">movies<\/a> (down 14%) or for foreign <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/trip-and-travel\/\" data-internallinksmanager029f6b8e52c=\"10\" title=\"Trip &amp; Travel\" target=\"_blank\" rel=\"noopener\">travel<\/a> (down 52%) has dried up.  <\/p>\n<p><strong>Opinion:<\/strong> Inflation is running rampant in the U.S.\u2014here\u2019s where it is, and isn\u2019t<\/p>\n<p>Stopping inflation means controlling the pandemic and helping the economy adjust to a new normal. To strengthen and shorten our supply chains for the inevitable next wave or next pandemic, we need significant investments in new domestic and global supply capacity, including manufacturing and transportation. Above all, it means luring back millions of potential workers who are put off by lousy, unsafe and low-paying jobs. <\/p>\n<p>Higher interest rates won\u2019t help us make those adjustments.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Wages_falling_behind\"><\/span>Wages falling behind<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>In fact, while higher wages would help lure back workers, the Fed is fixated on its fear of the dreaded wage-push inflationary spiral, in which workers who\u2019ve gotten a taste of higher wages will insist on getting more every year, forcing their bosses to knuckle under to their demands and leaving them with no option but to raise their own selling prices so they can make the payroll. <\/p>\n<p>No one who\u2019s ever worked for wages or paid them could ever believe such a ridiculous story. Businesses raise their prices when they can get away with it. Full stop. Workers may have once had some bargaining power over wages, but their clout has eroded. Even with strong gains this year, weekly wages have <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bls.gov\/news.release\/realer.nr0.htm\" class=\"icon none\">lost about 2% <\/a>of their purchasing power to inflation over the past year. <\/p>\n<p>The Fed shows no such concerns about the inflationary threat posed by higher profits for businesses or higher asset prices for investors. Why? Because higher profits and stock prices are thought to encourage more investment.<\/p>\n<p>But that\u2019s another theory that has no basis in reality. The level of interest rates has almost no effect on investment decisions by businesses, who look at the profit potential first and foremost. The evidence is overwhelming that ultralow interest rates for the past decade did nothing to encourage private investment.<\/p>\n<p>Prices are going up because crucial inputs\u2014labor, electronics, energy, housing, transportation\u2014are in short supply. Normally, the way to solve this imbalance would be to give workers and businesses incentives to increase their supply. That\u2019s the beauty of market economies: Prices provide continual signals about the balance of supply and demand for particular goods and services. Higher prices tell buyers to buy less and they tell producers to produce more until supply and demand are in balance.<\/p>\n<p>Markets often cannot reach this equilibrium on their own, so policy makers must push and pull their levers to keep the macroeconomy on the right track.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Wrong_for_the_job\"><\/span>Wrong for the job<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>The Fed has been assigned the job of fixing this. Unfortunately, the Fed doesn\u2019t have the tools to do it. Monetary policy works (in theory) by tweaking demand, but it has no direct impact on supply. <\/p>\n<p>Furthermore, it\u2019s become <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>arent over the past few decades that the Fed \u201chas much less control over spending (and therefore inflation) than is widely taken to be the case,\u201d as heterodox economists Dimitri B. Papadimitriou and L. Randall Wray of the Levy Institute of Bard College put it in a recent policy paper, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.levyinstitute.org\/publications\/still-flying-blind-after-all-these-years-the-federal-reserves-continuing-experiments-with-unobservables\" class=\"icon none\">\u201cStill Flying Blind After All These Years.\u201d<\/a><\/p>\n<p>Papadimitriou and Wray argue that the Fed gets a lot more credit for the Great Moderation of the macroeconomy over the past 40 years than it deserves. The Fed, they say, wandered fruitlessly in the wilderness for 40 years searching for a workable theory of inflation, finally settling on the spurious idea that inflation is caused by \u201cinflation expectations.\u201d According to this idea, managing inflation is a simple matter of managing expectations (as measured by bond yields and surveys): If people (consumers, business leaders, workers, and investors) don\u2019t expect higher prices, then prices won\u2019t rise.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:56.285714285714285%;\" data-subtype=\"photo\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-465911?width=540&amp;size=1.7753120665742026 540w, https:\/\/images.mktw.net\/im-465911?width=620&amp;size=1.7753120665742026 620w, https:\/\/images.mktw.net\/im-465911?width=639&amp;size=1.7753120665742026 639w, https:\/\/images.mktw.net\/im-465911?width=700&amp;size=1.7753120665742026 700w, https:\/\/images.mktw.net\/im-465911?width=700&amp;size=1.7753120665742026&amp;pixel_ratio=1.5 1050w, https:\/\/images.mktw.net\/im-465911?width=700&amp;size=1.7753120665742026&amp;pixel_ratio=2 1400w, https:\/\/images.mktw.net\/im-465911?width=700&amp;size=1.7753120665742026&amp;pixel_ratio=3 2100w\" sizes=\"(max-width: 639px) 100vw, (max-width: 979px) 620px, (max-width: 1299px) 540px, 700px\" src=\"https:\/\/images.mktw.net\/im-465911?width=700&amp;height=394\" alt=\"\" title=\"\">\n      <\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\">\n<h4 class=\"wsj-article-caption-content\"><span class=\"ez-toc-section\" id=\"Surveys_of_expected_inflation_didnt_predict_the_actual_inflation_that_was_unleashed_this_year\"><\/span>Surveys of expected inflation didn\u2019t predict the actual inflation that was unleashed this year.<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>      <span class=\"wsj-article-credit article__inset__image__caption__credit\" itemprop=\"creator\"><br \/>\n            MarketWatch<br \/>\n          <\/span><br \/>\n  <\/figcaption><\/figure>\n<\/p><\/div>\n<p>        The theory is incoherent, unprovable and probably gets the causation backward, Papadimitriou and Wray say. Expectations don\u2019t drive inflation, it\u2019s the other way around. The strongest evidence for that conclusion is that the current bout of inflation was not preceded by an increase in expectations. But once inflation started rising, so did expectations.<\/p>\n<p>And yet the Fed still clings to this theory. The only justification for raising interest rates now (since rate hikes cannot restore price stability by boosting the supply we need) is that failing to act decisively against inflation now would \u201cunanchor\u201d inflation expectations. The tail is truly waging the dog.<\/p>\n<p>Maybe it\u2019s time to rethink how we try to manage the economy by giving more of the responsibility for controlling inflation to fiscal and regulatory policy makers, who can at least design their policies to aim at the target. <\/p>\n<p><strong><em>Rex Nutting is a columnist for MarketWatch who\u2019s been writing about economics and the Fed for 25 years. <\/em><\/strong><\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author mobile-scrim hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Rex Nutting\",\"subhead\":\"The Wall Street Journal\",\"list\":[{\"type\":\"link\",\"icon\":\"bio\",\"url\":\"https:\/\/www.marketwatch.com\/topics\/journalists\/rex-nutting\",\"text\":\"Biography\"},{\"type\":\"link\",\"icon\":\"twitter\",\"url\":\"https:\/\/twitter.com\/RexNutting\",\"text\":\"@RexNutting\"},{\"type\":\"link\",\"icon\":\"email\",\"url\":\"http:\/\/www.marketwatch.com\/news\/mailto:rnutting@marketwatch.com\",\"text\":\"rnutting@marketwatch.com\"}]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Rex_Nutting\"><\/span>Rex Nutting<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-7855-E2F99025D7B2%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;#Rex Nutting: Why interest rates aren\u2019t really the right tool to control inflation&#8221; When the problem is lack of supply, the Fed\u2019s tool kit is useless With consumer prices rising at the fastest pace in nearly 40 years, the Federal Reserve is signaling that it will soon begin raising interest rates. 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