Well, I was reading some articles on Bloomberg today, and the one headline I came across was a great highlight of some of the things I've been saying with regard to the worries I've expressed on inflation, "TIPS' Yield Shows Fed Has Lost Control of Inflation." One of the most worrisome parts of this article:
The last time investors were so worried about faster inflation amid slowing growth, Paul A. Volcker presided over a Fed that would raise rates as high as 20 percent to end the stagflation crisis of the 1970s, according to Seth Plunkett, a bond fund manager at American Century Investment Management in Mountain View, California. The firm manages $20 billion.
That's scary bad, Jimmy Carter bad. Rapid inflation will harm far more people in far more ways than just the subprime crisis. An editorial by Caroline Baum, also from Bloomberg's website, does a great job of presenting a great deal of how I feel, and probably more effectively, here's the takeaway:
You probably can sense where I'm going. Today's economic and financial crisis would resolve itself more quickly and efficiently if the government got out of the way. Yes, there would be pain. Some banks would fail. Others would clamp down on credit to atone for the years of lax lending standards. Homeowners-in-name-only would become renters. Housing prices would fall until speculators found value.
That's not going to happen. The bigger the mess, the more urgent the calls for a government solution, the more willing government is to oblige.
We want laissez-faire capitalism in good times and a government backstop against losses in bad times. It's a tough way to run an economy.