Federal Reserve Bank of Minneapolis President Gary Stern confirms Fed’s fight against stagflation with higher rates – another catastrophe in the making
Karen Zuba
Jul. 18, 2008

The stagflation is the new buzz word for the Federal Reserve decision makers. They are eager now to fight inflation without worrying about stagnation deteriorating into depression. That is what is expected from a Federal Reserve that has established its reputation as the one that needs a new lesson in Contemporary Economics 101.

``We can''t wait until we clearly observe the financial markets at normal, the economy growing robustly, and so on and so forth, before we reverse course'''' and begin raising rates, Stern said in an interview in Minneapolis today. ``Our actions will affect the economy in the future, not at the moment. Forecasts play a critical role.''''

The economy is in its last leg of stagflation before inflation changes to deflation and drags the economy down into deep depression.

The Fed policy makers are stubbornly wrong again. What they should do is to drop the rates to zero percent just like Japan instead raising it any further.

The economy is headed for a thirty years of deflation and depression after a twenty-eight year stagflation.

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