What the Fed?

In the week ending December 21 the stock market fell out of bed, losing some 10 percent of value. But Chairman Powell of the Federal Reserve is still talking about higher interest rates.

Is he crazy? We have already seen a months long decline in housing prices, showing that at least where mortgages are concerned, the credit markets are showing a balance of buyers and sellers. And some investment banks are forecasting a slowdown in growth by the middle of next year.

Inflation in consumer prices is pretty moderate.

Yet the Fed still seems determined to fight inflation.

They say that the Federal Reserve operates only in one of two modes. It is either trying to fight inflation or fight recession. There is a third mode where it is acting as lender of last resort in a panic.

Usually, of course, the Fed is behind the curve. It keeps interest rates too low for too long after a recession, and then, playing catch-up, raises them too high and pitches the economy into a recession.

And then every generation or so in a credit crisis the Fed fails to act properly as lender of last resort and we get a 1929 Great Depression or a 2008 Great Recession where the credit system nearly collapses.

Now I suppose that right now the Swamp would like to kill Donald Trump's presidency and teach us deplorables to bend the knee to our overlords. After all, the president is in the middle of a fight with China on trade, is "shutting down the government" over "The Wall," is facing a Democratic House, the fury of Special Prosecutor Mueller, and I know not what.

So maybe the Fed is trying to teach President Trump a lesson, although I don't think you will find that power in the Constitution or in statute law.

Maybe there is something else that the stock market is telling us.

But come on Fed. When the market tanks by 10 percent in a week it is a sign that maybe, just maybe, you should switch from fighting inflation to fighting recession, if only for a month or two.

Or are you guys as dumb as a post?