Daily Archives: 8 April 2026

Not Sure This Is Correct

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James MacIntosh, writing for The Wall Street Journal, is worried about the Fed worrying too much about its last mistake regarding inflation, when it was too slow to respond to rising prices. For instance,

But there’s a fundamental difference between the new oil shock and the postpandemic boom. Inflation today, already visible in rising prices at the pumps, is driven by restricted supply as Iran cuts off oil and other shipping through the Strait of Hormuz. The 2021-22 inflation was driven by soaring demand as stimulus-rich consumers emerged from enforced hibernation during Covid lockdowns.
Central banks know how to deal with too much demand. They should have raised rates much earlier than their eventual 2022 rises to hold back borrowing and spending. Today, they can’t do anything about the hit to supply, because, as the saying goes, you can’t print oil.

The problem with this, though, is in the relationship between inflation—rising prices—and rising—”too much”—demand. Rising prices occurs because demand is rising faster than supply can rise to satisfy it; it does not occur simply from rising demand. If we want more stuff—here oil—and the production of oil exists to satisfy that rising demand, prices don’t rise; there is no inflation.

Inflation is always and only in the relationship between demand and supply; it is never in demand alone or in supply alone. The only way there can be too much demand if there’s too little supply (the other side of this is true, too: the only way there can be too little demand is if there’s too much supply, which results in falling prices—deflation). More demand than supply can satisfy and less supply than can satisfy demand are the same thing.

So, what can/should the Fed do about today’s too little supply of oil relative to the demand for it and the consequent rise in prices? Its mandate, aside from full employment, is price stability: no change in price level, or via its goal, keeping price increases to 2% inflation. The Fed’s tool for this interest rates, which is to say here, reducing demand by raising the cost of the money that is that demand. Thus: raise interest rates when that inflation gets out of hand/rises too far above that 2% in a sustained upward trend. This is wholly independent of both supply and demand individually and responsive only to the relationship between the two.

The problem here is that “out of hand,” “too far above,” and “sustained” are each individually only hazily defined criteria. My own opinion is that with employment, which is a consequence of stable prices as well as its own economic condition, close to full and stable and currently rising prices not yet out of hand or too far above 2% or on a sustained upward trend, the Fed should do nothing more than keep a watchful eye. Trying to time the market with enough precision to preempt inflation without cutting off growth is as much a fool’s errand as an individual investor’s timing with a view to precise top or bottom picking.

This also is consistent with my view that current interest rates are consistent with (if a bit lower than) interest rates that historically are associated with 2%± inflation, so there’s nothing generally that the Fed needs to do.

ACLU Exposes Its Intrinsic Racism

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Janai Nelson, ACLU President, made the organization’s, and her own, racism plain in her Sunday letter to The Wall Street Journal‘s Letters section, a letter in which she accused DoJ’s Assistant AG of its Civil Rights Division, Harmeet Dhillon of

undermin[ing] the rights she was appointed to protect. In a case before the Supreme Court, the department under her leadership filed an amicus brief arguing that Louisiana’s intentional creation of a second majority-minority congressional district violates the Constitution. Her position on this issue would limit voting rights for black Americans by making it incredibly difficult for black voters to elect their candidates of choice.

Nelson is ignoring her BFF’s and favorite Progressive-Democrat ex-President. then-Illinois State Senator, Barack Obama’s statement at Party’s 2004 Convention:

[T]here’s not a liberal America and a conservative America; there’s the United States of America. There’s not a black America and white America and Latino America and Asian America; there’s the United States of America.

Especially that last: There’s not a black America and white America and Latino America and Asian America; there’s the United States of America. Race doesn’t matter in this nation, for all that bigotry (hold up a mirror facing you, Ms Nelson) still exists here. There are only citizens of the United States.

I repeat the relevant clause of the 14th Amendment to our Constitution, even though that’s lost on an entity and its chief for whom our Constitution has no meaning:

No State shall…deny to any person within its jurisdiction the equal protection of the laws.

There’s not a black voter and white voter and Latino voter and Asian voter; there’s the United States of America voters. Gerrymandering by race is racist at its core.

Nelson would have a stronger case were she to argue that that same 14th Amendment clause makes gerrymandering on the basis of political party unconstitutional. It’s instructive, though, that she chose race as the core of her special-treatment-by-gerrymandering argument.