Memo To Market: I’m Baaaaaack!!!!!! From Inflation

Is the Federal Reserve an independent monetary authority or a handmaiden beholden to political and market players? Has it reverted to its mistaken behavior in the 1970s? Recent actions and public commitments, including Fed Chairman Ben Bernanke’s testimony to Congress yesterday — where he warned of a steeper decline and suggested that more rate cuts lie ahead — leave little doubt on both counts.

– Allan Meltzer (subscription required), Economist, Carnegie Mellon University

With Bernanke today completing his second day of testimony in his semi-annual report to Congress, inflation is front and center:

• The euro is at all time highs vs. the $
• Gold is at an all time high
• $100 oil
• Inflation appears to be creeping up

Following up on David Ranson’s wondeful Wall Street Journal editorial yesterday, “Inflation May Be Worse Than We Think” (subscription required), Carnegie Mellon economist Allan Meltzer has followed up today with an article comparing the current period to the the stagflation of the 1970s (“That ’70s Show” (subscription required)).

This memo just crossed the wires:

I’m Baaaaaack!!!!, by Inflation