The Labor Department said that the Consumer Price Index rose 1.1% last month. Energy alone was up 6.6%. Both figures were higher than what Wall St. expected.
Inflation is here to stay. Energy and commodities prices, the sources of most of the pressure, are global issues. They cannot be changed by the Fed. The inflation in China moves to the US though imports. The increase in oil prices from Venezuela goes into every tank of gas across the globe.
When they marched on Moscow, both the French in the 19th Century and the Germans in the 20th Century learned the improbability of winning a two-front war. The Fed, if it is indecisive, could face the same odds.
Fixing inflation should be largely abandoned as a goal because it is not one which can be obtained now.
The Fed can act, hard and fast, to get economic growth back on track. It will need to lower interest rates once more, and perhaps twice. It will need to keep the emergency lending windows open for the next several quarters. It may have to offer capital to regional banks just as it has money center banks and investment houses. It might as well hook up with the Treasury and put money into Fannie Mae (FNM) and Freddie Mac (FRE). With the housing crisis growing, only a fool would believe they will not need several billion dollars.
Win the winnable war, and let inflation take a course which cannot be blocked. OPEC and the world’s farmers have too much leverage, at least for now.
Douglas A. McIntyre
Travel Cards Are Getting Too Good To Ignore (sponsored)
Credit card companies are pulling out all the stops, with the issuers are offering insane travel rewards and perks.
We’re talking huge sign-up bonuses, points on every purchase, and benefits like lounge access, travel credits, and free hotel nights. For travelers, these rewards can add up to thousands of dollars in flights, upgrades, and luxury experiences every year.
It’s like getting paid to travel — and it’s available to qualified borrowers who know where to look.
We’ve rounded up some of the best travel credit cards on the market. Click here to see the list. Don’t miss these offers — they won’t be this good forever.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.