I don't think our Congress actually cares about our economy enough to do something that smart.

But you also have the problem of those dollars then going towards labor and materials, which will keep demand there high, continuing inflationary pressure in those areas.

> I don't think our Congress actually cares about our economy enough to do something that smart.

Unfortunately it seems to be a pipe dream in most countries I know.

> But you also have the problem of those dollars then going towards labor and materials, which will keep demand there high, continuing inflationary pressure in those areas.

Yes, and I am not sure there really is a solution to that. I guess hiking interest rates would cause a shift from debt to the new income stream, but it would be complex as ideally you’d still want lower rates to stimulate investment. Probably an increase in corporation and capital taxes as well, but then I might as well wish for a unicorn.

We have an extremely tight labor market, surging commodities prices and other inflationary pressures/symptoms, which large scale infrastructure investment would usually exacerbate.

I'm usually a Keynesian, but in this case, i think we should jack up interest rates and deliberately tank housing and asset prices, then use large scale infra investments to stop the unemployment rate rising too high.

Easier said than done, i suppose.

> I'm usually a Keynesian, but in this case, i think we should jack up interest rates and deliberately tank housing and asset prices, then use large scale infra investments to stop the unemployment rate rising too high.

I am mostly with you, but “deliberately crashing housing and asset prices” is political suicide and I don’t see it happening. Interest rates are a good start, though.

Also, I think that considering the current labour shortages the risk of unemployment getting out of control is limited.

High inflation has also historically been political suicide. The Biden administration has been doing what they can to place blame wherever they can for a reason.

I do fear the fed isn’t doing what it needs to because they’re afraid of being seen as political, one way or the other. I hope we don’t have to wait until after the midterms for them to grow a pair.

> I do fear the fed isn’t doing what it needs to because they’re afraid of being seen as political, one way or the other.

I agree and I wish this mindset would disappear. Of course a central bank is political. It’s job is to keep a working economy. There are few other institutions that affect directly so many people every day, it’s the definition of politics. They might not like the optics, but each of their decision is just as political as one from any government agency.

There is some sense in insulating them to some degree from short-termist elected politicians looking for a windfall, but their smug “I know better” attitude (and the lack of accountability) is deplorable.

Sorry, that was a bit of a rant, but we should remember that a central bank is there to serve a country, not the opposite.

> I do fear the fed isn’t doing what it needs to because they’re afraid of being seen as political, one way or the other.

The Fed tends to be restrained because the monetary policy levers they have been given are deliberately a blunt instrument with extreme overshoot dangers, especially when all the indicators aren't pointing the same way, and managing the economy requires the much more targetable tool of fiscal policy controlled by Congress as well as monetary policy.

(That said, the Fed is pushing, by historical standards, really hard on its levers, raising rates at a pace not seen since 1980.)

Building infrastructure can be a good investment, but that doesn't mean it does anything to help inflation. Massive government spending would probably make the situation worse, because it puts more money in people's pockets to further drive up costs

I have 0 faith that the US federal government in particular can put money to any good uses like they did during the New Deal era. Look at how much fraud there was in multiple states with the Covid relief money.