August 2021

The Federal Reserve’s Problem is Hidden in Plain Sight

The COVID-19 pandemic is over, or so it seems, and many of its effects are, indeed, transitory. That is the line from the Federal Reserve to describe their reasons for restraint in changing their monetary policies in the midst of chaos. Most of their caution is, in the short term, well-advised. It is just too early to know how the events of the last 16 months will play out in the end—lumber prices are just one egregious example. One thing that we can say is that given the virulence of the virus, with its lightning speed and global reach, it is remarkable that it was not worse. Credit to the vaccine scientists, but credit also to governments for acting with urgency. Financial lifelines of all sorts were extended in moments of true exigency.

John R. Gilbert

Senior Research Consultant