CHICAGO FED’S GOOLSBEE SAYS GETTING INFLATION BACK TO TARGET WILL BE “PAINFUL” — HIS OWN CHAIRMAN SAID LAST WEEK IT WOULD NOT BE

Austan Goolsbee, president of the Chicago Fed, spoke in London on September 21 and said the quiet part in plain words. From the Associated Press account: “The only way to bring inflation down is to raise rates and narrow the gap between supply and demand.” And: “Forcing inflation back to target in the short run means pushing employment below target.” And: “It’s going to be painful.”

He named the causes as supply shocks that will not fade on their own, higher oil from the war with Iran and tariffs. The Fed’s own textbook says wait those out. The Fed did the opposite five days earlier and raised its policy rate for the first time in three years. Goolsbee said more than one further hike may be needed later this year if the inflation turns out to be demand.

Then read his chairman. Kevin Warsh, the week before: “I don’t believe that we need to do harm to the labor markets to achieve our objective.” Two men on the same committee, one saying the cure requires unemployment and one saying it does not. Both voted for the same hike.

This is what it looks like when the tool does not fit the problem. Rates work on demand. A refinery that is not running and a tariff that is already paid are not demand. The people who will carry the cost are the ones who hold the currency being defended. Bitcoin does not have a committee, a dual mandate or a chairman who disagrees with it in public. At the time of this writing, bitcoin was $86,276.