As John Tamny explains in his terrific new book The Money Confusion the Fed not only has little direct impact on inflation it has little impact on the most important costs of capital in a growing economy. Most financing for the most dynamic companies comes out from equity investment for which credit cannot readily be substituted because bonds have limited upside.

The Fed does have some influence over the cost of capital mediated through our tightly regulated banking system. So it seems to be able raise mortgage rates and savage the biggest investment of most middle class families, which it is doing now. But it has almost no influence over inflation except to the extent such outright destruction makes people too poor to buy even suddenly cheap chickens.

It is true, as I said back in July, that most of what Biden would like to do would be bad, perhaps very bad for the economy. But with the GOP controlling the House he now won’t be able to do very much of it.

Bottom line: Republicans need to come up with something to talk about because gloating over the Biden’s economy will buy them even less in 2024 than it did in 2022