Letters to Barron's

The Fed’s Dilemma

To the Editor:

“As Inflation Roars, the Fed Faces a Thorny Choice” (Up & Down Wall Street, Dec. 10) cautions that “with Powell & Co. likely to protect the equities market, all those fed-funds rate increases are unlikely if stocks take a beating.” The Fed faced a similar dilemma from 1927 to 1929. It could raise interest rates to curb speculation, or keep rates low to prop up European exchange rates. It half-heartedly tried to do both and achieved neither. As the gold standard kept inflation in check and interest rates were not zero back then, today’s choice is tougher.

Jay Starkman
Atlanta

This article was originally published in Barron's, December 17, 2021.