Changing the world

Let me repeat part of what I said last time:

We have to find a new and better way to fight inflation. We can no longer rely on ready-made solutions that we implement without a thought. We have to develop new solutions that we will one day implement without a thought.

What I'm saying is that we have to stop using interest rates to fight inflation. We have to fight inflation a different way.

Remember back when the crisis was news? One of the things they worried about at the Federal Reserve was deflation. People had cut back their borrowing. People were paying down debt. And the Fed was worried about deflation.

I shouldn't have to write another sentence. You should know what I'm thinking: Paying down debt is a way to keep prices from going up.

Policymakers don't have to raise interest rates and choke off growth to fight inflation. We just need policies that encourage people to pay down debt rather than accumulating it. We can fight inflation by paying down debt.


Everybody and his relentlessly unimaginative brother is focused on interest rates. We argue always about how soon to raise rates and how much to raise them, but no one ever considers just turning away from interest rate policy. Rates must go up, or they must not, we say, and say not another word about it. Relentlessly unimaginative.

We cannot solve our economic problems by choosing between raising and not raising interest rates. We have squeezed the life out of our economy. We have raised rates to reduce inflation and lowered rates to get growth, then raised again and lowered again, and repeated this insanity until until no gap remains between too little growth and too much inflation. We squeezed the gap to nothing, then squeezed some more. And now we try to have inflation and we still don't get adequate growth.

Using interest rates to manage the economy is no longer an acceptable strategy. We can no longer rely on this ready-made solution. We need a different way to fight inflation, one that can become the new standard solution to this economic problem.

I need you to understand the significance of what I'm saying. I want us to stop doing a thing that everyone thinks is the only way to fight inflation. I want to fight inflation a different way.

I want to change the world.