Minneapolis Federal Reserve CEO Warns Inflation Is ‘Spreading Out’

Federal Reserve Bank of Minneapolis CEO and President Neel Kashkari said during an appearance on the Sunday telecast of CBS News’ “Face the Nation” that inflation is now “very concerning” and is “spreading out” across the entire American economy.

Kashkari said that as new inflation data keeps coming in, the Federal Reserve “keeps getting surprised.” He said that inflation continues to run higher than expected and in “not just a few categories.” He said the increases are spreading more broadly across the economy. He added that is the reason the central bank is “acting with such urgency to get it under control.”

He noted that even though wages are increasing for many U.S. workers, all of the costs of ordinary goods and services are rising faster. That means Americans are undergoing a “real wage” cut even though nominal wages are somewhat higher.

Kashkari also stuck to the Biden administration’s talking points about the cause of inflation, blaming the Russian invasion of Ukraine and worldwide supply chain problems related to the COVID-19 pandemic.

He said that the Fed needs to “get the economy back into balance” before wages rise to the level that they further push the consumer price index higher as well.

Ignoring the increased money supply that is chasing the fewer number of goods and services available, Kashkari said that the central bank had “hoped that supply would come online more quickly.”

He admitted that supply is depressed, although he didn’t mention the dysfunctional labor market and lowered capital investment in almost all domestic industries. Of course, that is consistent with the talking points used by politicians and corporate media that are holding out the promise that if Vladimir Putin is put in his place and COVID-19 somehow ends, America’s production problems will be over.

As it is, Kashkari said that the Fed’s position is that it has to “get demand down in the balance.” He said, “We cannot wait till supply fully heals. We have to do our part with monetary policy.”

The Biden White House denies the U.S. economy is in recession as Democrats face the possibility of disaster in the upcoming midterm elections. In fact, the administration is being forced into denying the technical definition of what a recession is. Kashkari said Sunday that inflation is so bad currently that “it doesn’t matter if we use the term or not.”

That provides Democrats with another easy way out of explaining to voters how they can continue to blame Putin and the coronavirus for the effects of unrestrained federal spending. It also gives the Federal Reserve an excuse for why interest rates are certain to increase further.