[Moonman62]

First off, it's well known that central banks blame their economies for inflation. Economic growth and low unemployment are usually their targets. Looking at Europe, growth is lackluster, and unemployment is still high, yet they are hiking rates. There is no other cause except oil prices.

But it really doesn't matter whether I am right about their reason for hiking rates. What matters is that central banks are ineffective at fighting inflation, because they operate on the incorrect theory that the source of inflation is economic, whether it's low unemployment or oil prices, or something else.

Here is a chart documenting the Federal Reserve's failure. It should be noted that the FOMC started operations in 1936, and promptly caused a recession because it incorrectly feared that ample gold reserves would cause inflation.

[Nervous Tick]

Thanks for taking the time to post a thoughtful response.

I see that you and I have a difference in opinion re: the role and effectiveness of a central bank. We’ll probably have to agree to disagree, but I’ll remain interested in your informed opinion.

By the way, you say:

>> Looking at Europe, growth is lackluster, and unemployment is still high, yet they are hiking rates.

That’s true in part, but not uniformly throughout Europe. Germany, for example, has held the line on wage cost and is experiencing decent growth and even shows some progress on unemployment. Germany is a significant factor in the entire EU economy.