Farm Bureau’s top economist critical of fed inflation policy
American Farm Bureau Federation’s top economist is critical of how the Federal Reserve is handling America’s inflation problem. Dr. Roger Cryan tells Brownfield raising interest rates without managing the supply of money is not helping the country recover. “That’s imposing costs on the entire economy including farmers and it could create the same sort of debt trap that a lot of farmers fell into in the early 1980s when they were faced with ridiculously high-interest rates.”
Cryan tells Brownfield for about 40 years, interest rates were held to around two to four percent, which was good for the economy and gave the market confidence, but with so much stimulus spending. “I think the fed has sort of betrayed the trust that the market put in it.”
Cryan says the similarities between now and the 1980’s financial crisis are “uncomfortable.” He tells Brownfield, “The biggest difference is that we have a chairman of the Federal Reserve Bank that doesn’t subscribe to the idea that the money supply needs to be managed. That’s probably, to me, the scariest thing about the current situation.”
Cryan says the recession caused by COVID was supply-related and not a demand problem, so stimulating more demand with a 42% increase in the money supply was an overdose of the wrong prescription.
Cryan says, unlike in the 1980s, the federal reserve can sell assets like bonds to manage the money supply if it chooses to. He says, “They bought too many assets in 2020 and 2021, and the silver lining of that is that they could sell those assets to manage the money supply rather than raising interest rates because those interest rate increases will take time to work themselves out. they’re affecting both short-term rates and long-term rates.”
Roger Cryan authored an opinion article on the American Farm Bureau Federation website, here.