The Fed's Approach to Inflation Control

Back then, the United States would hold short duration rates at just over zero. They held long duration rates at 2.5%. And so they had this kind of like low artificial but positive yield curve, submerged below the inflation rate. So you'd have inflation spike up to 19% and that whole short-term and long-term industry complex was just locked there. It was kind of like classic inflating the debt away. After the war, they pivoted towards austerity. The challenge now is that we have, in some ways, a similar but less extreme scenario with the difference being that there's no end in sight this time.

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