CPI inflation for the calendar year just ended (December 2007 over December 2006) was 4.1%, the highest annual figure since 1990. And yet the FOMC is expected to lower the Fed Funds target by 50 or even 75 basis points at its next meeting. Will there even be any dissent? The Wall St. Journal economics blog, reading the tea leaves of public statements by each of the FOMC members, says no. Even the most “hawkish” of the regional Reserve Bank presidents (Jeffrey Lacker of Richmond and Charles Plosser of Philadelphia) are “falling in line behind Bernanke”. Meanwhile “None of the governors has a history of dissent” (sadly, this includes Randy Kroszner); “nor does New York Fed President Timothy Geithner”.

Meanwhile, over at Vox Baby, Andrew Samwick asks the right question about the supposed desirability of easy money:

Over the past few years, cheap credit and imprudent lending policies by some bad actors generated excessive consumption and investment in the real estate sector. This boosted economic activity beyond the level that would have prevailed with policies that we now wish, with hindsight, had been in place. ... If we acknowledge that bad loans fueled the activity, why is it now a widely shared policy objective to maintain that level of activity?

"We Need Economic Stimulus" is an emperor without any clothes.