From the speeches of Fed officials, you might conclude that the Fed has absolutely nothing to do with inflation. You might think they had never heard of a theory that suggests that monetary policy has an impact on prices. Rather, they seem to suggest, inflation is something visited upon us by dramatic price movements in important commodities, which in turn are dictated by world events or sudden and inexplicable changes in demand and supply.
This peculiar mix-up of cause and effect has nothing to do with reality. It is a myth that price inflation is somehow led around by the nose by major sectors such as energy and has nothing to do with the money stock. Further, it is not the case that consumers are nothing but passive players in this drama, accepting whatever prices they are given. FULL ARTICLE