Price inflation in the United States remains stubbornly high, with October’s print at 7.7 percent. The Fed’s preferred measure, so-called core inflation is only two-tenths of a percent below forty-year highs, at 6.3 percent. Yet, it was just last year that the Federal reserve and other “experts” were concerned that inflation wasn’t high enough.

It’s been said there’s no such thing as a controlled experiment in the social sciences, including economics. But we had something close to a laboratory experiment back in 1920–21 and 1930–31.

In each of these periods there was a depression. Unemployment was high—for a while—it briefly was higher in the 1920s than in the 1930s. Prices fell in both periods. 

Investors are on the edge of their seats for any sign that Fed central planners will someday “pivot” to cutting interest rates, instead of raising them. They forget that recessions and major stock bear markets have occurred after the Fed started cutting rates and the yield curve spread shifted from negative to positive.

Austerity works. We know what it is and don’t like it, but it works. It usually means cutting your consumption and spending, paying down your debts, pawning assets, and working more hours to restore your economic situation.

You might invoke “austerity” because you lost your job, your house burned down, or you have an unexpected child on the way. You might take similar actions if the economy was in crisis. It’s essentially the same thing as cutting expenses to save for a down payment on a house, paying for a child’s education, or accumulating a fund for retirement.

In my research into Leonard Read’s writing, I recently came across his “Look to the Miracle!” in the May 1963 Notes from FEE. It struck me that what he had to say almost half a century ago about how his Foundation for Economic Education worked to advance liberty and how it resisted pigeon-holing in traditional ways is at least as relevant today.

Read first pinpoints the source of the pigeon-holing problem.