The Federal Reserve Can’t Get Off the Hook So Easily

Aug. 8, 2022 2:32 pm ET

In “Why Inflation Is on the Way Down” (op-ed, July 26), Donald Luskin writes, “The Fed didn’t cause the underlying growth of money. We have to blame Congress for that.” But Congress doesn’t create money. To cover costs of programs, the Treasury issued securities, which the Federal Reserve purchased. If the Fed didn’t oblige, the money supply wouldn’t have grown so significantly, and interest rates would have surely gone up markedly on government securities. One can’t blame the growth in money supply on Congress and not the Fed. They were clearly partners.

Em. Prof. Stephen Happel

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