Fed: "The Eagle Flies At Dawn"

It is a widely held view in the financial/economic policy world that the Federal Reserve needs to raise interest rates to begin to reverse the now obvious inflationary trend. However, it is also conventional wisdom that the Fed won't do anything until after the election, which means December. Let's examine that conventional wisdom. Recent FOMC meetings, which have resulted in rates falling dramatically, have had a string of dissents - Lacker, Fisher and Plosser have all dissented at some point. Fisher remains a stalwart inflation hawk and Lacker is on record that he's eager to raise rates. Now, in the last few days we've seen a media full court press of sorts in favor of inflation hawkishness. Gary Stern said last Friday that we shouldn't wait for complete stabilization of housing and financial markets to raise rates. This week it was Plosser to come out and say "sooner rather than later." Today the Fed's Beige Book noted that all 12 bank regions are experiencing inflation. All this is coming to a head and taking on quite a public face. Are we really to believe that this is all rogue officials waging their campaign of hawkishness in defiance of standing policy? No. These are the signals that rates are going up. But when? Why would these officials be laying it on thick in July, when many are on vacation, for a rate hike in December? October is more plausible, especially since Mishkin will be gone, but would the Fed spring this just a month before the election? That seems odd. It'd be better to get a new policy course started earlier so the electorate and the respective campaigns get used to and operate longer with a known policy direction. So I think rates are going up in August. We've got two weeks until the FOMC meeting, the Fed is saying 'get your deals done now, rates are going up.' Anybody who needed some breathing room to repair their balance sheets to avert financial disaster ought to have done it by now. If any financial institution's fate rests on looser policy or more time in this low rate environment, they are dead in the water anyway. Banks got their respite. It's over. It is time to heal the dollar and stamp down inflation. Away we go.