 This is minor issues number three, the Fed's immaculate disinflation. Hi, I'm Mark Thornton. Today the plans at the Fed for an immaculate disinflation took a hit when the employment report was released and over a half a million new jobs were created in the United States. And this is bad news for the Fed, even though it would be great news for Americans in the labor force. The Fed's immaculate disinflation holds that they will raise interest rates known well in advance in order to bring down the rate of price inflation back to its throne at the 2% level and the 2% target of the Fed. This in the immaculate version holds that we will maintain full employment during this process that stock markets while volatile will not crash and will eventually recover fully. Likewise with housing, it will be rough, but eventually we will cut rates and reestablish robust conditions in housing and for things like investment. The bad news is that with 500,000 plus new jobs created in January, three times the estimated amount and with the unemployment rate falling to 3.4%, the lowest level since 1969, which was before we went off the gold standard, way more than 50 years ago, that suggests that the Fed has more work to do in this process of immaculate disinflation. And it really throws a monkey wrench into the Fed's process because they had just committed to their final increases of raising interest rates in the economy. They had basically announced plans to stop raising rates in the near future and then of course opened up the possibility of cutting rates even rapidly if necessary at the end of this process. And of course, for markets, such plans mean potential actions. If problems occur, say a big increase in unemployment or a stock market crash, why not just move up those plans in time by a few months? It wouldn't be reversing your options or your plans, but simply implementing them a little sooner. So if we did get bad data, we could just resort to those preset options and the Fed would be ready to pivot, ready for recovery, ready for the next boom. The announcements of the big increase in new jobs does throw a monkey wrench into those problems. The good news for the economy is bad news for the Fed. The good news for the economy means that there is probably much more price inflation ahead. And this implies more increases in interest rates beyond those previous Fed plans in order to reduce the impact of their monetary inflation, which started almost three years ago. The truth is, is that ultimately killing price inflation, which the Fed caused in the first place, implies higher rates, painfully higher rates without any controls or subsidies. For example, in European countries, they're subsidizing electrical rates. In the United States, we've resorted to, in small matters, increasing oil released from our strategic petroleum reserves. So you have to increase rates without those types of subsidies. The real process of killing inflation means much higher unemployment. It means businesses having to shut down or close. It means bankruptcies, personal bankruptcies and other misfortunes. And it involves housing foreclosures as well. It means pain for us. So yes, the pain of higher prices from the Fed is spread evenly across, impacting us to one level or another in terms of higher prices for gasoline, eggs, and so forth. That's what ultimately brings price inflation down, is pain for us. But that pain in the Fed's eyes is necessary to protect its constituencies, which of course includes the banks. It includes wealthy people and owners in the stock markets. It includes the political elites and, of course, most especially government bondholders. So what looked very plausible midweek here in the U.S. economy now looks like an open question. And the probability of the Fed's immaculate disinflation now seems far away and far less likely.