Very thought provoking analysis. But the idea that inflation is here to stay is a bit naive. It underestimates the power of the Fed. The Fed is the most important actor in the financial markets in the whole world. And it has a legal mandate to tame inflation. If Jerome Powell does not fulfill the mandate, he can in principle be impeached. If he does, and the economy is going into a recession, nobody can accuse him of anything. Economic growth is not one of the Fed's explicit, or even implicit mandates.
The argument is that the fed doesn't matter if the USA can't defend its supply chains. It's not like the author forgot to take the fed into account. The argument is they only matter under specific circumstances.
That's a bit of an exaggeration. Maybe 10% of the US's supply chains can be considered to be under threat. If China stops trading with the US altogether, then it would be more, but China can't do that.
The world is not about to end. The Fed absolutely matters. Just look at what happened on Friday afternoon when Jerome Powell spoke and people thought that he sounded more hawkish than it was expected. Nothing changed, except some words, and the markets took a dive.
Powell can make the equities markets go down 20, 30 or 50%. It's a kids play for the Fed to orchestrate a recession, not to mention a depression. The tricky part is to orchestrate a soft landing, but soft or hard, a landing we will have.
I agree with you it's an exaggeration. I just thought I'd mention it because if your first response it didn't sound like you argument was it's an exaggeration, but that you have understood the point of the pdf. But fine I get it now.
