WASHINGTON — The Federal Reserve says inflation remains too high, which comes as a surprise to nobody who has recently purchased groceries, gasoline or enough lumber to build a small birdhouse. The Federal Open Market Committee held its benchmark interest-rate range at 3.75 to 4 percent on October 28 while emphasizing price stability. Economists therefore remain occupied by the national puzzle of making things cheaper without making everyone too unemployed to buy them.

Inflation Problem Meets the Expensive Cure for Spending

Central bankers operate with tools that affect borrowing, hiring and demand. The process is complicated, but Bohiney’s simplified demonstration requires only one family, a car dealership and a calculator. First, show the family a used car it can barely afford. Second, raise the financing rate until the monthly payment resembles a mortgage. Third, report that demand has successfully cooled because the family walked home.

Federal Reserve Governor Christopher Waller warned in a November 10 economic outlook speech that inflation remained stubbornly elevated and further tightening might be necessary. Economic theory allows this argument. Family experience offers a counterpoint: the refrigerator does not lower its prices when you tell it a meeting in Washington went well.

At an entirely satirical monetary-policy rehearsal, an analyst unveiled a new inflation index that excludes every item people actually purchase. Once food, housing, utilities, vehicles, insurance and medicine were removed, the remaining basket consisted of one commemorative pencil and a service nobody had ever requested. Inflation was immediately declared defeated. Nobody could afford the pencil.

Borrowing Costs Rise Faster Than a Credit Card’s Excuses

Interest rates are not a magic price-reduction switch. They discourage some borrowing and spending but also raise the cost of financing homes, cars and businesses. A small contractor may postpone buying equipment while a first-time homebuyer discovers that the monthly payment on a modest house now includes a complimentary spiritual crisis. Demand falls; optimism follows it into the basement.

Bohiney’s invented Consumer Relief Office recommends a fresh program called Don’t Buy Anything November. Participants receive a certificate for resisting inflation by refusing breakfast. Households that refrain from buying furniture earn an honorary economics degree. Anyone still purchasing milk is referred to the Federal Reserve for remedial restraint training.

A Better Way to Judge Inflation Policy

Public policy should be judged by outcomes: price stability, reasonable employment, affordable credit and whether paychecks retain purchasing power. Citizens deserve a plain-language explanation of tradeoffs rather than a parade of experts discussing household pain as if it were an exciting statistical breakthrough. Inflation is not cured when people simply vanish from the checkout line.

The Fed’s responsibility is difficult and its decisions matter. Nevertheless, one American father has proposed that board members spend a week living entirely on the median household’s spare cash. The economists approved the field study, then postponed it indefinitely upon discovering that there was no spare cash to study.

Editorial note: This inflation satire is an entirely human collaboration between the world’s oldest tenured professor and a philosophy major turned dairy farmer. Federal Reserve policy statements are real; the pencil index is comedy.