Biden* appointed Janet Yellen to SecTreas. She contends that the current inflation 'is temporary' (questionable assertion) and that higher interest rates would be a good thing (definitely correct.)
...Yellen – presumably with the backing of President Biden – is supporting Powell on rate hikes, which is a dramatic shift from the prior administration.
The issue in the interview was inflation and whether or not it would be fired up further by the federal government’s $4 trillion additional spending spread over 10 years, adding $400 billion per year in extra spending.
Yellen said that this would not be enough for inflation to over-run. And she said that the current “spurt” in prices powered by the stimulus would fade next year – toeing the line that the biggest burst of inflation in three decades that blew through the Fed’s target by a big margin would just be “temporary.”
But, and here it comes: If the current burst of inflation turns out to be not temporary and triggers more persistent inflation, and thereby higher interest rates, it would be a good thing.
“If we ended up with a slightly higher interest rate environment, it would actually be a plus for society’s point of view and the Fed’s point of view,” she told Bloomberg News....
Anyone who lived through the Ford-Carter Inflation knows that the cure was jacked-up interest rates. It was a very bitter pill, to be sure; prime rate hit 18%. But it stopped the spending, which was the point; it ended the "too much money" part of the inflation equation.
Of course, Yellen's other contention--that the Obama-Trump-Biden* inflation is 'temporary' is fatuous. The enormous spending jag these three pushed through (and Biden* is not finished yet) has had horrible consequences for people who buy food and fuel. There's no reason to think that's going to come to an end, no matter Yellen's politically correct yapping.