Our view is that exceptionally accommodative monetary policy has created distortions in many markets (e.g. bonds, stocks (both real and meme), and real estate) and that the Fed should move steadily, but openly, toward reestablishing a more normal interest rate policy.  Markets may not like monetary tightening in the short term, but we think our economy (and our citizens) will ultimately benefit from capital markets that are more focused on fundamentals and are less reliant on an excess of cheap money sloshing around.  But the Fed is in a sticky position.  Loose monetary policy, along with the demand shock of a reopening economy, has poured gasoline on the inflation fire, and the Fed could be behind the curve in fighting it.  Next year, however, two things will likely happen that will help to put a damper on inflation. 

First, there will probably be some progress on the supply chain problems, leading to higher in-stock levels and moderating prices. 

Second, the stimulus the Federal government injected into the economy during the early days of the pandemic will begin to fade. 

These two factors should coalesce and help the Fed to keep inflation under control.  Investors, however, seem to be getting antsy that the Fed is being too complacent.  We’ll see what the inflation numbers look like over the next few months . . .