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In this first piece of a series, we’re going to walk through an overview of the ways inflation statistics can diverge between countries and demonstrate just how difficult it is to establish apples-to-apples comparisons between aggregate inflation measures in different countries.
The “Break Glass” Moment: Secretary Yellen Should Use the ESF to Insure and Accelerate Commodity Production
The Department of Treasury should be making use of the Exchange Stabilization Fund (ESF) to target accelerated supply-side responses and insure critical producers against downside risks.
Given the discretion afforded the Secretary in utilizing the ESF, and the strong correlation between commodity price volatility and exchange rate volatility, the Secretary has the authority to establish a Supply Insurance and Acceleration Program for key commodities.
The White House and Congress should consider an “all-of-the-above” approach oriented around three objectives: (1) investments where productive capacity; (2) targeted policies for reducing sectoral demand; and (3) policies that facilitate greater competition and technological diffusion.
Creative production contracts involving the sale of put options (as we previously advocated for), could help set a soft “floor” on oil prices, preventing a large-scale return to consumer purchases of gas-guzzling cars.