Despite a large tax cut and seven increases of one quarter of a point in the fed funds rate, inflation continues to be an elusive target, lingering at around 2%.  The only interest rates that seem to be reacting to the Federal Open Market Committee's promptings are those of Treasury-issued debt, residential mortgages, and lending.  The Phillips Curve has lost its relevance as a predictor of inflation, as full employment is no longer a trigger, at least for now.  Meanwhile, the FOMC continues to exclude the energy and food components from its calculation of inflation, which is troubling for two reasons: (1) oil is where the action is today, and (2) groceries have been on the rise for some time – just ask my wife. Inflation's elusiveness may be at least partially explained by the systemic changes to banking that have occurred because of the 2007 crisis and the Fed's reaction to it – namely, collapse of the fed funds...(Read Full Article)