The problem of the global economy.

The US is caught in a unique situation of rising CPI/inflation and the economy tanking because of the credit crunch foisted by the sub-prime mortgage meltdown.

In the past, from what I remember growing up, the Feds used the prime lending rate to keep inflation in check by raising rates. To stimulate growth when the economy was down, they would lower interest rates.

Well, now we have the convergence of doubly bad news of growing inflation and a tanking economy, and it occured to me that the real culprit is the global economy. Not that the global marketplace is a bad thing; it is merely an observation that requires the Feds to change strategy. That is, that lowering interest rates really won't have an effect on the US marketplace, as it once did in a more insular economy.

The only solution would appear to be to pump cash into the economy, but that itself is prone to exporting cash to other countries via the marketplace (after all, we import more than we export). It appears that what we really need is to have the Federal goverment look closer at providing direct grants to revitalizing the existing infrastructure. This is a direct investment in jobs, people, and the local economies across the US. Sure, those dollars will eventually find their way overseas towards the purchase of consumer goods, but it will be a process by which it will have gone through the hands of several people and kept local companies afloat.