From an article by Arthur L. Broida in "The AEI Economist," a publication of the American Enterprise Institute:

Clearly, these are not ordinary times for those charged with guiding it. As in the 1970s, we are suffering from the unfolding consequences of past events, and our difficulties may again be compounded by bad luck and policy. But we are not helpless. We may have to live with the price-raising shock of a weakening dollar in order to cope with our trade deficit, but we can oppose to it the price-lowering shock of the federal spending cuts and revenue increases required to cope with our budget deficit. And we need not gratuitously wound ourselves by adopting new protectionist measures....

The Fed's task at present is perhaps the most difficult it has ever faced. It is operating in an unusually thick cloud of uncertainty and in an unusually fragile financial environment. It must walk a narrow and winding path between the degree of restraint that would trigger a financial panic and possibly a recession and the degree of ease that would stimulate excessively rapid grouth in spending. And to reduce the probability that any adverse shocks will precipitate a new wage-price spiral, it must maintain its credibility as a determined inflation fighter. That credibility depends not only on what it does, but also on what its officials-and other responsible government officials-say. In particular, if firms and workers come to believe that the government's overriding objective is to avoid a near-term recession, the chances of an accelerating inflation, culminating in a deeper recession, will be heightened. There is a need in Washington for discretion as well as for wisdom.