Wealth & Money Quote by Martin Feldstein

A tidy sentence that quietly drops a bomb under every convenient scapegoat. Feldstein’s line is aimed at the perennial political temptation to blame inflation on anyone but the people steering the money supply: greedy companies, unruly unions, foreign oil shocks, speculators, bad luck. By insisting inflation is "domestic" and therefore a mirror of "domestic monetary policy", he narrows the circle of responsibility until it lands squarely on central banks and the governments that lean on them.

The wording matters. "Reflects" sounds clinical, almost passive, as if inflation is merely a readout on a dashboard. That calm verb does rhetorical work: it smuggles in a causal claim while avoiding the partisan heat of "caused by". Feldstein gets to sound like an empiricist while delivering a moral: if prices are running away, your institutions did it, or allowed it.

Context sharpens the edge. Feldstein came of age in the post-1970s inflation hangover, when economists and policymakers were relearning (or pretending to relearn) that credibility, expectations, and money creation aren’t abstract. They show up in grocery bills and wage fights. The sentence also preemptively swats away the comforting idea that globalization or imports can permanently "export" inflation elsewhere. Exchange rates adjust; domestic policy remains the anchor.

It’s not a denial that shocks exist. It’s a hierarchy: shocks may light the match, but monetary policy decides whether it becomes a house fire.