Two years ago, free money was flowing and the Fed was our friend. Now the Fed’s tactics for keeping the economy moving in the right direction have gotten a lot tougher . . . but it’s still the lesser of two evils here. If anything, we can say that the enemy of inflation is still our friend.

After all, inflation is now the biggest driver of economic misery for Wall Street and Main Street alike right now. The economy is running too hot. A little air conditioning would actually be welcome.

That’s how Fed Chair Jay Powell can say with a straight face that “the economy is strong” and “doesn’t seem to be anywhere close to a downturn” even though everyone on Wall Street has started obsessing over a recession on the horizon.

Powell has the best seat in the economy. If something important is happening, he sees it. And unless the mighty Fed has gotten totally out of touch, whatever he can’t see, doesn’t really matter in the grand scheme of things.

So if economic conditions are too cold on your corner of Wall Street, that’s not on the Fed’s agenda right now. The world Powell sees has “households and businesses in very strong financial shape,” with more financial resources than normal . . . balance sheets “substantially” better than the historical trend.

The labor market is, if anything, too strong for comfort. Powell says it’s “very, very” strong. Wages are soaring . . . not as fast as inflation, but enough to become a real headache for employers who are already having a hard time staying staffed up.

And that’s why the Fed has gotten so aggressive about fighting inflation. In Powell’s world, once people are employed, the objective shifts to keeping prices under control.

Those are the only two goals. So if the job market is too hot, paradoxically, it’s time to take enough money out of circulation to cool things off. It’s time to force a slowdown.

That’s not a popular posture. The last real recession we had was the Great Recession of 2008, savage enough to leave lasting trauma behind. After that, it’s been over a decade of growth . . . sometimes faster, sometimes slower, but except for sudden shocks like the pandemic, always moving in the right direction.

If not for inflation, the economy is growing at a rate above 6% a year. That’s a boom. The problem, of course, is that inflation is running even hotter, giving us the impression that things are getting worse.

Stock prices have inflated. That’s bad for Wall Street, which is struggling now to figure out what great companies should actually cost under normal conditions. A lot of excess needs to be discounted.

And the cost of living has inflated. That’s bad for Main Street. It’s hard out there, and until rate hikes start working, there’s no relief in sight.

We’re looking for inflation to stay above 6% in the coming year. Prices are not going down. Barring real leadership from Washington, what we pay at the grocery store and at the gas station is the new normal.

As investors, we’re lucky to live in both worlds. Our Wall Street life can theoretically boost our wealth fast enough to keep up with the cost of living our Main Street lives.

If your investments aren’t doing that, I urge you to take a close look at your portfolio while we’re waiting for the Fed to bring relief to everyone on Main Street. Things are going to get a little cooler with every rate hike.

Ultimately, that’s going to feel good. For now, even the hint of a slowdown is going to scare some people who only remember the brake before the economy crashed.

Sometimes there are real speed limits. We’re beyond safe driving velocity now. But Powell thinks he can get us home without triggering even a mild recession.

He says it will be challenging. He says it won’t be easy. But if we take the bitter medicine, we get through this.