Here’s James Bullard:
The Federal Reserve’s “very aggressive” easy money policy is going to stay that way for a “long time,” St. Louis Fed President James Bullard told CNBC on Friday.
“This is a monetary policy that packs a punch,” said Bullard, who’s a voting member on the Federal Open Market Committee (FOMC).
Uncertainty about the future of the central bank’s bond buying program has weighed on the stock market in recent days.
But the St. Louis Fed president said in Friday’s “Squawk Box” interview, “I think policy is much easier than it was last year because the outright purchases are more potent tool than the ‘Twist’ program was …
Yes, but only because Twist was very weak.
. . . I don’t think markets have fully absorbed that switch.”
That’s not Bullard’s job. He hasn’t been hired to outguess the markets. If he wants to do that he should go run a hedge fund. His job is to be led around by the markets like a stupid ox with a steel nose ring being dragged along by a farmer.
For the year, Bullard predicted gross domestic product (GDP) growth at 3.0 percent.
It’s not going to happen. Ironically one of the reasons it’s not going to happen is because James Bullard thinks it is going to happen.
For the 100th time: No subsidized NGDP futures market = criminal negligence.
PS. Nickik asked the following question:
I agree that NGDPLT may not be appropriate for small and/or emerging economies that are relatively undiversified.
I’m from Switzerland and while its not a emerging economy it’s small. What kind of policy would you advocate for a country like that?
[Update: I misquoted Nickik, the first sentence there is him quoting me.]
I haven’t studied Switzerland, but if they don’t want to use NGDP, then might consider targeting total wage and salary income. I prefer that aggregate targets such as NGDP or national income be done on a per capita basis, or per working age adult (although I often omit that fact to save time.)
If they want to stick with inflation targeting, I’d suggest:
1. Use an index that includes only domestically produced goods.
2. Use an index that nets out all sales/VAT/excise taxes.
3. Do level targeting.
I think that sort of price index would work fine for Switzerland.