The biggest basher of them all
Ramesh Ponnuru has a very good article pushing back against Robert Samuelson’s criticism of Fed bashers. While Mr. Samuelson is certainly right that much of the criticism is a bit nutty, sometimes I think there is a tendency for what Paul Krugman calls “Very Serious People” to be overly protective of institutions such as the Fed. I am perfectly willing to accept the claim that the Fed is an institution full of very talented people. I believe that its leadership is well intentioned. I believe Fed policy partly explains why the US has done better than the eurozone in the past 4 years. I believe that, on average, Fed policy has improved over time.
But . . . no institution should be immune from criticism, as there is always room for improvement. Today I’d like to talk about the biggest Fed basher of them all: Ben Bernanke. Here’s Bernanke blaming the Fed for the Great Inflation:
Monetary policymakers bemoaned the high rate of inflation in the 1970s but did not fully appreciate their own role in its creation.
And here’s Bernanke attributing the performance of the Fed during the Great Moderation to improved Fed policy:
With this bit of theory as background, I will focus on two key points. First, without claiming that monetary policy during the 1950s or in the period since 1984 has been ideal by any means, I will try to support my view that the policies of the late 1960s and 1970s were particularly inefficient, for reasons that I think we now understand. Thus, as in the first scenario just discussed (represented in Figure 1 as a movement from point A to point B), improvements in the execution of monetary policy can plausibly account for a significant part of the Great Moderation. Second, more subtly, I will argue that some of the benefits of improved monetary policy may easily be confused with changes in the underlying environment (that is, improvements in policy may be incorrectly identified as shifts in the Taylor curve), increasing the risk that standard statistical methods of analyzing this question could understate the contribution of monetary policy to the Great Moderation.
And here’s Bernanke blaming the Fed for the Great Depression:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.
That’s a pretty serious charge, given that the economic collapse of 1929-33 turned the Nazis from a small fringe party to the dominant political force in Germany. And Bernanke is not just a Fed basher; he lashes out at any other central bank that doesn’t do what he thinks they should be doing:
Japan is not in a Great Depression by any means, but its economy has operated below potential for nearly a decade. Nor is it by any means clear that recovery is imminent. Policy options exist that could greatly reduce these losses. Why isn’t more happening? To this outsider, at least, Japanese monetary policy seems paralyzed, with a paralysis that is largely self-induced. Most striking is the apparent unwillingness of the monetary authorities to experiment, to try anything that isn’t absolutely guaranteed to work. Perhaps it’s time for some Rooseveltian resolve in Japan.
So the Fed is to blame for the Great Depression, deserves praise for producing low inflation during the 1950s and early 1960s, deserves praise for producing a stable macroeconomy during the Great Moderation (1984-2007), and is to blame for the Great Inflation of 1966-81. In this set of PowerPoint slides Bernanke blames the Fed for the severe 1981-82 recession. Are we to assume that beginning in 2008 the Fed suddenly stopped being responsible for macroeconomic outcomes? After being to blame or deserving credit for virtually every single major macroeconomic twist and turn since it was created in 1913?
Not according to William Dudley, current New York Fed President and close Bernanke ally. He argues the Fed continued to make mistakes after 2008:
I would give each of these four explanations some weight for why the recovery has been consistently weaker than expected. But I would add a fifth, monetary policy, while highly accommodative by historic standards, may still not have been sufficiently accommodative given the economic circumstances. . . .
My conclusion is that the easing of financial conditions resulting from non-traditional policy actions has had a material effect on both nominal and real growth and has demonstrably reduced the risk of particularly adverse outcomes. Nevertheless, I also conclude that, with the benefit of hindsight, monetary policy needed to be still more aggressive. Consequently, it was appropriate to recalibrate our policy stance, which is what happened at the last FOMC meeting.
As I argued in a recent speech, simple policy rules, including the most popular versions of the Taylor Rule, understate the degree of monetary support that may be required to achieve a given set of economic objectives in a post-financial crisis world. That is because such rules typically do not adjust for factors such as a time-varying neutral real interest rate, elevated risk spreads, or impaired transmission channels that can undercut the power of monetary policy. [emphasis added]
So from the vantage point of October 2012, William Dudley suggests that monetary policy over the previous 4 years was insufficiently expansionary. He’s “bashing” the Ben Bernanke Fed, and he’s almost a clone of Bernanke in his policy views!
I wonder if Dudley is also admitting that, in retrospect, a certain group of monetary cranks that were bashing the Fed in 2008 and 2009 for inadequate nominal growth might have been right.
I don’t know if “Fed basher” is the right term to apply to Ben Bernanke. All I can say is that if Bernanke is a Fed basher, then I’m proud to be one too.
Tags:
12. March 2015 at 13:46
“Are we to assume that beginning in 2008 the Fed suddenly stopped being responsible for macroeconomic outcomes? After being to blame or deserving credit for virtually every single major macroeconomic twist and turn since it was created in 1913?”
Maybe Bernanke meant that after Feb. 1, 2006 the Fed stopped being responsible for macroeconomic outcomes.
12. March 2015 at 14:51
I saw on Ryan Decker’s blog “UPDATED PRIORS” that The Federal Reserve Board currently employs more than 300 economics PhDs. They certainly have a lot of highly educated staff. I would suspect that the ratio of PhDs to overall staff is as high or higher than any other government entity.
12. March 2015 at 15:07
Jim, Yes, they are loaded with talent.
12. March 2015 at 15:48
Talent cannot stop the failure of socialism.
Sumner wrote:
“I am perfectly willing to accept the claim that the Fed is an institution full of very talented people. I believe that its leadership is well intentioned.”
Who do you trust, central bankers or the market?
12. March 2015 at 16:13
“Who do you trust, central bankers or the market?”
MF, Is neither an acceptable answer?
12. March 2015 at 16:13
Jim S—And you should read some the work produced by those 300 staffers, and even larger number of PhDs hired by the 12 regional Fed banks. In addition, they put academic economists on retainer. Much minutia in painfully obfuscatory jargon is produced.
Unfortunately, the net effect of such a large body of economists is to provide intellectual armor for an ossified, self-reverential Fed.
To wit: I have never heard a Fed official say, “We have to print more money.” Mr. Harada of the Bank of Japan speaks in such an open and succinct manner.
I also note the Fed has never held a conference or seriously addressed the issue of Market Monetarism.
12. March 2015 at 16:18
“That’s a pretty serious charge, given that the economic collapse of 1929-33 turned the Nazis from a small fringe party to the dominant political force in Germany.”
That is not a “given”. You have not even asked yourself why fascism was localized to only two countries after 1929. There were fascist political groups all over the world, and yet we’re now talking only about Germany (and sometimes Italy). Why? Because it was not the deflation that “caused” fascism as a political order. Nor was it any other single factor. To reduce a 200 year in the making social movement in a country to one short episode of deflation is to display clear prejudice and self-serving bias.
Fascism in Germany was the complex result of a myriad of factors. The profound philosophical cultural shift that began during the late 18th century and early 19th century, which spawned into a number of sub-movements, most of all what is now considered Socialism, was by far the most important factor. This philosophical shift did not occur in the US. German philosophers from Kant, Fichte, Hegel, Feuerbach, Stirner, Marx and Engels (who were heavily borrowed from, economically, by the Nazis), to Nietzsche (who Hitler has cited as a prime influence), as well as influential Scottish hilosopher Thomas Carlyle, were the intellectual seeds for European fascism.
You should read these works, for they provide is with an intellectual history and evolution of thought that explains not only fascism, but communism, and the socialist movement that took place during the 20th century.
Other factors include:
The political turmoil in the Prussian empire with its destructive warring statesmen.
The rampant anti-semitism and racism was also an important necessary factor.
The Treaty of Versailles which effectively told the German people that they were responsible for the Great War, and must pay for it. That was yet another highly important factor.
Nationalism and militarism were the political manifestations of the above factors.
These were not significant factors in the US and elsewhere which is why the 1929 collapse did not lead to fascism worldwide. Germany was special.
It is foolish to pin an entire socio-political movement of fascism to falling friggin prices of carrots and shirts. I mean really.
But was the deflation “a” factor? An honest assessment would be yes it was. It was another exacerbating factor. It should be noted that the deflation would not have took place if it weren’t for the previous inflation. Deflation was a consequence, so deflation being a factor means prior inflation was an even more important factor.
Every time Sumner tries to play the “deflation lead to Hitler” card, I know that he is only doing that to backhandedly promote his own socialist agenda of inflation. It is fear mongering at its most immature and trite.
12. March 2015 at 16:28
Derive:
“MF, Is neither an acceptable answer?”
You have just been written into Sumner’s little black book of bad people.
I suspect, but could be wrong, that the correct answer is that which enables you to have it both ways. Say you trust the market, with an immediate “but” or “however” written right before some statements about the Fed, yet not conclusively putting either the Fed or the market as more trustworthy than the other.
I am guessing you then have to conclude with an argument about the ideal Fed as one that overrules the market in Sumner’s preferred manner, like aggregate spending, but don’t say it is because the market can’t be trusted to set optimizing spending, say it like a disinterested technocrat and cite a graph that shows 16% of some arbitrary group of wage earners during some arbitrary time in the past who didn’t receive a pay cut when some arbitrary variabke of corporate earnings fell. Then say checkmate bitchez!
12. March 2015 at 16:32
“But thanks to you, we won’t do it again”
Bankrupt U Bernanke lied. He collapsed the roc in MVt by -160 percent from July 2008 until Oct 2008.
Bloomberg:
“The swings were so unusual that officials from the New York Fed met the next day to try and figure out what actually happened”
Vacuous. The roc in MVt collapsed by 50 percent from July 2014 until December 2014.
ZeroBrains:
“It is now just over a month since the infamous Treasury flash crash of October 15, which has by now surpassed the May 2010 stock market crash in terms of CAUSATIVE MYSTERY”
Wrong. I predicted the flash crash of May 6th 2010 6 months in advance and within 1 day…and the Oct 15th decline.
The money supply can never be managed by any attempt to control the cost of credit.
12. March 2015 at 18:48
“You have just been written into Sumner’s little black book of bad people.”
I’m OK with that, so long as he doesn’t mix it up with his other black book and accidentally start drunk dialing at 2am after he’s been out hugging the bar. 🙂
12. March 2015 at 20:35
(Sumner) “But . . . no institution should be immune from criticism, as there is always room for improvement.” – except this blog?
Sumner should be praising Bernanke as the Fed did exactly what he is proposing: print money to try and prop up the economy. The Fed, bought junk commercial paper to bail out banks (over 40% of the Fed’s balance sheet is toxic junk mortgages; it used to be mostly government paper). Goes to show there’s no pleasing everybody.
But the most glaring example of ideology by Sumner is the belief that an ant at the head of a log floating downstream is steering the log, i.e., (Sumner) “Are we to assume that beginning in 2008 the Fed suddenly stopped being responsible for macroeconomic outcomes? After being to blame or deserving credit for virtually every single major macroeconomic twist and turn since it was created in 1913?” HAHAHA! A grown man believes in fairy tales! Strikes a chord though with Duda, and perhaps that’s the intended audience. But if it was that easy to dictate prosperity by debasing the money supply, then the Romans would still be in power and we’d have perpetual prosperity now (http://en.wikipedia.org/wiki/Roman_currency#Debasement_of_the_currency)
12. March 2015 at 23:49
I’ve just now realized that inevitably a new recession will hit US or Europe in few years time. What are central banks then going to do since interest rates are very close to zero due to factors related to secular stagnation? Which central bank will be first to understand that inflation targeting by means of interest rate is a thing of the past?
13. March 2015 at 02:11
Andy:
By what process of reasoning did you use to come to that “realization”? Please try not to mistake an emotionally driven feeling of euphoria and certainty with correct ratiocination and discursive reasoning. Not saying I disagree with your conclusion, but what is more important is whether or not the path you took to get to that conclusion instead of others is of high quality.
13. March 2015 at 02:28
Ray:
Don’t you get it? The Roman Emperor Deocletian’s flaw was that he didn’t target NGDP to be rigid. He devalued the currency at the threat of death in the wrong way. He should have devalued the currency at the threat of death so that aggregate spending rose at a…uh…scientifically…um…”modest”…rate, then the Roman Empire would have had miniminal monetary problems.
They collapsed due to inflation because Sumner was not an advisor. It is a modest proposal. Put an MM in charge of legalized counterfeiting all over the world and we’ll only then have to worry about every problem that arises being caused by something other than money. Must be something other than money. No way that stable NGDP can itself cause problems. People don’t need a free market in money in order to coordinate in the long run. Hmmm…it would seem that maybe, just maybe, people really non’t need a free market in food either in order to coordinate their nutrition. Maybe, and I am just throwing this out there, maybe then state can oh, take over all food production? It should not be a big problem, if a market foodist is put in charge of the “Public Department of Food”, and the state targeted a nice steady growing pace of potato and fish production. At least by doing so they’ll avoid food caused problems. Should people die, then clearly it is because of non-food related, “fiscal” problems. It cannot be because of steady food. I mean do healthy growing people not have some steady diet?
I am not advocating for this, I’m just being a passive advisor. Let the world burn, and I’ll show you the best water pouring target. That is why I am here.
Maybe if the state took over everything, and targeted a nice stable growing GDP of mud huts and rice paddies, and machine guns, then the only problems that could possibly take place must be from what is not targeted…which would be nothing in that case! Targets are the pathway to prosperity. Aim your target above waist. When you shoot, don’t waver. Be disciplined. Keep to your targeting, regardless. You would be doing God’s work.
Get it now?
13. March 2015 at 03:43
@MF – hahaha! You are a master of history I see, I fully agree with your “why Nazism arose” arguments and your parody above. The strongest argument for not adopting NGDPLT is Edmund Burke’s however, to go slow when adopting a new institution, since there’s no guarantee it will work. Sumner’s proposal, if no different that John Taylor’s rule (which is based on history), would be OK to try, but as I understand Sumner’s proposal it is “unbounded” meaning the Fed can in theory keep buying all commercial paper until such time NGDP hits a target. Is this not crazy? I think it is. What happens when the Fed pushes on a string, and nothing happens? What happens? French Revolution: Robespierre, Reign of Terror, and Thermidorian Reaction (Wikipedia: “…its economic policies paved the way for rampant inflation”)
13. March 2015 at 03:51
Oh look, the morons are discussing history.
Is there something these two idiots aren’t experts on ?
13. March 2015 at 04:21
Ray says the Fed can’t increase NGDP, and uses as an example the Romans increasing NGDP.
Andy, Good question.
13. March 2015 at 05:44
@ssumner – “Ray says the Fed can’t increase NGDP, and uses as an example the Romans increasing NGDP.” – no, you misread it (again), your reading skills are slipping. You are referring to MF’s parody.
But more substantively, can you please point to an empirical reference that shows the quantity theory of money holds true at all times? It’s not an accounting identity. Arthur Burns pointed out decades ago that velocity changes with time (that’s why he emphasized ‘animal spirits’ and expectations, not MM which he was hostile to, and antagonistic to M. Friedman). Constant velocity only held for a period when times were good, not now. So if velocity is not constant, is it not possible hat the Fed buying paper would not have any effect? “pushing on a string” Why not? Also, no ‘theory’ please, but empirical facts. No Milton Friedman thought experiments please. You really should do a blog post on this topic, not a one line joke response to me. What is your foundation for NGDPLT? It’s sticky wages, money illusion, and, most importantly, the quantity theory of money. Please discuss the validity of the latter through all times and periods.
13. March 2015 at 07:35
Bank capital consists of capital stock, surplus, undivided profits, and all net worth reserves. The counter-cyclically forced expansion of bank capital accounts during the Great-Recession, resulted in the DIMINUTION of commercial bank deposits in the system (and released even more, excess reserves, IBDDs). I.e., c. $626b of the money stock was absorbed by 2011. It’s perhaps as much as a trillion dollars sopped up by 2015.
And the FDIC introduced unlimited transaction deposit insurance which destroyed Vt. It drew funds out from all over the world.
Shifts from time/savings deposits, TDs, to transactions deposits, TRs, within the CBs & the transfer of the ownership of these deposits to the non-banks, NBs, involves a shift in the form of bank liabilities (from TD to TR) & a shift in the ownership of (existing) TRs (from savers to NBs, et al). The utilization of these TRs by the NBs has no effect on the volume of TRs held by the CBs, or the volume of their earnings assets. I.e., the non-banks are customers of the deposit taking, money creating, CBs.
13. March 2015 at 08:01
[…] Source […]
13. March 2015 at 08:48
Vice Chairman Stanley Fischer
February 27, 2015
“Prior to the financial crisis, because reserve balances outstanding averaged only around $25 billion, relatively minor variations in the total amount of reserves supplied by the Desk could move the equilibrium federal funds rate up or down. With the nearly $3 trillion in excess reserves today, the traditional mechanism of adjustments in the quantity of reserve balances to achieve the desired level of the effective federal funds rate may well not be feasible or sufficiently predictable”
The money stock can never be managed by any attempt to control the cost of credit.
13. March 2015 at 09:36
Thought-provoking new post by Yglesias:
http://www.vox.com/2015/3/12/8199063/emailgate-rubio-lee
However, I’m not sure he’s totally right about the most important issues at stake in 2016…..
13. March 2015 at 10:20
[…] Who is the biggest Fed basher of them all? Ben Bernanke! (themoneyillusion) […]
13. March 2015 at 10:31
Scott:
Major Freedom and Ray Lopez equate market monetarism with monetary socialism. My take is that you would be open to a free banking system but do not spend time blogging on it because you think it politically unfeasible and instead spend your time on the most market friendly mechanism of influencing the money supply in a central bank system. Am I right? Or, do you believe that a free banking system is not economically feasible as well as not politically feasible in the US?
13. March 2015 at 10:56
@Carl–you remind me of those characters who idolize movie stars until they are introduced to them with their makeup off, backstage. You might be cruelly disappointed by your hero Sumner… In theory, even free-banker G. Selgin has a sort of NGDPLT scheme he calls ‘productivity norm’ that allows for falling prices. But all these rules are potentially unbounded, meaning, if they don’t work to raise NGDP, the Fed keeps printing money until–boom!–hyperinflation. You want to superheat water and have the steam explode in your face? That’s MM NGDPLT. At some point money is no longer neutral, such as when the Fed is buying loans for kid’s lemonade stands. Sumner has never explained why his rule prevents that, so we must assume the worse. BTW you do realize there’s no solid empirical evidence for monetarism? All the data I’ve seen merely shows the Fed weakly influencing the market short-term (days), or following the market–including the Volcker Fed in the early 1980s. Notice from any chart how Volcker LOWERED interest rates in the 80s (i.e., followed the market), contrary to the myth that he ‘raised rates to bring on a recession and broke the back of inflation’. But we all believe in myths I suppose.
13. March 2015 at 11:57
David Stockman:
http://davidstockmanscontracorner.com/why-the-dollar-is-rising-as-the-global-monetary-bubble-craters
(1) Is David Stockman an “Internet Austrian”?
(2) I can’t tell whether Stockman is predicting inflation or deflation…..
13. March 2015 at 13:27
@TravisV, good link to Iglesias.
I’m no fan of Hillary, but I dread the idea of handing all the keys back to the GOP 16 years after they gave us some really bad government.
Clearly, the big tax cuts of the Bush era did not translate into economic magic, and today, the government’s fiscal situation is a lot worse.
More divided government, please.
13. March 2015 at 15:06
Ray:
Thanks. I feel much better prepared emotionally to handle Scott’s answer after reading your response.
Also, thanks for pointing out that an approach that targets a particular rate of ngdp growth leads to hyperinflation. I’ll be sure to keep an eye on Fed lemonade stand share purchases.
13. March 2015 at 16:17
Carl:
“My take is that you would be open to a free banking system but do not spend time blogging on it because you think it politically unfeasible and instead spend your time on the most market friendly mechanism of influencing the money supply in a central bank system. Am I right? Or, do you believe that a free banking system is not economically feasible as well as not politically feasible in the US?”
What you perceive to be the most market friendly mechanism of influencing the money supply is not in fact the most market friendly. Every rigid rule for a monopolist system of money are as equally anti-market as every other. It is wrong to believe that NGDP targeting is more market friendly than say price level targeting. In both cases, the market is stripped of setting all monetary variables.
Sumner has mislead you. He has mislead you into believing that with NGDPLT “the market” will set interest rates, prices, and every other non-NGDP variable. But that is not the case. No matter what single variable a central bank “targets”, even if the central bankers do not consciously intend to affect interest rates and prices, they nevertheless do in fact affect them. Sumner contradicts himself when he writes that even in economies with no intentional NGDP targeting, the Fed is nevertheless affecting it, but then denies that should the Fed target NGDP, that somehow the Fed will not be affecting other variables like interest rates.
You just cannot have any market determined monetary variables when there is a state monopoly in money that makes market competition all but impossible.
Imagine there is a force from within the market that, coupled with ” regular” Fed inflation, would otherwise lead to falling NGDP. Should the Fed act, and engage in so-called “OMOs”, then that very activity will affect interest rates and prices, even if the purpose, the intention of it, is to make NGDP rigid.
Money changes affect all monetary variables. The intention of the person or people bringing about the money change is irrelevant to this point.
To reply to your question, it makes no difference what my opinion is on how ” politically feasible” free banking would be. I am not sure I even understand what that even means. I do not claim to have godlike knowledge to be able to predict what the world will look like in the future. I can only guess, and your guess is as good as mine, that is until the future actually unfolds and we get to see whose guess was more accurate. Whoever is more accurate would not be in any sense victorious in the particular debate here which is about function and efficacy.
Even if you convinced me that free banking is likely not going to happen during my particular lifetime, it is not like your devotion will somehow be vindicated. I cannot for the life of me understand why it is that so many on this blog feel themselves vindicated or validated by aligning one’s thoughts as what should happen, with what the state happens to do. It is quite frankly so degrading and lacking of dignity in my view. To find meaning and self-worth defined as what the state does or does not do.
Do you honestly believe should the future world take the form of X, that you will be better off if you thought all along that yes, X should happen, while I would be somehow worse off if I always thought Y should happen instead?
If the future world is X, then you would be no better and no worse off for having thought like you do right now about what is and is not politically feasible. If the future world becomes one where central banks target NGDPLT, then I can tell you that I would be just as impoverished and coerced because of that no matter if right now I joined in with your crusade or if I decided to not join with you today. It doesn’t make any difference to who I am as a person and what I want for myself.
The problem with the socialist mindset is that it does not see value in the individual. It is only about aligning one’s mind with what the state does.
I don’t care what is and is not “politically feasible”. That is the concern of politicians, and I am not a politician. I am an academic.
13. March 2015 at 16:33
Daniel:
“Moron”, “Idiot”…
You are boring. Zero creativity.
13. March 2015 at 18:07
It appears that Gresham’s Law applies to blog commentators.
13. March 2015 at 19:54
@George Selgin – LOL! But you’re still posting here… OT – did you ever meet Richard H. Timberlake at U of G? From reading his book ‘Monetary Policy’ he seems like a crusty old fellow.
@Carl – “I’ll be sure to keep an eye on Fed lemonade stand share purchases.” – yes, you’ll notice that the ‘extraordinary’ (which implies one time) purchases post-2008 of junk mortgages by the Fed led to an explosion, by several trillion, in Fed balance sheet ‘assets’, to the point these ‘assets’ are over 40% of the total. Now multiply this by ten to understand NGDPLT. How is that not ruinous?
14. March 2015 at 03:53
Should there be a ban on people calling each other swear words like moron and idiot? It is an unnecessary distraction that degrades the quality of the blog.
14. March 2015 at 05:24
Ray, You said:
“But more substantively, can you please point to an empirical reference that shows the quantity theory of money holds true at all times? It’s not an accounting identity. Arthur Burns pointed out decades ago that velocity changes with time (that’s why he emphasized ‘animal spirits’ and expectations, not MM which he was hostile to, and antagonistic to M. Friedman).”
That’s right, the QTM is not a tautology. Why didn’t I think of that? And Friedman argued V is constant? Still good for a few laughs, but I am slowly losing interest in mocking you, it’s too easy, too repetitive. Not as fun anymore. Unless you can come up with some novel inanities, soon you’ll be joining MF.
BTW, you said you were never going to comment again at this blog. What happened; can’t pull yourself away?
Carl, I favor completely deregulating banking, but I see the banking system as being essentially unrelated to the monetary system. One might just as well talk about “free retailing” and contemplate Walmart issuing currency. I’ve advocated that the government contract out the issuance of currency to private firms, if that helps. And of course I believe the market should set interest rates and the money supply, not the Fed.
George, It’s certainly true at my blog.
Tyler, Yes there should.
14. March 2015 at 09:07
“It is an unnecessary distraction that degrades the quality of the blog”
Not so. Sometimes that’s exactly what it boils down to. Although it’s usually considered to be an absence of thought, like using clichés, morons rule economics. There are more myths in economics than “Carters Got Liver Pills”. The Fed could be run by grade school kids. Tyler should go back to school to learn how to write. It would be especially helpful if people defined their terms, and eschewed colloquialisms.
And it’s hard for me to believe you even matriculated at Chicago. I discovered the Gospel 36 years ago. Never made a mistake or revision. It’s worth trillions of economic dollars. It of course, and unfortunately, sells itself. I’ll change the world without trying. Intelligence concerns filtering, not being a black hole.
14. March 2015 at 10:01
flow5 writes…
“It would be especially helpful if people defined their terms…”
Does anyone else see the irony in who this is coming from? 🙂
14. March 2015 at 14:04
Yes, Scott, you and Krugman and many mainstream economist have been correctly “bashing” the Fed for not doing more to head off and reverse the Great Recession sooner (and not to risk re-depressing growth now with an increase in short term interest rates). But this is pop-gun bashing compared the the real bashers who have bashed the Fed for doing far too much (QE, delaying increasing short term rates). Are there any Senators who are criticizing the Feb for undershooting its own inflation target since 2009?
14. March 2015 at 17:31
“Does anyone else see the irony in who this is coming from?”
You actually think I’m going to give it away for free? I am the Alpha and the Omega. Go fish.
15. March 2015 at 02:52
Semi off-topic:
“Varoufakis says QE to fuel unsustainable equity rally”
http://www.reuters.com/article/2015/03/14/us-ecb-qe-varoufakis-idUSKBN0MA0H120150314
Yep, Greece is criticizing the loose money policies of the EBC.
15. March 2015 at 05:25
Thomas, You said:
“Are there any Senators who are criticizing the Feb for undershooting its own inflation target since 2009?”
Yes, and what does that tell us about the Democratic party? What can we learn from the fact that Elizabeth Warren wanted Volcker to lead the Fed?
Luis, Amazing.
15. March 2015 at 07:03
The FOMC’s overriding policy impact, on the short-run vs. the long-run, is typically demarcated by an inversion of the seasonal factors. We will be able to evaluate the economic expansion in c. 3 days – when the seasonal inflection point expires (where selling equities usually stops).
Every year, the seasonal factor’s map, or scientific proof, is demonstrated by the roc in the product of money flows, M*Vt.
It is axiomatic, unless money, and money flows, exceed the rate-of-change in real-output by 2-3 percentage points, output can’t be sold, production will be cut back, & jobs will be lost.