& BRIEFLY NOTED: For 2022-03-04 Fr: I still do not understand why the Federal Reserve is not extraordinarily gleeful about the recovery that it (plus the Biden administration, plus the Democratic congressional caucuses) have managed. When have we ever seen such rapid recoveries in the labor-force? No, we are not back to pre-plague levels. But we are certainly getting there. And a full recovery is certainly attainable: we could have another 7 million jobs over the next two years, if we are lucky and skillful. And let me disagree with Powell: I see no reason why the Fed should have “moved earlier” on rate increases. Bond-market expectations of medium- and long-term inflation are still extraordinarily well-anchored. And one of the major benefits of maintaining the anchor is that then it gives you policy flexibility to do whatever is optimal in the short run to attain maximum feasible employment and productivity growth. That means that the Federal Reserve’s task is to craft a path for interest rates and for the short-term inflation rate that gets the economy to the place where a well-functioning frictionless flex-price macroeconomy would go if it could. We cannot have a frictionless flex-price macroeconomy. We have sticky prices. We have, for very powerful human psychological reasons, downward-sticky wages. We have sticky debts. (In the context of sticky debts, the standard 20th-century austerian belief that a business-cycle free macroeconomy could be attained in a straightforward way by a war to destroy labor unions appears more than usually silly.) The fact that we are repeatedly kissing up to and sticking to the zero-lower bound means that the nominal interest-rate degree-of=freedom is simply not enough to do the job. Plus we do need for relative prices to move to provide the incentives for the structural sectoral adjustment that we need to undertake. So why, again, should the Fed have moved earlier to hike interest rates? If medium- and long-term inflation expectations were on the move, I would get the point. But where is the evidence that they are?
I agree that the Fed and the Administration should be celebrating the Fed's management of the rapid recovery in real GDP and employment.
That does not mean that the Fed was perfect. A better estimate of the effects of Delta and then Omicron on LFPR and supply chain problems would have allowed the Fed to start dialing back monetary stimulus sooner, at least in September when the TIPS showed expectations of inflation rising. I agree with Powell, "hindsight says we should have moved earlier." And the rebound in expectations in December after having fallen in November indicates that the Fed needs to be seen as "doing something" to bring expectations down towards target.
I have been following the aircraft flying on the borders. A lot of military cargo, military passenger and spy planes. A Global Hawk is in the air constant as are air to air tankers. A lot of traffic into Rzeszow in south eastern Poland near Lviv. Lviv is only 100 road miles from Rzeszow. The fighting terrain around western Ukraine is perfect for defense. Lots of forests and hills.
To the west are the Carpathian's.
Perfect ambush country for road bound attackers. Defenders would chew the Russians to pieces.
I also saw an F16 flying on the Hungary Modova border. Very interesting.
I’ve been traveling quite a bit this week. Every airport is packed. I didn’t even know Des Moines HAD a satellite lot when I had to park. Des Moines! Denver was a zoo. People are spending like they are on spring break and don’t care what the price of Hurricanes at the beach bar cost. Disneyland and Disneyworld are booked solid. Hall reservations for marriages nearly back to prepandemic levels. I agree with Krugman, the disconnect between how people are acting and what they are telling pollsters about the economy is weird.
I agree that the Fed and the Administration should be celebrating the Fed's management of the rapid recovery in real GDP and employment.
That does not mean that the Fed was perfect. A better estimate of the effects of Delta and then Omicron on LFPR and supply chain problems would have allowed the Fed to start dialing back monetary stimulus sooner, at least in September when the TIPS showed expectations of inflation rising. I agree with Powell, "hindsight says we should have moved earlier." And the rebound in expectations in December after having fallen in November indicates that the Fed needs to be seen as "doing something" to bring expectations down towards target.
Re: PlanC
I have been following the aircraft flying on the borders. A lot of military cargo, military passenger and spy planes. A Global Hawk is in the air constant as are air to air tankers. A lot of traffic into Rzeszow in south eastern Poland near Lviv. Lviv is only 100 road miles from Rzeszow. The fighting terrain around western Ukraine is perfect for defense. Lots of forests and hills.
To the west are the Carpathian's.
Perfect ambush country for road bound attackers. Defenders would chew the Russians to pieces.
I also saw an F16 flying on the Hungary Modova border. Very interesting.
I’ve been traveling quite a bit this week. Every airport is packed. I didn’t even know Des Moines HAD a satellite lot when I had to park. Des Moines! Denver was a zoo. People are spending like they are on spring break and don’t care what the price of Hurricanes at the beach bar cost. Disneyland and Disneyworld are booked solid. Hall reservations for marriages nearly back to prepandemic levels. I agree with Krugman, the disconnect between how people are acting and what they are telling pollsters about the economy is weird.