With better border control (which includes treating would-be immigrants with dignity and according to the law) we could have a better mix of skilled immigrants with visas and fewer unskilled immigrants without. Of course we could have more skilled immigrants immediately while the border is getting under better control.

Does Ms Ali Hirse just not like immigrants?

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Thoughts on the Brookings Conference

Blanchard-Bernanke: I take them to be saying that [at least they are consistent with] at first inflation was helpful in facilitating income maximizing changes in relative prices arising from price shocks but that afterward there was “overshooting” by other relative prices (wages?). This seems plausible. Given the information gleaned from the model, what should the Fed have done differently? [This in not the same as asking if they should in real time have had a model that would have enabled them to have done things differently, but that, too, is a question worth asking.]

Fruman: No hint of how/why inflation at any stage raises real GDP? (Tricks workers into accepting lower real wages a la pre-expectations Keynesianism?) Even accepting the monetary/fiscal policy => Real GDP & Inflation = NGDP, “monetary -fiscal” dodges the question of what should _monetary_ policy do given fiscal policy to return inflation to target when real GDP is maxed.

Clarissa: The Fed delay in raising rates in Nov 2021 (Sept 2021 when TIPS first exceeded target) was a tactical error, (shared by other central banks) not abandonment of FIAT framework. [Let’s take his word for it.] He hints (Or do I over interpret?) that the delay occurred because Powell announced in November to finish the taper before the hike. [I wish we could develop a consensus that the Fed should never announce instrument settings unconditional on future events in advance.]

Eggertson sheds light on the rate hike delay: “As late as the fourth quarter of 2021, the median forecasters—both FOMC and private sector—were expecting inflation to drop back from north of 5 percent in 2021 to the neighborhood of 2-1/2 percent in 2022. It wasn’t until March of 2022 that the Fed forecasters saw inflation moving up to over 4 percent in 2022”

I can’t prove it, but the Q42021 FMOC expectation looks really inconsistent with Q4 2021 TIPS _5 year_ expectation of 2.7-3.0%. [I wish we could develop a consensus that the Treasury should issue some intermediate tenor TIPS.]

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Blanchard and Bernanke, a fantastic read. Thanks! But page 38: "However, even as the effects of price shocks have waned, the effects of tight labor markets have begun to cumulate. Our decomposition shows that, as of early 2023, tight labor market conditions still accounted for a minority share of excess inflation. But according to our analysis, that share is likely to grow and will not subside on its own. The portion of inflation which traces its origin to overheating of labor markets can only be reversed by policy actions that bring labor demand and supply into better balance."

How might monetary policymakers accomplish a "better balance?" A lot of people retired during the pandemic. Businesses need to fill those vacancies somehow. On the labor demand side, businesses can stop hiring workers either by 1) slowing their business expansion plans (i.e. growth) and not filling up job vacancies, or by 2) continuing business expansion but by increasing the productivity of those already hired. (Anything else?). On the labor supply side, 1) increase the labor force participation rate; 2) improve the quality of workers so that one worker is as good as, say, two workers. (Anything else?). Can monetary policymakers directly address any of those things other than by raising interest rates so that growth stalls? If that's not a good place to be, then other policymakers need to step up. Encourage labor force participation as much as possible. Why isn't the media doing stories on how difficult it is to hire these days or how many jobs are available (just like they were doing stories daily about inflation some time ago)? They could do some public service once in a while.

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