Ballad of Lucy Gray Baird; Andromeda Galaxy; very briefly noted; & reflections on "Team Transitory", trying to think about GPT-LLM-ML, SubStackers vs. Nazis, & BRIEFLY NOTED: For 2023-12-13 We...
Summers: I don’t think Summers is being as helpful as he could be in taking stock of past discussion of monetary policy as he could be. HIS earliest warnings were of too large fiscal deficits, NOT of the Fed waiting too long before starting to bring inflation that was temporarily in excess of target, back to target. Referring to Fed errors that he did not call as errors in real time shows poor grace, even if they WERE errors. He correctly points out that the Fed has not managed to reduce inflation from above target to target without recession in a coon’s age, but gives absolutely no indication of why he thinks this time could not be different.
Strain: I guess it’s fortunate that people did not “drip enough envy” that decrease in inequality after 2007 led them to ignore their own situation. But ultimately, so what? We need large increases in revenues to reduce our growth-inhibiting budget deficits (that shift the terms of trade against tradeables). Where should a disproportionate part come from? From the beneficiaries of the Regan, GWB, and Ryan-Trump tax cuts for the rich and deficits acts.
Wolfers: Vague as it is, there is probably little harm done, I’m deeply distrustful of the Fed speculating about its future actions via the “dot plots,” without specifying what future observations of what data would lead the Fed to choose those interest rates as most appropriate to achieving its targets.
Team Transitory policy advice: Never very clear. I think Team Transitory had the right diagnosis, that inflation was needed to allow the economy to adjust to sectoral shocks, NOT to reduce real wages pushed up by a “wage price (expectations) spiral.” That correct diagnosis did not, however, give precise policy guidance about how long over target inflation should be allowed to continue and how rapidly it should be brough back to target.
Summers: I don’t think Summers is being as helpful as he could be in taking stock of past discussion of monetary policy as he could be. HIS earliest warnings were of too large fiscal deficits, NOT of the Fed waiting too long before starting to bring inflation that was temporarily in excess of target, back to target. Referring to Fed errors that he did not call as errors in real time shows poor grace, even if they WERE errors. He correctly points out that the Fed has not managed to reduce inflation from above target to target without recession in a coon’s age, but gives absolutely no indication of why he thinks this time could not be different.
Strain: I guess it’s fortunate that people did not “drip enough envy” that decrease in inequality after 2007 led them to ignore their own situation. But ultimately, so what? We need large increases in revenues to reduce our growth-inhibiting budget deficits (that shift the terms of trade against tradeables). Where should a disproportionate part come from? From the beneficiaries of the Regan, GWB, and Ryan-Trump tax cuts for the rich and deficits acts.
Wolfers: Vague as it is, there is probably little harm done, I’m deeply distrustful of the Fed speculating about its future actions via the “dot plots,” without specifying what future observations of what data would lead the Fed to choose those interest rates as most appropriate to achieving its targets.
Team Transitory policy advice: Never very clear. I think Team Transitory had the right diagnosis, that inflation was needed to allow the economy to adjust to sectoral shocks, NOT to reduce real wages pushed up by a “wage price (expectations) spiral.” That correct diagnosis did not, however, give precise policy guidance about how long over target inflation should be allowed to continue and how rapidly it should be brough back to target.
Upvoted for the Ballad of Lucy Gray Baird. My grandfather's favorite song was Streets of Laredo.
Ballad of Lucy Gray: 👍👍