& yet it seems to be beyond him to do that? I mean, the principal thing that even an obsequious Professional Republican economist should be doing right now is pushing Trump to end the tariff chaos...
You need to invent a term (as emotionally effective as Chaos Monkey) to describe people who discard a lifetime of principle (including wrong ones like the Laffer curve) to bend the knee. Quisling is accurate but not as emotionally satisfying. Defectors? Koolaiders? (except no one believes they believe their statements.
It's like the 2+2=5 sequence in 1984. Perhaps Fivers except it's too obscure.
> Marc Sobel: You need to invent a term (as emotionally effective as Chaos Monkey) to describe people who discard a lifetime of principle (including wrong ones like the Laffer curve) to bend the knee. Quisling is accurate but not as emotionally satisfying. Defectors? Koolaiders? (except no one believes they believe their statements. It's like the 2+2=5 sequence in 1984. Perhaps Fivers except it's too obscure...
> Marc Sobel: Question? Will kids-these-days recognize Star Trek TNG allusions?
> > Me: Perhaps: "they now claim they see five lights"?
> > > Marc Sobel: You need to invent a term (as emotionally effective as Chaos Monkey) to describe people who discard a lifetime of principle (including wrong ones like the Laffer curve) to bend the knee. Quisling is accurate but not as emotionally satisfying. Defectors? Koolaiders? (except no one believes they believe their statements. It's like the 2+2=5 sequence in 1984. Perhaps Fivers except it's too obscure...
Bank regulation may turn out to be at least as important as interest rates. Bank capital requirements will be de facto lowered, resulting in more share repurchases. The only part of bank lending that is growing is loans to shadow banks (non-depository financial...). For banks, lower Fed Funds may merely generate more leverage on private credit.
The Fed, along with other regulatory agencies, will cheer on the golden age of fraud. This won't be from a Greenspan-type free market ideology, but from sheer corruption. Fraud is worse than credit failures because the collateral tends to be worthless, and it undermines confidence in large swathes of the financial system.
I miss “secular stagnation”, low interest rates, low inflation, saving money by having to pay less for the federal debt.
I remember the low CD rates. I would like to know what these higher interest CD’s are loaned out for, and what they get in interest rates. I am benefitting from the higher interest rate, but I don’t think it is a good thing for making family loans to family businesses.
It’s easy to fall into an analytic mode that assumes there is a rational policy shop in the White House. If there’s such a thing as non-rational policy this administration cannot clear even that bar. TACO came from the trading floor, where all analysis boils down to buy, sell, or hold.
To be useful, any analysis needs to begin by acknowledging that there is no policy, that Trump can continue to issue these performative tariff threats indefinitely. Lately he doesn’t even bother to send out these threats under official letterhead.
At Trump’s core is a need to dominate, like a 5th grade bully. Anybody have ideas about how to disarm an overgrown 5th grade bully?
That’s a sentence I’d like to rewrite. Of course he can—and will—issue these performative threats indefinitely. Being able to issue these threats and receive attention worldwide is one of the prime attractions in being president for him.
On the other hand, the collective information gathering forces of the U.S. government combine to produce the Presidential Daily Brief. It’s ambrosia for the curious but he can’t be bothered.
How does policy "... look through tariff effects and focus on underlying inflation" when the only possible effect of Trump's tariffs vs to drive prices. upward?
"Governor Adriana Kugler said 'the US central bank should keep holding interest rates steady_for some time,_ citing accelerating inflation as tariffs start to boost prices.
This gets it exactly backwards. It's _because_ tariffs are starting t boost prices of tariffed goods and their substitutes, that the Fed needs to make sure the average average price level rises enough to allow the relative prices of those items to increase without putting pressure to reduce nominal prices of any downwardly sticky nominal price good or services.
Now maybe current instrument settings DO allow enough inflation and that no adjustment is needed. Kubler and Waller should talk out how much (more?) inflation is desirable.
"Hence the prudent thing, the professional central-banker thing, the work-for-the-American-people-rather-than-for-your-political-masters thing for the Fed to do is to stand pat, for now."
I think that Waller should have said that the tariff increases constitute a negative supply shock and that rather than wait for that to push so many markets out of equilibrium that resource employment is diminished, the Fed should crank up a bit of temporary inflation assuming that the tariff raising episode is over. [If not it should cross that bridge when it comes to it.] Consequently it should cut the EFFR rate by 25 bp (not to zero as _some_ have suggested) at the next meeting.
That ought not to further spook expectations, which are already over target, anyway.
I chuckled a bit while reading his advice to "look through" the tariffs. Which ones? The ones already in place, which differ from the ones first proposed, or the ones presumed to come into effect in 2 weeks or the additional ones imposed whenever some foreign leader tries to prosecute a budding authoritarian.
But I digress.
On the topic, should monetary policy consider the large and growing stock of foreign portfolio investment or just assume what it good domestically will suffice for external investors?
I ask having gone through the T.I.C. data yesterday. In aggregate, $32.4T total of which UST $8.1T, Corporate Bonds $4.8T and Corporate equity $18.6T (the latter amplified by valuation gains).
That's a lot of hot money.
* Notable individual nations in light of the trade/tariff war: Japan $2.7T, $1.1T in equity; Singapore $1T, $687B ($500B GDP)
You need to invent a term (as emotionally effective as Chaos Monkey) to describe people who discard a lifetime of principle (including wrong ones like the Laffer curve) to bend the knee. Quisling is accurate but not as emotionally satisfying. Defectors? Koolaiders? (except no one believes they believe their statements.
It's like the 2+2=5 sequence in 1984. Perhaps Fivers except it's too obscure.
Anyhow I look to your muse.
Perhaps: "they now claim they see five lights"?
> Marc Sobel: You need to invent a term (as emotionally effective as Chaos Monkey) to describe people who discard a lifetime of principle (including wrong ones like the Laffer curve) to bend the knee. Quisling is accurate but not as emotionally satisfying. Defectors? Koolaiders? (except no one believes they believe their statements. It's like the 2+2=5 sequence in 1984. Perhaps Fivers except it's too obscure...
Question? Will kids-these-days recognize Star Trek TNG allusions?
No.
> Marc Sobel: Question? Will kids-these-days recognize Star Trek TNG allusions?
> > Me: Perhaps: "they now claim they see five lights"?
> > > Marc Sobel: You need to invent a term (as emotionally effective as Chaos Monkey) to describe people who discard a lifetime of principle (including wrong ones like the Laffer curve) to bend the knee. Quisling is accurate but not as emotionally satisfying. Defectors? Koolaiders? (except no one believes they believe their statements. It's like the 2+2=5 sequence in 1984. Perhaps Fivers except it's too obscure...
https://www.youtube.com/watch?v=jk3EsXgXcyQ
Bank regulation may turn out to be at least as important as interest rates. Bank capital requirements will be de facto lowered, resulting in more share repurchases. The only part of bank lending that is growing is loans to shadow banks (non-depository financial...). For banks, lower Fed Funds may merely generate more leverage on private credit.
The Fed, along with other regulatory agencies, will cheer on the golden age of fraud. This won't be from a Greenspan-type free market ideology, but from sheer corruption. Fraud is worse than credit failures because the collateral tends to be worthless, and it undermines confidence in large swathes of the financial system.
I miss “secular stagnation”, low interest rates, low inflation, saving money by having to pay less for the federal debt.
I remember the low CD rates. I would like to know what these higher interest CD’s are loaned out for, and what they get in interest rates. I am benefitting from the higher interest rate, but I don’t think it is a good thing for making family loans to family businesses.
It’s easy to fall into an analytic mode that assumes there is a rational policy shop in the White House. If there’s such a thing as non-rational policy this administration cannot clear even that bar. TACO came from the trading floor, where all analysis boils down to buy, sell, or hold.
To be useful, any analysis needs to begin by acknowledging that there is no policy, that Trump can continue to issue these performative tariff threats indefinitely. Lately he doesn’t even bother to send out these threats under official letterhead.
At Trump’s core is a need to dominate, like a 5th grade bully. Anybody have ideas about how to disarm an overgrown 5th grade bully?
Why can't Trump keep issuing performative tariff threats indefinitely?
That’s a sentence I’d like to rewrite. Of course he can—and will—issue these performative threats indefinitely. Being able to issue these threats and receive attention worldwide is one of the prime attractions in being president for him.
On the other hand, the collective information gathering forces of the U.S. government combine to produce the Presidential Daily Brief. It’s ambrosia for the curious but he can’t be bothered.
How does policy "... look through tariff effects and focus on underlying inflation" when the only possible effect of Trump's tariffs vs to drive prices. upward?
"Governor Adriana Kugler said 'the US central bank should keep holding interest rates steady_for some time,_ citing accelerating inflation as tariffs start to boost prices.
This gets it exactly backwards. It's _because_ tariffs are starting t boost prices of tariffed goods and their substitutes, that the Fed needs to make sure the average average price level rises enough to allow the relative prices of those items to increase without putting pressure to reduce nominal prices of any downwardly sticky nominal price good or services.
Now maybe current instrument settings DO allow enough inflation and that no adjustment is needed. Kubler and Waller should talk out how much (more?) inflation is desirable.
"Hence the prudent thing, the professional central-banker thing, the work-for-the-American-people-rather-than-for-your-political-masters thing for the Fed to do is to stand pat, for now."
I think that Waller should have said that the tariff increases constitute a negative supply shock and that rather than wait for that to push so many markets out of equilibrium that resource employment is diminished, the Fed should crank up a bit of temporary inflation assuming that the tariff raising episode is over. [If not it should cross that bridge when it comes to it.] Consequently it should cut the EFFR rate by 25 bp (not to zero as _some_ have suggested) at the next meeting.
That ought not to further spook expectations, which are already over target, anyway.
I chuckled a bit while reading his advice to "look through" the tariffs. Which ones? The ones already in place, which differ from the ones first proposed, or the ones presumed to come into effect in 2 weeks or the additional ones imposed whenever some foreign leader tries to prosecute a budding authoritarian.
But I digress.
On the topic, should monetary policy consider the large and growing stock of foreign portfolio investment or just assume what it good domestically will suffice for external investors?
I ask having gone through the T.I.C. data yesterday. In aggregate, $32.4T total of which UST $8.1T, Corporate Bonds $4.8T and Corporate equity $18.6T (the latter amplified by valuation gains).
That's a lot of hot money.
* Notable individual nations in light of the trade/tariff war: Japan $2.7T, $1.1T in equity; Singapore $1T, $687B ($500B GDP)