Larry Summers Was Right (Rather, More Right þan Wrong), &

BRIEFLY NOTED: For 2022-05-02 Mo

FIRST: Larry Summers Was Right (Rather, More Right than Wrong):

Here we have a sectoral-rebalancing chart from Tim Duy of SGH Macro Advisors:

How did people ever expect we were going to wheel the economy away from producing in-person services and toward producing more goods without at least some inflation?

Did they expect deflation in service prices and wages? Seriously? To have demanded or expected that the Federal Reserve hold to its 2% inflation target during this economic-wheeling, sectoral-rebalancing recovery was not something I ever understood.

However, on Friday the 5=year 5-year forward inflation breakeven crossed my personal redline of 2.5%.

That moves, in my estimation, the balance of the probabilities to the position that it is more likely than not that the Federal Reserve should be tightening a little bit faster and further than it is, assuming that it is maintaining its 2% PCE inflation target. Just a little bit, mind you. So while I would not think a 75-basis point interest-rate hike this week would be a mistake, I would also be happy with a 50-basis point hike, and a raised eyebrow or two.

There is, on a deeper level, the question of whether the 2% PCE inflation target is appropriate. My strong belief is that it is not. “But we need to maintain our credibility” carries next to no weight with me as an argument. To make a credible commitment to continue to do stupid things when they are obviously stupid just because you said you would—that’s not the kind of credibility that you want. You want credibility of a very different kind: the confidence of markets that you will do the right thing and the smart thing.

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One Video:

Asianometry: Can You Do 7nm Chips Without EUV?: ‘Yes, but… <https://www.youtube.com/watch?v=Th4E-0VFaEA>:

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One Image:

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Very Briefly Noted:

• Liana Baker, Michelle F Davis, & Kurt Wagner: Elon Musk Plan for Twitter: Pitch Featured Job Cuts, Ways to Make Money<https://www.bloomberg.com/news/articles/2022-04-28/musk-s-twitter-pitch-featured-job-cuts-other-ways-to-make-money>

• Alan Crawford: China’s Europe Ties Fall Victim to Putin’s War <https://www.bloomberg.com/news/newsletters/2022-04-29/china-s-europe-ties-fall-victim-to-putin-s-war>

• John Huxtable Elliott: Richelieu and Olivares <https://archive.org/details/richelieuolivare0000elli/mode/1up>

• J. R. R. Tolkien: The Lord of the Rings: ’Eomer said, “How is a man to judge what to do in such times?” “As he has ever judged”, said Aragorn. “Good and evil have not changed since yesteryear, nor are they one thing among Elves and another among Men. It is a man’s part to discern them, as much in the Golden Wood as in his own house”… <https://whatsmyquote.com/quote/eomer-said-how-is-a-man-to-judge-what-to-do-in-such-times-as-he-has-ever-judged-said-aragorn-good-and-evil>

• David Marchese: Thomas Piketty Thinks America Is Primed for Wealth Redistribution<https://www.nytimes.com/interactive/2022/04/03/magazine/thomas-piketty-interview.html>

• Jeffrey Frankel: The West’s Energy Policy Can Be Geopolitical & Green: ‘It might be better for everyone if the fossil-fuel sector were to shrink worldwide. With Russia’s invasion of Ukraine prompting Western governments to devise energy policies that are both environmentally and geopolitically robust, that thought should help to concentrate minds… <https://www.project-syndicate.org/commentary/western-energy-policy-geopolitical-environmental-goals-by-jeffrey-frankel-2022-04>

• Laura Tyson & Daniel Weiss: Public-Private Decarbonization: ‘To keep global warming within 1.5°C, trillions of dollars more will need to be invested in clean energy production and infrastructure every year from now until 2050. While most of that will have to come from the private sector, governments must act as the seed funders and market makers… <https://www.project-syndicate.org/commentary/public-policy-catalyzes-clean-energy-private-investment-by-laura-tyson-and-daniel-weiss-1-2022-04>

• Clayton M. Christensen (2012): The New Church of Finance: Deeply Held Belief Systems & Complex Codes Must Be Changed: ‘Morris Chang, chairman of TSMC…. There is a simpler way to account for finances… more tons of money is better than less tons of money… <https://www.deseret.com/2012/12/9/20445386/clayton-m-christensen-the-new-church-of-finance-deeply-held-belief-systems-and-complex-codes-must-be>

• Aaron Erlich: Roots of the Resistance: Understanding National Identity in Ukraine <https://warontherocks.com/2022/04/roots-of-the-resistance-understanding-national-identity-in-ukraine/>

• Nina L. Khrushcheva: The Origins of Putin’s Totalitarianism <https://www.project-syndicate.org/commentary/origins-of-putin-totalitarianism-in-kgb-fsb-by-nina-l-khrushcheva-2022-04>

• Branko Milanovic: The Lessons & Implications of Seizing Russian Oligarchs’ Assets <https://glineq.blogspot.com/2022/04/the-lessons-and-implications-of-seizing.html>

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Twitter & ‘Stack:

• Charlie Sykes: “A Willingness To Do Harm”: ‘In the past… “the threat of economic damage acted as a brake on a governor’s willingness to use state power to attack his enemies…. This seems to cross a line…

"A Willingness To Do Harm"

• Josh Marshall: ’So in today’s commentary the new owner of Twitter started randomly telling his 80m followers people should definitely stop taking their psychiatric meds because otherwise they’re definitely going to kill themselves. And he looked over all that he had tweeted, & saw that it was good…

Josh Marshall @joshtpm

So in todays commentary the new owner of Twitter started randomly telling his 80m followers people shld definitely stop taking their psychiatric meds because otherwise they’re definitely going to kill themselves. And he looked over all that he had tweeted& saw that it was good.

• Matthew Yglesias: It’s Time to Raise Taxes on the Rich

It's time to raise taxes on the rich

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