Brad, when you write: "Is that simply because I am not updating my beliefs fast enough in response to new data—especially to the news that is the OPEC+ price cut?" - did you mean OPEC+ -production- cut?
I'm continuing to slowly read the book (into the Cold War now), and that section of the history resonates with this point from the post:
"How reliable are the underlying historical examples and analogies? Not at all. Every generation, as I just said, face is the problem of building, Econo, social software code for humanity that will run on top of a brand new set of technologically enabled forces of production hardware."
You've used that analogy before (and it's a good one) and I've mostly heard it in terms of future shock -- the psychological and social stress of constant change. But reading about the world wars I find myself thinking of the (apocryphal) quote that, "[people] can always be relied upon to do the right thing — having first exhausted all possible alternatives." Humans learn by trial and error, and the section of the book I'm reading emphasizes that, as technology and globalization increase, business and governments wield and increasing amount of power to impact people's lives, and that the trial and error becomes more costly.
At the moment the lesson I am taking from it is a (small-c) conservative one. That we should remember there is rarely a straight line between intentions and outcomes, and that increasing power does not make that path any more direct.
I like Larry Summers, too. I worked for him sporadically at the Bank for a while and he’s at least 7 times 77 as smart as I, BUT he messed up his messaging in early 2021. The danger was that the Fed would not take steps soon enough to make temporary inflation temporary, NOT that the “stimulus” was too large and would cause inflation. And I do not like calling the Fed’s allowing inflation expectations to undershoot it target, “secular stagnation.”
Carter: Starting with “Starting with …” is a potpourri of obvious truths and nonsense.
When in the “neoliberal” epoch were deficits ever believed to be apocalyptic? The Original Sin of "neoliberalism" was the Reagan tax cuts + deficits, a sin that GWB and Trump eagerly emulated.
Maybe it was not the smartest people who abandoned the “orthodoxy” of free trade. 😊
Monetary policy is certainly not the “ideal or only appropriate tool for economic management” but it is for the management of macroeconomic aggregates, leaving fiscal policy to deal with allocation of resources between saving and investment and income distribution.
I’d have to agree with Carter that Powel’s press conference did not much advance the public's understanding of the Fed’s role as facilitating relative price adjustments or demonstrate his own.
Not to answer your question, I wish to again protest to giving almost exclusive (if not magical) important to the labor market. The Fed is supposed to be facilitating relative price changes when some prices do not adjust downwardly [or if we go full Liejonhufund the speed of adjustment of different prices differ]. Either way it's all the prices in the economy not just the prices of labor transactions that can fail to clear and the transaction not to occur.
But to answer your question, yes the Fed should not be announcing future movement of monetary policy instruments, ever, but especially not rate increases when TIPS shows that bond traders expect inflation to undershoot the target over 5 and 10 years. Too bad Janet hasn't let us figure out what the shorter term expectations are.
[BTW Matt Yglesias still has not explained the lack of shorter tenor TIPS but a knowledgeable sounding commentator on the Substack replied with the hypothesis that there would not be enough demand for the constellation of instruments for prices to be meaningful. ]
Brad, when you write: "Is that simply because I am not updating my beliefs fast enough in response to new data—especially to the news that is the OPEC+ price cut?" - did you mean OPEC+ -production- cut?
I'm continuing to slowly read the book (into the Cold War now), and that section of the history resonates with this point from the post:
"How reliable are the underlying historical examples and analogies? Not at all. Every generation, as I just said, face is the problem of building, Econo, social software code for humanity that will run on top of a brand new set of technologically enabled forces of production hardware."
You've used that analogy before (and it's a good one) and I've mostly heard it in terms of future shock -- the psychological and social stress of constant change. But reading about the world wars I find myself thinking of the (apocryphal) quote that, "[people] can always be relied upon to do the right thing — having first exhausted all possible alternatives." Humans learn by trial and error, and the section of the book I'm reading emphasizes that, as technology and globalization increase, business and governments wield and increasing amount of power to impact people's lives, and that the trial and error becomes more costly.
At the moment the lesson I am taking from it is a (small-c) conservative one. That we should remember there is rarely a straight line between intentions and outcomes, and that increasing power does not make that path any more direct.
I like Larry Summers, too. I worked for him sporadically at the Bank for a while and he’s at least 7 times 77 as smart as I, BUT he messed up his messaging in early 2021. The danger was that the Fed would not take steps soon enough to make temporary inflation temporary, NOT that the “stimulus” was too large and would cause inflation. And I do not like calling the Fed’s allowing inflation expectations to undershoot it target, “secular stagnation.”
Carter: Starting with “Starting with …” is a potpourri of obvious truths and nonsense.
When in the “neoliberal” epoch were deficits ever believed to be apocalyptic? The Original Sin of "neoliberalism" was the Reagan tax cuts + deficits, a sin that GWB and Trump eagerly emulated.
Maybe it was not the smartest people who abandoned the “orthodoxy” of free trade. 😊
Monetary policy is certainly not the “ideal or only appropriate tool for economic management” but it is for the management of macroeconomic aggregates, leaving fiscal policy to deal with allocation of resources between saving and investment and income distribution.
I’d have to agree with Carter that Powel’s press conference did not much advance the public's understanding of the Fed’s role as facilitating relative price adjustments or demonstrate his own.
Not to answer your question, I wish to again protest to giving almost exclusive (if not magical) important to the labor market. The Fed is supposed to be facilitating relative price changes when some prices do not adjust downwardly [or if we go full Liejonhufund the speed of adjustment of different prices differ]. Either way it's all the prices in the economy not just the prices of labor transactions that can fail to clear and the transaction not to occur.
But to answer your question, yes the Fed should not be announcing future movement of monetary policy instruments, ever, but especially not rate increases when TIPS shows that bond traders expect inflation to undershoot the target over 5 and 10 years. Too bad Janet hasn't let us figure out what the shorter term expectations are.
[BTW Matt Yglesias still has not explained the lack of shorter tenor TIPS but a knowledgeable sounding commentator on the Substack replied with the hypothesis that there would not be enough demand for the constellation of instruments for prices to be meaningful. ]