The bond-market canary's plumage is still lustrous!; secular stagnation is likely to return; John Stuart Mill & Harriet Taylor; avoiding neighborhood blight via immigration; Tressie McMillan Cottom &
The Fed's own staff suggested that the tightening of credit in the Senior Loan Officer's Survey may be equivalent to about 100 bps of additional increases in the Fed Funds rate. And that has barely begun to bite. No wonder the bond market is saying what it is saying. It is noteworthy, however, that the future Fed Funds rate cuts priced by the bond market likely reflect the mean/average of a distribution at each point the market expects the rate to be cut. The distribution around this mean, I strongly suspect, has a negative skew, skewed toward lower rates. In negatively skewed distributions, mean < median < mode. Inference: the modal value of the distribution expects fewer Fed Funds rate cuts than what the bond market chatter heads on TV keep saying. Meanwhile, the people you cite, quite amazingly for some of them (given their prior jobs), choose to ignore all of that evidence, which is what we really have about a future scenario (as you correctly point out). I don't know what to say about the things they are conjuring up to justify a policy action. Don Quixote at the windmills? It is one thing to give an informed recommendation, but quite another to make up word salads describing all manner of future Armageddons on which the Fed should act now. Why does this pass for policy advise? It very much reminds me of Very Serious People, who wanted fiscal austerity now just because they projected all manner of bad things happening in the future.
I'm awfully glad for a voice of sanity in the inflation debate. I'm very fearful that the Fed will not accept yes for an answer to the question, are inflation and expectations of inflation well controlled? The institutional design off the Fed insures regulatory capture by bankers.
I don't recognize all of your inflation names. Some, I know, are economists. But El-Erian and O'Neill, at least, are wealthy professional investors. So if they think TIPS are cheap, they're backing up the truck, right? Right?
The last time CPI declined in nine consecutive months (excluding months where it was unchanged in the sequence) was 1975 and if the CPI continues to decline over 10 straight months we are back to 1921.
The Fed's own staff suggested that the tightening of credit in the Senior Loan Officer's Survey may be equivalent to about 100 bps of additional increases in the Fed Funds rate. And that has barely begun to bite. No wonder the bond market is saying what it is saying. It is noteworthy, however, that the future Fed Funds rate cuts priced by the bond market likely reflect the mean/average of a distribution at each point the market expects the rate to be cut. The distribution around this mean, I strongly suspect, has a negative skew, skewed toward lower rates. In negatively skewed distributions, mean < median < mode. Inference: the modal value of the distribution expects fewer Fed Funds rate cuts than what the bond market chatter heads on TV keep saying. Meanwhile, the people you cite, quite amazingly for some of them (given their prior jobs), choose to ignore all of that evidence, which is what we really have about a future scenario (as you correctly point out). I don't know what to say about the things they are conjuring up to justify a policy action. Don Quixote at the windmills? It is one thing to give an informed recommendation, but quite another to make up word salads describing all manner of future Armageddons on which the Fed should act now. Why does this pass for policy advise? It very much reminds me of Very Serious People, who wanted fiscal austerity now just because they projected all manner of bad things happening in the future.
I'm awfully glad for a voice of sanity in the inflation debate. I'm very fearful that the Fed will not accept yes for an answer to the question, are inflation and expectations of inflation well controlled? The institutional design off the Fed insures regulatory capture by bankers.
The 2% inflation rate is the Fed's White Whale. Like Captain Ahab, they are willing to destroy the economy in pursuit of it.
I don't recognize all of your inflation names. Some, I know, are economists. But El-Erian and O'Neill, at least, are wealthy professional investors. So if they think TIPS are cheap, they're backing up the truck, right? Right?
The last time CPI declined in nine consecutive months (excluding months where it was unchanged in the sequence) was 1975 and if the CPI continues to decline over 10 straight months we are back to 1921.