"Claiming that it will keep raising interest rates until after there are clear signs that the labor market is in a substantial downturn is a recipe for subsequent panicked cutting of interest rates back to the zero lower bound, after which the Federal Reserve will have next to no traction to boost the economy, and the chances of a rapid return to full employment will then be very bad:"
Personally, I read the constant banging of the inflation panic drum, which essentially kicked off as soon as it became obvious Biden would be sworn in, as attempting a restoration of the previous secular stagnation regime. Which has obvious benefits for insane & insanely wealthy rich guys: they get bailed out (with no penalty! & no strings attached!) if their idiot financial bets go bad, while their labor costs are kept artificially low, and they get a constant supply of fresh dollars pumped into the market via 'market support'. Why wouldn't they want to go back to that? Aside from the policy doing serious social damage, pissing everyone off, and retarding overall growth. They can escape to their private island, or their former missile silo in Kansas, while society collapses because of said policy! They win! They'll be the richest people in the post-apocalyptic world!
(Does that sound insane to you? Because it seems pretty insane to me, but yet, that's what those guys say/imply all the time: he who dies with the most toys wins. ...wins what? The booby prize in hell?)
I am sticking to my previous position: secular stagnation is not a thing that falls out the sky, it's the result of too restrictive monetary policy. The struggle over economics is a struggle over the social order, because people focused on the most growth would not run such a policy because it demonstrably *does* *not* *provide* *the* *promised* *results* (faster growth for one). It didn't when the same policy was called the gold standard and it won't now, either.
"There are consequences to choosing to have a Republican Worthy—even a highly competent one—rather than a sensible macroeconomist at the head of the Fed."
Powell tends to pick a direction and go too hard at it for too long. He also obviously is keen on what the market thinks (the markets think the Fed should do whatever is necessary to increase market returns, the actions preferred being whatever bug the rich guys have up their butts about this quarter). I guess this means we're in agreement that if another Democrat is elected President with a trifecta that they should appoint Democrats to the key jobs instead of trying to appease unappeasable right-wingers because that never works out?
I was not enlightened about why teachers and nurses and child care workers are leaving their jobs. I get that wages in alternative lines of work may have gone up faster, but why is THAT? childcare centers, hospitals and schools have increased their monopsony power? But how? The article really needed a supply and demand curve graph.
I know the author is not stupid, but does seem never to have been near an economist. [Doubly odd since Ezra Klein does have pretty good economic instincts]
It looks to me like the Fed mad a mistake in Sept 2021 in not heeding the TIPS market that expected it to overshoot its target. Today TIPS seems to be saying that it now expects it to undershoot. Avoiding recession while getting inflation back down to target is hard enough. It will be just about impossible if it undershoots. Of course it would be good if Treasury would provide us with more markets for making expectations explicit are more tenors.
Matt did not take my mailbag question, so we still do not understand the political economy of the Treasurys' odd decision. :) Milan is running nest week's mailbag so I'll ask him He actually does go ut and interview people sometimes, so who know?
A guy from Scott Alexander's blog says that you can get intermediate tenor of inflation expectations from TIPS secondary markets. I guess it could work in theory but are the markets big enough and thick enough?
So far, conservative opposition to YIMBY-ism seems more rhetorical than real? In practice, Republican lawmakers like developers and the Chamber of Commerce, and thus end being pro-building.
There might be a gap between local and state level parties on this issue.
"Claiming that it will keep raising interest rates until after there are clear signs that the labor market is in a substantial downturn is a recipe for subsequent panicked cutting of interest rates back to the zero lower bound, after which the Federal Reserve will have next to no traction to boost the economy, and the chances of a rapid return to full employment will then be very bad:"
Personally, I read the constant banging of the inflation panic drum, which essentially kicked off as soon as it became obvious Biden would be sworn in, as attempting a restoration of the previous secular stagnation regime. Which has obvious benefits for insane & insanely wealthy rich guys: they get bailed out (with no penalty! & no strings attached!) if their idiot financial bets go bad, while their labor costs are kept artificially low, and they get a constant supply of fresh dollars pumped into the market via 'market support'. Why wouldn't they want to go back to that? Aside from the policy doing serious social damage, pissing everyone off, and retarding overall growth. They can escape to their private island, or their former missile silo in Kansas, while society collapses because of said policy! They win! They'll be the richest people in the post-apocalyptic world!
(Does that sound insane to you? Because it seems pretty insane to me, but yet, that's what those guys say/imply all the time: he who dies with the most toys wins. ...wins what? The booby prize in hell?)
I am sticking to my previous position: secular stagnation is not a thing that falls out the sky, it's the result of too restrictive monetary policy. The struggle over economics is a struggle over the social order, because people focused on the most growth would not run such a policy because it demonstrably *does* *not* *provide* *the* *promised* *results* (faster growth for one). It didn't when the same policy was called the gold standard and it won't now, either.
"There are consequences to choosing to have a Republican Worthy—even a highly competent one—rather than a sensible macroeconomist at the head of the Fed."
Powell tends to pick a direction and go too hard at it for too long. He also obviously is keen on what the market thinks (the markets think the Fed should do whatever is necessary to increase market returns, the actions preferred being whatever bug the rich guys have up their butts about this quarter). I guess this means we're in agreement that if another Democrat is elected President with a trifecta that they should appoint Democrats to the key jobs instead of trying to appease unappeasable right-wingers because that never works out?
elm
i mean, it's a thought
Tooze, all too often, seems more interested in showing how smart HE is that the actually analysis suffers. What if the cigar is just a cigar?
I was not enlightened about why teachers and nurses and child care workers are leaving their jobs. I get that wages in alternative lines of work may have gone up faster, but why is THAT? childcare centers, hospitals and schools have increased their monopsony power? But how? The article really needed a supply and demand curve graph.
I know the author is not stupid, but does seem never to have been near an economist. [Doubly odd since Ezra Klein does have pretty good economic instincts]
It looks to me like the Fed mad a mistake in Sept 2021 in not heeding the TIPS market that expected it to overshoot its target. Today TIPS seems to be saying that it now expects it to undershoot. Avoiding recession while getting inflation back down to target is hard enough. It will be just about impossible if it undershoots. Of course it would be good if Treasury would provide us with more markets for making expectations explicit are more tenors.
Matt did not take my mailbag question, so we still do not understand the political economy of the Treasurys' odd decision. :) Milan is running nest week's mailbag so I'll ask him He actually does go ut and interview people sometimes, so who know?
A guy from Scott Alexander's blog says that you can get intermediate tenor of inflation expectations from TIPS secondary markets. I guess it could work in theory but are the markets big enough and thick enough?
So far, conservative opposition to YIMBY-ism seems more rhetorical than real? In practice, Republican lawmakers like developers and the Chamber of Commerce, and thus end being pro-building.
There might be a gap between local and state level parties on this issue.