Thursday, September 17, 2015
Fed Hysteria
Check out this quote from Daniel Henninger in today's WSJ:
"Not least, the future of the slow-growth, anxiety-producing American economy is in the hands of one nice lady named Janet Yellen, who presides over what is literally a central-bank black box. Crazy."
People this is indeed crazy. Also ridiculous, untrue, ignorant, etc.
Repeat after me, the FED does NOT control the real growth rate of economy!
(In fact it barely influences it).
Then as a corollary try this, The FED chair is NOT the dictator of the FED and the FED is NOT independent of politics.
There is a boatload of academic research supporting all three of these points.
But America is gripped by this weird cult of personality view of economic events. The Volcker recession, Alan Greenspan; The Maestro, the Greenspan (and Bernanke) put.
The FED chair is NOT steering the American Economy.
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4 comments:
The fed does not control the real growth rate, but it does absolutely control the nominal growth rate. Given that prices and wages and debts in the actual economy are denominated in nominal dollars, there is plenty of potential for unexpected swings in the nominal growth rate to do tremendous damage to the real growth rate.
Political elections is: one man, one vote.
But there are men who don't want to vote, and men who want to vote more than once.
The FED is just one of the many ways devised to vote more than once, and with different time and space coordinates.
A so-called economics "professor" thinks stickiness does not matter.
Do the world a favour and pick an occupation more suitable to your intellectual level.
Like football punditry. Or street sweeping.
Ah, another brave anonymous critic. I surely don't think stickiness matters over a 7 year horizon. Even the Calvo fairy will pretty much get everybody adjusted in that time period.
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