Reality shows a "soft landing" in 2023 in the United States taking shape. We avoid a recession, we keep the job-full recovery, and inflation moves back down. Hawks, it's time to join us in reality.
Hi, a question on the inflation target. Going forward inflation may get structurally higher and volatile due to factors largely beyond the Fed's control (commodity, trade, supply chains, etc.). Wouldn't keeping the 2% target induce a structural contractionary bias to monetary policy? In this sense a higher target would make sense, and maybe would not harm the CB's credibility, not to mention the positive effect on debt dynamics. In other words, one could say that the 2% target was good for the world we saw in the 90s/00s but may not be fit for the 2020s. Thanks.
What are your thoughts on inflation being sticky? The higher end of inflation is easier to tame, but the closer we get to 2, the stickier inflation becomes. We are still estimated to be ABOVE 7 percent. Progress is great, but the job isn't close to being finished.
Thanks for the awesome post! Interested to hear your thoughts.
Lmao “the central bank’s credibility.” All they do is trade their fake credibility in pretending to be dumb while they rob us blind. The value of the Dollar was trashed in the first 100 years of the Fed. You can’t say that about the prior instance in that series—it’s steady value from 100 years prior to its establishment, with a brief hiccup during the Civil War (an era replete with banker cartel shenanigans).
The central banking system is the enslavement of all mankind and every involved party should incarcerated or hanged. They’re just running the same game they always do—look at their history. It’s hike into recession, cut into inflation, steal the country’s wealth, repeat.
With enormous respect, most workers are not living more safely with Covid, and the evidence will continue to demonstrate that over time. The illusion that Covid is mild and needs little or no mitigation in the workplace or elsewhere is now so firmly entrenched across political ideology that workers will get infected/re-infected and a portion of them will have long-term consequences that cost them their health and livelihoods, and will cost the economy. Transmission rates are high across the country, we are under-vaccinated, and mask wearing is anathema. There is mounting evidence for all of this, and we would be smart to begin to face it whole we still can. Apologies if I misunderstood the Covid references, but the most vulnerable workers are not able to live with Covid more safely if they are not fully informed, forced into unsafe working conditions, and have little to no income supports otherwise.
The inflation burden of proof has been there for a month or two IMO. But it's very hard not to see "the whites of their eyes" at this point, and back/ease off on the Fed's increasing "economic repression"... (Ironic usage intended.)
I'm with you 75%. It is extremally annoying to hear hitting the Fed's inflation target discussed in terms of how much _unemployment_ may or may not be "needed." There _is_ a question about how much inflation is needed, when and for how long to deal with shocks that require changed in relative prices in order to maintain full and efficient employment of _labor and other resources. And it -is- possible that bringing inflation ack down to 2% too quickly could not be enough inflation to maitain full employment. When the cops are chasing the robbers, it's possible that a pedestrian might get run over, but it would be crazy to talk about how many pedestrians "need" to be run over for the cops to catch the robbers. :)
I do hope that the Fed, once it had succeeded in getting inflation down, especially if unemployment did occur, WILL rethink whether 2% is the best target going forward if it thinks that economic shocks will be greater in the future than in thee past.
I also wish that the Fed had more market indicators f inflation expectations like TIPS available for intermediate tenors. Couldn't the Fed whisper in the Treasurys ear with that request? :)
Hi, a question on the inflation target. Going forward inflation may get structurally higher and volatile due to factors largely beyond the Fed's control (commodity, trade, supply chains, etc.). Wouldn't keeping the 2% target induce a structural contractionary bias to monetary policy? In this sense a higher target would make sense, and maybe would not harm the CB's credibility, not to mention the positive effect on debt dynamics. In other words, one could say that the 2% target was good for the world we saw in the 90s/00s but may not be fit for the 2020s. Thanks.
What are your thoughts on inflation being sticky? The higher end of inflation is easier to tame, but the closer we get to 2, the stickier inflation becomes. We are still estimated to be ABOVE 7 percent. Progress is great, but the job isn't close to being finished.
Thanks for the awesome post! Interested to hear your thoughts.
Lmao “the central bank’s credibility.” All they do is trade their fake credibility in pretending to be dumb while they rob us blind. The value of the Dollar was trashed in the first 100 years of the Fed. You can’t say that about the prior instance in that series—it’s steady value from 100 years prior to its establishment, with a brief hiccup during the Civil War (an era replete with banker cartel shenanigans).
The central banking system is the enslavement of all mankind and every involved party should incarcerated or hanged. They’re just running the same game they always do—look at their history. It’s hike into recession, cut into inflation, steal the country’s wealth, repeat.
With enormous respect, most workers are not living more safely with Covid, and the evidence will continue to demonstrate that over time. The illusion that Covid is mild and needs little or no mitigation in the workplace or elsewhere is now so firmly entrenched across political ideology that workers will get infected/re-infected and a portion of them will have long-term consequences that cost them their health and livelihoods, and will cost the economy. Transmission rates are high across the country, we are under-vaccinated, and mask wearing is anathema. There is mounting evidence for all of this, and we would be smart to begin to face it whole we still can. Apologies if I misunderstood the Covid references, but the most vulnerable workers are not able to live with Covid more safely if they are not fully informed, forced into unsafe working conditions, and have little to no income supports otherwise.
please don't cry...You're right, you're so right!...please...don't
I agree with almost everything you have said except for your faith in the Fed not overdoing the tightening.
I sure hope I'm wrong on that and you're right!
OK 80%? :)
Very good post, thanks.
The inflation burden of proof has been there for a month or two IMO. But it's very hard not to see "the whites of their eyes" at this point, and back/ease off on the Fed's increasing "economic repression"... (Ironic usage intended.)
https://twitter.com/asymptosis/status/1599089440257110016
I'm with you 75%. It is extremally annoying to hear hitting the Fed's inflation target discussed in terms of how much _unemployment_ may or may not be "needed." There _is_ a question about how much inflation is needed, when and for how long to deal with shocks that require changed in relative prices in order to maintain full and efficient employment of _labor and other resources. And it -is- possible that bringing inflation ack down to 2% too quickly could not be enough inflation to maitain full employment. When the cops are chasing the robbers, it's possible that a pedestrian might get run over, but it would be crazy to talk about how many pedestrians "need" to be run over for the cops to catch the robbers. :)
I do hope that the Fed, once it had succeeded in getting inflation down, especially if unemployment did occur, WILL rethink whether 2% is the best target going forward if it thinks that economic shocks will be greater in the future than in thee past.
I also wish that the Fed had more market indicators f inflation expectations like TIPS available for intermediate tenors. Couldn't the Fed whisper in the Treasurys ear with that request? :)