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By Scott Sumner
Here's Tyler Cowen: The Fed thus could make an error on either side of its target, through no procedural fault of its own. As a result, as a simple matter of logic, the rate of price inflation could be too high, or it also could be too low. if you think you know the direction of the error in advance, you aren’t paying enough attention to the underlying unpredictable uncertainties. If by "know" Tyler means, "know with certainty" then he...
NBA fans occasionally come up with fanciful trade proposals---say Trae Young for Zion Williamson---and then ask, "Who says no?" The basic idea is that if your trade proposal is clever enough then neither side will say no. Commenters occasionally tell me that the US must...
I second that. I believe that the US got to 11 or 12% unemployment in 1982, but was back down to 7% by the end of 1984. The simplest way to think about is via market expectations; the market doesn’t think that inflation will pick up after the pandemic is over, which is exactly what you would expect if the Fed were pursuing a policy of tight money. Because really, after the pandemic there should be a burst of inflation and hiring as people all over the world celebrate by taking trips, going to restaurants, concerts, movies, etc, etc. The market doesn’t seem to think that the Fed will let that happen.
P Burgos , May 24, 8:06 pm.
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