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We need to increase government spending

ResponsiblyIrresponsible
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4/21/2015 12:53:55 AM
Posted: 1 year ago
At 4/21/2015 12:27:43 AM, Benshapiro wrote:
It'll help the economy

I had a giant post (which no one actually read) explaining why that would in fact be a terrible idea: (http://www.debate.org...).

For further reading, see David Beckworth: (http://macromarketmusings.blogspot.com...)

And Scott Sumner: http://mercatus.org...

But, the bottom line is that fiscal policy is offset by monetary policy, so it accomplishes nothing more than raises expectations of future taxes; it can't actually shift the AD curve any more than the Fed would have, anyway.
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Benshapiro
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4/21/2015 1:07:52 AM
Posted: 1 year ago
At 4/21/2015 12:53:55 AM, ResponsiblyIrresponsible wrote:
At 4/21/2015 12:27:43 AM, Benshapiro wrote:
It'll help the economy

I had a giant post (which no one actually read) explaining why that would in fact be a terrible idea: (http://www.debate.org...).

For further reading, see David Beckworth: (http://macromarketmusings.blogspot.com...)

And Scott Sumner: http://mercatus.org...

But, the bottom line is that fiscal policy is offset by monetary policy, so it accomplishes nothing more than raises expectations of future taxes; it can't actually shift the AD curve any more than the Fed would have, anyway.

Why was it so helpful in getting us out of the Great Depression then?
ResponsiblyIrresponsible
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4/21/2015 4:14:05 AM
Posted: 1 year ago
At 4/21/2015 1:07:52 AM, Benshapiro wrote:
At 4/21/2015 12:53:55 AM, ResponsiblyIrresponsible wrote:
At 4/21/2015 12:27:43 AM, Benshapiro wrote:
It'll help the economy

I had a giant post (which no one actually read) explaining why that would in fact be a terrible idea: (http://www.debate.org...).

For further reading, see David Beckworth: (http://macromarketmusings.blogspot.com...)

And Scott Sumner: http://mercatus.org...

But, the bottom line is that fiscal policy is offset by monetary policy, so it accomplishes nothing more than raises expectations of future taxes; it can't actually shift the AD curve any more than the Fed would have, anyway.

Why was it so helpful in getting us out of the Great Depression then?

You may want to read the read, first of all. I never made the case that fiscal stimulus was incapable of boosting RGDP, but only that monetary policy is significantly more effective -- and that any fiscal multiplier is a sign of incompetence. Clearly, monetary policy was far too tight throughout most of the Depression.

Second, you're wrong on the facts. This paper by Christina Romer -- an Obama advisor, mind you -- found that nearly *all* of the gains came from monetary stimulus, not fiscal policy.

http://eml.berkeley.edu...
~ResponsiblyIrresponsible

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LETeller
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4/29/2015 10:41:47 PM
Posted: 1 year ago
I had a giant post (which no one actually read) explaining why that would in fact be a terrible idea: (http://www.debate.org...).


- Read it.

For further reading, see David Beckworth: (http://macromarketmusings.blogspot.com...)


- Nothing to do with fiscal policy.

And Scott Sumner: http://mercatus.org...


- Very unimpressive. Assumes one for one linkage between inflation and all government spending. Unless you are an Austrian and define inflation in their odd way, there's no logical or empirical evidence for that.

But, the bottom line is that fiscal policy is offset by monetary policy, so it accomplishes nothing more than raises expectations of future taxes; it can't actually shift the AD curve any more than the Fed would have, anyway.


- How does that happen? Is that the monetarist argument or Ricardian equivalence?

If the latter, how did that equivalence work out for you as Bush tripled the debt and lowered taxes, yet savings rates went negative? I think we can dispense with the omniscient, planning-for-a-lifetime American myth.

If the former, how do you explain the past seven years?

You may want to read the read, first of all. I never made the case that fiscal stimulus was incapable of boosting RGDP, but only that monetary policy is significantly more effective -- and that any fiscal multiplier is a sign of incompetence. Clearly, monetary policy was far too tight throughout most of the Depression.: : :

- If your argument is that the monetary supply effects of spending would trigger inflation which would in turn trigger an offsetting monetary response, and the only thing a central bank can do is to increase the money supply, which in your estimation ought to trigger the same inflation and the same central bank response, how do you escape that circle?

Second, you're wrong on the facts. This paper by Christina Romer -- an Obama advisor, mind you -- found that nearly *all* of the gains came from monetary stimulus, not fiscal policy. : :

- Romer? Oh, well that sure sounds tempting, but why would I care what Romer thinks? What has she been right about that you feel is worth paying attention to?
ResponsiblyIrresponsible
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4/29/2015 10:59:47 PM
Posted: 1 year ago
At 4/29/2015 10:41:47 PM, LETeller wrote:
I had a giant post (which no one actually read) explaining why that would in fact be a terrible idea: (http://www.debate.org...).


- Read it.

K.

For further reading, see David Beckworth: (http://macromarketmusings.blogspot.com...)


- Nothing to do with fiscal policy.

Totally wrong and proves you didn't read it -- and if you did read it, it proves you didn't understand it. Beckworth made the argument that, because the Fed has an explicit inflation target, fiscal policy is forced to conform to a rigid standard such that it cannot, on its own, close a significant output gap.

And Scott Sumner: http://mercatus.org...


- Very unimpressive. Assumes one for one linkage between inflation and all government spending.

Totally wrong and a complete strawman -- much of the offset is, as Sumner has long argued, implicit: fiscal policy becomes more expansionary, and thus monetary policy, insofar as it is optimized such that the goal is to stabilize NGDP, must be more contractionary, and vice versa. Inflation *does* not need to move, because prices and wages are sticky in the short run and policy is, by definition, forward-looking to adjust for lags.

Unless you are an Austrian and define inflation in their odd way, there's no logical or empirical evidence for that.

Re-read the paper, because there's not only a logical case, but a case in recent history: the threat of budget sequestration resulting in a more contractionary fiscal policy led the Fed to action, which led to accelerated growth in 2013 when Krugman and friends were predicting a contraction to the tune of about 700k jobs.

But, the bottom line is that fiscal policy is offset by monetary policy, so it accomplishes nothing more than raises expectations of future taxes; it can't actually shift the AD curve any more than the Fed would have, anyway.


- How does that happen? Is that the monetarist argument or Ricardian equivalence?

It has absolutely nothing to do with either, and you would know that if you actually read the paper or bothered to read anything that I've written -- including the post I linked to.

If the latter, how did that equivalence work out for you as Bush tripled the debt and lowered taxes, yet savings rates went negative? I think we can dispense with the omniscient, planning-for-a-lifetime American myth.

I never made an argument for Ricardian equivalence. Granted, your argument here is utter bullsh1t, and even a Keynesian would concede that Bush's stimulus as of 2008 -- which was associated with a massive jump in both real disposable income and savings -- could conceivably stand the test of Ricardian equivalence. But it's not an idea that I endorse fully, nor does it have anything to do with what I've been advocating.

If the former, how do you explain the past seven years?

It isn't the former, though I have no idea what you mean by the "monetarist" argument. Monetarists wanted an explicit, constant growth target for, say, M2. I've never advocated that, and Milton Friedman himself practically recanted that view in the late 1990s in response to a giant uptick in velocity.

You may want to read the read, first of all. I never made the case that fiscal stimulus was incapable of boosting RGDP, but only that monetary policy is significantly more effective -- and that any fiscal multiplier is a sign of incompetence. Clearly, monetary policy was far too tight throughout most of the Depression.: : :

- If your argument is that the monetary supply effects of spending would trigger inflation which would in turn trigger an offsetting monetary response, and the only thing a central bank can do is to increase the money supply, which in your estimation ought to trigger the same inflation and the same central bank response, how do you escape that circle?

You really haven't the slightest idea of what you're talking about, and are *completely* strawmanning the points I've laid out.

First, offset is largely *implicit* and a response to future NGDP growth -- not necessarily inflation. It's not even necessarily to combat inflation, because we expect firms to substitute output in lieu of raising prices after a bad demand shock. It' simply recalibrating the reaction function.

Second, what you just wrote makes zero sense. I'm saying monetary policy offsets FISCAL POLICY. If the Fed were to increase the money supply, its to achieve its NGDP target; it isn't going to "offset" itself, though it will necessarily adjust to changes in the outlook, though they may predate changes in inflation

Third, the Fed can do a lot more than simply "expanding" the money supply, including forward guidance -- which was the lynchpin of monetary policy over the past six years, and proves that you *really* don't know what you're talking about.

But, to address your concern, if there were an expectation that inflation were to soar, then yes, the Fed would tighten, though that could take a number of forms. That isn't remotely inconsistent with the initial reaction function, nor does that represent monetary offset.

Second, you're wrong on the facts. This paper by Christina Romer -- an Obama advisor, mind you -- found that nearly *all* of the gains came from monetary stimulus, not fiscal policy. : :

- Romer? Oh, well that sure sounds tempting, but why would I care what Romer thinks? What has she been right about that you feel is worth paying attention to?

That's completely irrelevant because I'm not making an appeal to authority -- and insinuating that I am, once more, shows that you aren't serious about actually hashing out these issues.

I cited her paper not because she's "Christina Romer" -- she could be X no name from Y random college, but the point is that she conducted an extensive analysis shooting down the canard that WWII spending (which, once more, is far distinct from the kind of fiscal stimulus the OP advocated for) was responsible for ending the Depression.

Word of advice: if you're going to bump an old thread with the intent of challenging me, it's best you ensure that you've done the necessary reading and actually understand that which you're responding to. Failure to do so only makes me angry, and causes you to look like a fool.
~ResponsiblyIrresponsible

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LETeller
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4/29/2015 11:32:11 PM
Posted: 1 year ago
Totally wrong and proves you didn't read it -- and if you did read it, it proves you didn't understand it. Beckworth made the argument that, because the Fed has an explicit inflation target, fiscal policy is forced to conform to a rigid standard such that it cannot, on its own, close a significant output gap.


- My bad. He had a clause in a sentence that hinted that the argument could be made. There's no argument there, but the same responses I already have given would apply had he made the argument.


- Very unimpressive. Assumes one for one linkage between inflation and all government spending.

Totally wrong and a complete strawman -- much of the offset is, as Sumner has long argued, implicit: fiscal policy becomes more expansionary, and thus monetary policy, insofar as it is optimized such that the goal is to stabilize NGDP, must be more contractionary, and vice versa. Inflation *does* not need to move, because prices and wages are sticky in the short run and policy is, by definition, forward-looking to adjust for lags.


- "monetary policy, insofar as it is optimized such that the goal is to stabilize NGDP" - right. So your argument is that, absent inflation, the Fed sees a rise in GDP and mves to quash it?

I'm totally unaware of that policy directive. Can you comb through Humphrey Hawkins and post the relevant language directing the Fed to kill any signs of life they see in GDP with contractionary policy?

I suppose at this point we probably need to talk about the Fed's contractionary policy options. What are your thoughts on the ffr moves between 2004 and 2007?

Impressive, huh? They sure shut that housing bubble down.

That's okay - there's no reason to examine the history of the Fed or how it actually operates or is constrained. You have a nice deductive theory going here. Just go with it.

Unless you are an Austrian and define inflation in their odd way, there's no logical or empirical evidence for that.

Re-read the paper, because there's not only a logical case, but a case in recent history: the threat of budget sequestration resulting in a more contractionary fiscal policy led the Fed to action, which led to accelerated growth in 2013 when Krugman and friends were predicting a contraction to the tune of about 700k jobs.


- I'm not sure what that has to do with the price of tea in China. Where's the part about how the Fed offsets expansionary fiscal policy by endeavoring to squash any growth in GDP?

But, the bottom line is that fiscal policy is offset by monetary policy, so it accomplishes nothing more than raises expectations of future taxes; it can't actually shift the AD curve any more than the Fed would have, anyway.


- How does that happen? Is that the monetarist argument or Ricardian equivalence?

It has absolutely nothing to do with either, and you would know that if you actually read the paper or bothered to read anything that I've written -- including the post I linked to.


- I think the more likely explanation is that I didn't find anything in what you wrote that amounted to an explanation.

If the latter, how did that equivalence work out for you as Bush tripled the debt and lowered taxes, yet savings rates went negative? I think we can dispense with the omniscient, planning-for-a-lifetime American myth.

I never made an argument for Ricardian equivalence. Granted, your argument here is utter bullsh1t, and even a Keynesian would concede that Bush's stimulus as of 2008 -- which was associated with a massive jump in both real disposable income and savings -- could conceivably stand the test of Ricardian equivalence. But it's not an idea that I endorse fully, nor does it have anything to do with what I've been advocating.



- Oh, my. I see somebody's never heard of a balance sheet recession. That's deleveraging, cowboy, not saving as a precuationary measure against future taxes.

That's worth a *facedesk*

If the former, how do you explain the past seven years?

It isn't the former, though I have no idea what you mean by the "monetarist" argument. Monetarists wanted an explicit, constant growth target for, say, M2. I've never advocated that, and Milton Friedman himself practically recanted that view in the late 1990s in response to a giant uptick in velocity.


- You're confusing policy and theory. Monetarists argue that V and Y are constants in the equation of exchange. Y has to be constant, because capitalism is inherently unable to service customers and respond to what people want, and V has to remain constant, cuz, well just cuz, cuz the argument doesn't work if it isn't. It isn't anywhere close to constant, but that won't stop a monetarist.


You really haven't the slightest idea of what you're talking about, and are *completely* strawmanning the points I've laid out.

First, offset is largely *implicit* and a response to future NGDP growth -- not necessarily inflation. It's not even necessarily to combat inflation, because we expect firms to substitute output in lieu of raising prices after a bad demand shock. It' simply recalibrating the reaction function.

- It's implicit, is it? In other words, the Fed has no such policy, but it sure sounds scholarly when you stroke your chin and say it. Implicit my foot. If it's implicit, explain the specific mechanism. And you give WAY too much credit to monetary policy.

Second, what you just wrote makes zero sense. I'm saying monetary policy offsets FISCAL POLICY. If the Fed were to increase the money supply, its to achieve its NGDP target; it isn't going to "offset" itself, though it will necessarily adjust to changes in the outlook, though they may predate changes in inflation


- They either respond to indicators, or they don't. You can't have it both ways.

Third, the Fed can do a lot more than simply "expanding" the money supply, including forward guidance -- which was the lynchpin of monetary policy over the past six years, and proves that you *really* don't know what you're talking about.


- Ah, forward guidance. They can't just expand the money supply, they can tell people they will expand the money supply. Yeah, that adds a whole different dimension.

But, to address your concern, if there were an expectation that inflation were to soar, then yes, the Fed would tighten, though that could take a number of forms. That isn't remotely inconsistent with the initial reaction function, nor does that represent monetary offset.

- I have no concern about inflation. What are you talking about?

Word of advice: if you're going to bump an old thread with the intent of challenging me, it's best you ensure that you've done the necessary reading and actually understand that which you're responding to. Failure to do so only makes me angry, and causes you to look like a fool.

- I really don't care whether you get angry or not. You haven't said anything here that has any power.

You have a deductive theory about implicit NGDP targeting (which the Fed doesn't do), which you say automatically offsets fiscal policy. In other words, your argument is either that the Fed is actively working to sabotage Congress, or so stupid that they can't help doing so. You're posting a large number of words with very little meaning.

It's not that I "don't know what I'm talking about", but that you're posting some really dense nonsense.

To clarify your post, tell me about this implicit reaction. Be specific. What does the Fed do, and what indicators trigger them to do it?
ResponsiblyIrresponsible
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4/29/2015 11:56:02 PM
Posted: 1 year ago
At 4/29/2015 11:32:11 PM, LETeller wrote:
- My bad. He had a clause in a sentence that hinted that the argument could be made. There's no argument there, but the same responses I already have given would apply had he made the argument.

He didn't just hint at it -- it was the entire crux of the piece. He was responding to Ben Bernanke who argued that a regime change wasn't necessary, but a more balanced monetary-fiscal mix would be appropriate. Beckworth's entire piece shot that down.

- "monetary policy, insofar as it is optimized such that the goal is to stabilize NGDP" - right. So your argument is that, absent inflation, the Fed sees a rise in GDP and mves to quash it?

No, I didn't see that... at all. I said a change in expected NGDP -- which fiscal policy could induce -- would cause the Fed to recalibrate its reaction function.

I'm totally unaware of that policy directive. Can you comb through Humphrey Hawkins and post the relevant language directing the Fed to kill any signs of life they see in GDP with contractionary policy?

This is a complete strawman, and it's sad that you don't understand that.

I suppose at this point we probably need to talk about the Fed's contractionary policy options. What are your thoughts on the ffr moves between 2004 and 2007

Impressive, huh? They sure shut that housing bubble down.

What's funny is, you're agreeing with Beckworth: he just released a paper claiming that policy was too loose in the early 2000s because the Fed was targeting inflation, not NGDP. I think he's wrong because NGDP did not accelerate out of control, and there's only a casual link between "loose" money and financial imbalances, so I don't buy this argument that the Fed should have tightened -- not to mention, there's a new paper from the UChicago showing a cost-ben yielded a grand total of a 3 basis point hike in the FFR. Not encouraging.

That's okay - there's no reason to examine the history of the Fed or how it actually operates or is constrained. You have a nice deductive theory going here. Just go with it.

Are you stupid? I'm starting to think you might really be stupid.

Never once did I ever suggest anything of that sort. In fact, my views are based entirely on what the Fed can and can't do, and what it's done right and wrong in the past -- in fact, my one example of an implicit offset came from a few years ago.

You may want to start paying attention.

- I'm not sure what that has to do with the price of tea in China. Where's the part about how the Fed offsets expansionary fiscal policy by endeavoring to squash any growth in GDP?

Never once did I say that it will "squash any growth in GDP." Learn how to read. I explained the mechanism of offset thoroughly already, several times.

- I think the more likely explanation is that I didn't find anything in what you wrote that amounted to an explanation.

I laid it out as simply as is humanely possible, and clarified it in subsequent posts, both with you and with others, and even linked to additional material. Sumner's paper, even, explains it completely in Layman's terms so that anyone, even people without a background in economics, can understand it. I'm sorry that this is, clearly, over your head -- though that doesn't render it complex.

- Oh, my. I see somebody's never heard of a balance sheet recession.

Of course I've heard of a balance sheet recession. It's best you not make assumptions, lest you embarrass yourself among people who clearly know more than you.

You also happen to be wrong: it wasn't a balance sheet recession, but an NGDP shock PROLONGED by deleveraging, which to this day is acting as a headwind restraining -- possibly permanently -- the level of potential output.

That's deleveraging, cowboy, not saving as a precuationary measure against future taxes.

Deleveraging began in 2009, "cowboy." This took place in 2008. Try to keep up.

You'll note, once more, that there was even a line in my first post -- which you didn't read -- saying, explicitly, that equivalence is not my main argument. There are better arguments for it than 2008, but I want to focus on task.

That's worth a *facedesk*

Your ignorance -- and ignorance of your ignorance -- does in fact make me want to pound my head violently on my desk, yes.

- You're confusing policy and theory.

No, I'm not -- but let's see what garbage you can construe.

Monetarists argue that V and Y are constants in the equation of exchange. Y has to be constant, because capitalism is inherently unable to service customers and respond to what people want, and V has to remain constant, cuz, well just cuz, cuz the argument doesn't work if it isn't. It isn't anywhere close to constant, but that won't stop a monetarist.

Yup, never once did I construe theory and policy, because I was ONLY addressing policy. I'm fully aware of the long-run variation of quantity theory of money -- and I pointed out that Friedman effectively recanted it in the 1990s, and that my proposal -- NGDP targeting -- is designed to ADJUST for velocity shocks. Pay attention.

- It's implicit, is it? In other words, the Fed has no such policy, but it sure sounds scholarly when you stroke your chin and say it. Implicit my foot. If it's implicit, explain the specific mechanism.

Yes, implicit in the sense that this isn't physically a 1-for-1 trade off in the AD curve.

There are a number of possible mechanisms which I've already explained, all of which amount to recalibrating the reaction function and adjusting the *degree* of accommodation.

And you give WAY too much credit to monetary policy.

I'm really not, but I can understand why someone who doesn't understand it, such as yourself, would think that.

- They either respond to indicators, or they don't. You can't have it both ways.

Of course they do; that's part of the reaction function, and I'm not trying to have it both ways. I'm saying, precisely, that BECAUSE they're responding to indicators, they're lasering in on their NGDP target -- because fiscal policy moves the indicators, inefficiently might I add, the Fed will adjust.

- Ah, forward guidance. They can't just expand the money supply, they can tell people they will expand the money supply. Yeah, that adds a whole different dimension.

It's a lot more than that, and there's a myriad of academic work on unconventional policy -- asset purchases, targeting rules, IOR, the possibility of a permanent, long-term commitment, say to a permanently elevated base, etc. Right here you've exposed your flagrant ignorance.

Communication of policy is ALWAYS necessary for successful transmission. Take the BOJ. It doubled its monetary base -- note: not the same as its money supply -- but found itself amid deflation because it wasn't seen as a credible commitment.

- I have no concern about inflation. What are you talking about?

You just ignored everything I just wrote.
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ResponsiblyIrresponsible
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4/30/2015 12:07:18 AM
Posted: 1 year ago
Word of advice: if you're going to bump an old thread with the intent of challenging me, it's best you ensure that you've done the necessary reading and actually understand that which you're responding to. Failure to do so only makes me angry, and causes you to look like a fool.

- I really don't care whether you get angry or not. You haven't said anything here that has any power.

It would help, for you to make remarks as pretentious and misinformed as you are, if you actually bothered to read, comprehend, and respond thoughtfully to what I've said. You've done none of the above, but in the process have exposed your own rank ignorance and lack of reading comprehension.

You have a deductive theory about implicit NGDP targeting (which the Fed doesn't do),

Wrong -- and I've made this argument before: maximum sustainable employment and price stability, or the current dual mandate, are proxies for "aggregate demand," which is none other than NGDP. An NGDP target is thus implicit, though it's not used as an intermediate target, which is to say that policy decisions aren't communicated in terms of NGDP -- which is a mistake, but it's where we're at.

which you say automatically offsets fiscal policy.

I never said it was automatic, and I even expressed that view with a number of caveats, as did Sumner in his paper, which you also didn't read. The point was recalibrating the reaction function. I feel as though I'm talking to a wall trying to communicate this very easy -- at least to me -- point.

In other words, your argument is either that the Fed is actively working to sabotage Congress, or so stupid that they can't help doing so.

No, completely and hopelessly wrong -- failure to offset fiscal policy, a sign of Fed incompetence, would be sabotaging Congress by failing to fulfill its Congress-sanctioned dual mandate.

You're posting a large number of words with very little meaning.

They have meaning, just not to you because they're completely over your head; that doesn't mean that's likewise the case for people who actually bother to read and understand the points I'm making and, when faced with an idea or concept they don't understand, ask questions in lieu of strawmanning, as you've done.

It's not that I "don't know what I'm talking about", but that you're posting some really dense nonsense.

It is precisely that you don't know what you're talking about, and the fact that you don't understand it is why you believe it's "dense nonsense."

To clarify your post, tell me about this implicit reaction. Be specific. What does the Fed do, and what indicators trigger them to do it?

I've already gone on AT LENGTH about this, for goodness' sake. I'm getting extremely frustrated about having to repeat myself.

The Fed reacts to a number of indicators -- realized and expected: that could be inflation expectations, consumer confidence, forward interest rates, and hopefully at some point, NGDP future prices. They also respond to risks, because monetary policy operates with a lag of about 25 to 50 months. Those risks, up and down, to the outlook could include fiscal policy. More specifically, fiscal policy could be a tailwind -- i.e., a stimulus -- or a headwind -- austerity -- but we don't live in a ceteris paribus world, so the Fed failing to adequately respond to deviations in fiscal policy is obfuscating its own mandate.

Now, how will it respond? There are several different ways, and they're tailored to the situation. Here's a good example I provided earlier. In the end of 2012, budget sequestration was all the rage and was projected to cut, I think, a point and a half from GDP, all else equal. The Fed added $45 trillion in additional, open-ended, Treasury purchases per month. That achieved additional accommodation in several ways:

(1) Flow effects of the purchases

(2) Announcement effect, shifting back fed funds futures -- market implied expectations of liftoff -- and pushed down long-term rates.

(3) Raised NGDP expectations, thus bolstering spending and investment.

(4) Confidence effects, thus bolstering autonomous spending.

(5) Portfolio balance, or the "hot potato" effect.

Is that enough detail for you?
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LETeller
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4/30/2015 12:46:42 AM
Posted: 1 year ago
He didn't just hint at it -- it was the entire crux of the piece. He was responding to Ben Bernanke who argued that a regime change wasn't necessary, but a more balanced monetary-fiscal mix would be appropriate. Beckworth's entire piece shot that down.


- I think you're reading into it way more than it deserves. One clause, one sentence. No argument or extrapolation.

- "monetary policy, insofar as it is optimized such that the goal is to stabilize NGDP" - right. So your argument is that, absent inflation, the Fed sees a rise in GDP and mves to quash it?

No, I didn't see that... at all. I said a change in expected NGDP -- which fiscal policy could induce -- would cause the Fed to recalibrate its reaction function.


- Yeah, and I asked you if there was an actual directive for that. Is there? And what would the operational options look like?

I'm totally unaware of that policy directive. Can you comb through Humphrey Hawkins and post the relevant language directing the Fed to kill any signs of life they see in GDP with contractionary policy?

This is a complete strawman, and it's sad that you don't understand that.

- I don't think you know what a straw man is. It was a question: can you provide specifics? Your answer: No, I can't.


What's funny is, you're agreeing with Beckworth: he just released a paper claiming that policy was too loose in the early 2000s because the Fed was targeting inflation, not NGDP. I think he's wrong because NGDP did not accelerate out of control, and there's only a casual link between "loose" money and financial imbalances, so I don't buy this argument that the Fed should have tightened -- not to mention, there's a new paper from the UChicago showing a cost-ben yielded a grand total of a 3 basis point hike in the FFR. Not encouraging.


- The Fed did tighten, and I never argued that monetary policy was too loose in the 2000s. I said that, beginning with QE, it was as loose as it can get. I made no judgment about it - just pointed out that it didn't exert the power you claim it should have.

And yeah, the Fed does not target NGDP, which is why I asked you for a specific directive or set of policy responses.

That's okay - there's no reason to examine the history of the Fed or how it actually operates or is constrained. You have a nice deductive theory going here. Just go with it.

Are you stupid? I'm starting to think you might really be stupid.

Never once did I ever suggest anything of that sort. In fact, my views are based entirely on what the Fed can and can't do, and what it's done right and wrong in the past -- in fact, my one example of an implicit offset came from a few years ago.


- It was in the OTHER direction. Of course the Fed is going to offset the contractionary effects of austerity. You're arguing that they would symmetrically try to offset stimulus. The assumption has to be either that they're stupid or they're actually knee-jerk antagonistic toward Congress. Your example doesn't prove an offset to stimulus in any way.

You may want to start paying attention.

Never once did I say that it will "squash any growth in GDP." Learn how to read. I explained the mechanism of offset thoroughly already, several times.

-You said "implicit NGDP targeting". That is an assertion which explains nothing, an assumes an implicit policy which we can be pretty sure doesn't exist.

I laid it out as simply as is humanely possible, and clarified it in subsequent posts, both with you and with others, and even linked to additional material. Sumner's paper, even, explains it completely in Layman's terms so that anyone, even people without a background in economics, can understand it. I'm sorry that this is, clearly, over your head -- though that doesn't render it complex.


- You have an amazing ability to fill paper with words and be clear about very little. Just identify the operational mechanisms. Thanks in advance.

- Oh, my. I see somebody's never heard of a balance sheet recession.

Of course I've heard of a balance sheet recession. It's best you not make assumptions, lest you embarrass yourself among people who clearly know more than you.

- Well then, why are you claiming that deleveraging was an example of "Ricardian equivalence"?

You also happen to be wrong: it wasn't a balance sheet recession, but an NGDP shock PROLONGED by deleveraging, which to this day is acting as a headwind restraining -- possibly permanently -- the level of potential output.


- NGDP shock? lol I l'm going to need some mayonnaise with that baloney.

That's deleveraging, cowboy, not saving as a precuationary measure against future taxes.

Deleveraging began in 2009, "cowboy." This took place in 2008. Try to keep up.

- Oh, people began saving for future taxes in 2008? Color me surprised.


That's worth a *facedesk*

Your ignorance -- and ignorance of your ignorance -- does in fact make me want to pound my head violently on my desk, yes.

- You're confusing policy and theory.

No, I'm not -- but let's see what garbage you can construe.

- You just DID. I mentioned a monetary theoretical point, and you

Never mind. You're loud, but unfocused.

Yup, never once did I construe theory and policy, because I was ONLY addressing policy. I'm fully aware of the long-run variation of quantity theory of money -- and I pointed out that Friedman effectively recanted it in the 1990s, and that my proposal -- NGDP targeting -- is designed to ADJUST for velocity shocks. Pay attention.


- Pay attention? You responded to a theoretical point I raised, bucko, by citing a policy which was irrelevant to the point - you just didn't understand what I was getting at.

- It's implicit, is it? In other words, the Fed has no such policy, but it sure sounds scholarly when you stroke your chin and say it. Implicit my foot. If it's implicit, explain the specific mechanism.

Yes, implicit in the sense that this isn't physically a 1-for-1 trade off in the AD curve.

You can save that crap for a debate with Krugman.

There are a number of possible mechanisms which I've already explained, all of which amount to recalibrating the reaction function and adjusting the *degree* of accommodation.

-Yeah, uh that's not an operational mechanism, and you have yet to identify even one. Every time I bring up a potential option you may be talking about, you say, "no, I'm not talking about that".

And you give WAY too much credit to monetary policy.

I'm really not, but I can understand why someone who doesn't understand it, such as yourself, would think that.


- Those who understand a little often get confused, thinking that those who understand more don't know anything at all. I asked you for policy specifics, and your response was "you're ignorant" *golf clap*

- They either respond to indicators, or they don't. You can't have it both ways.

Of course they do; that's part of the reaction function, and I'm not trying to have it both ways. I'm saying, precisely, that BECAUSE they're responding to indicators, they're lasering in on their NGDP target -- because fiscal policy moves the indicators, inefficiently might I add, the Fed will adjust.

- Oh, on the "implicit" NGDP target which they don't have?

It's a lot more than that, and there's a myriad of academic work on unconventional policy -- asset purchases, targeting rules, IOR, the possibility of a permanent, long-term commitment, say to a permanently elevated base, etc. Right here you've exposed your flagrant ignorance.


- I believe I mentioned most of those, and described their limitations.

Are you sure you know what "ignorance" means?

Communication of policy is ALWAYS necessary for successful transmission.

Having a policy which transmits is ki
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4/30/2015 1:10:20 AM
Posted: 1 year ago
At 4/30/2015 12:46:42 AM, LETeller wrote:
- I think you're reading into it way more than it deserves. One clause, one sentence. No argument or extrapolation.

No, it was a lot more than on clause -- it was the crux of Beckworth's argument.

And, not to mention, he's written on it before.

- Yeah, and I asked you if there was an actual directive for that. Is there? And what would the operational options look like?

And I already answered that. In what you just quoted, I was simply responding to your strawman.

- I don't think you know what a straw man is. It was a question: can you provide specifics? Your answer: No, I can't.

No, I don't think YOU know what a strawman is. You misrepresented my argument -- suggesting that I actually argued the Fed would quash any movement in GDP -- and I, rightly, called you out for strawmanning.

Yes, I can -- and I did. Pay attention.

- The Fed did tighten,

Starting in 2004, yeah, but not enough by many estimates -- including Beckworth's.

.and I never argued that monetary policy was too loose in the 2000s.

You did, actually -- you directly mentioned the housing bubble, asked whether the Fed could contract policy, and insinuated that the inability to contract led it to missing the housing bubble. Let's ignore the fact that loose money did not spark the bubble, and get right to the fact that even if it were possible to pop it -- it's not, and thats what made the Depression as bad as it was when the Fed tried to pop the stock market bubble in 1929 -- it would be a terrible idea.

You accused me of not wanting to look at history -- which was categorically stupid, by the way. There's another example.

I said that, beginning with QE, it was as loose as it can get.

Yeah, and you're only 100% wrong, and once more exposing your ignorance.

I made no judgment about it - just pointed out that it didn't exert the power you claim it should have.

Another strawman -- I never said that current policy should have exerted more power, but that policy was too loose and the Fed should have done more, including credibly committing to a permanently elevated balance sheet.

And yeah, the Fed does not target NGDP, which is why I asked you for a specific directive or set of policy responses.

I gave you several. Here are a few more:

(1) Commit to a permanently elevated balance sheet

(2) Transition to NGDP level targeting, and commit to stabilizing nominal incomes and returning them to their pre-recession trend

(3) Reducing IOER to either 0, or making it negative, as has been done in the ECB and elsewhere

(4) Continue asset purchases, shifting out market expectations of the rate path and pushing down long-term interest rates.

- It was in the OTHER direction. Of course the Fed is going to offset the contractionary effects of austerity. You're arguing that they would symmetrically try to offset stimulus. The assumption has to be either that they're stupid or they're actually knee-jerk antagonistic toward Congress. Your example doesn't prove an offset to stimulus in any way.

I think it is highly ironic for you to insinuate that I'm stupid, when you've foolishly spent this entire conversion spewing complete bulls1ht, exposing your ignorance, and strawmanning my arguments.

I love how you begin by conceding to offset -- but you stupidly suggest that it isn't symmetric. Why's that the case? Look at the 1960s: fiscal policy was far too lose. Offsetting that was not "sabotaging" Congress, you moron -- it was establishing its dual mandate which Congress sanctioned it to do in the first place.

Monetary offset is fundamentally symmetric -- the argument Sumner makes is that, in the absence of the stimulus of 2009, monetary policy would've been tighter. That's the case because not only would RGDP and NGDP have been lower, as would have employment, but that -- and Beckworth has done some great analysis on this -- the Fed continuously overestimated growth in the throes of the crisis and contracted asset purchases when inflation began to move upward to 2 percent, treating its target like a ceiling and signaling to markets that it wasn't serious about stabilizing NGDP -- thus NGDP expectations didn't rise accordingly, and the impact of the accommodation was muted. THAT is one of the main reasons policy was too tight -- that, and the Fed waited too long to expand the balance sheet and let the dollar appreciate and real rates soar in 2008.

-You said "implicit NGDP targeting". That is an assertion which explains nothing, an assumes an implicit policy which we can be pretty sure doesn't exist.

It does exist -- price stability is inflation at 2 percent, and maximum employment is consistent with the NAIRU, which is consistent with potential output.

NGDP = real GDP * inflation

Was that clear enough?

- You have an amazing ability to fill paper with words and be clear about very little. Just identify the operational mechanisms. Thanks in advance.

I laid them out several times. You have an amazing ability to say a lot, whilst acting like a damn wall -- will these ideas that I keep having to repeat for you permeate into that brick you use for a brain? This isn't difficult stuff, though you're treating it as though it's rocket science.

- Well then, why are you claiming that deleveraging was an example of "Ricardian equivalence"?

I didn't. Deleveraging began in 2009; my example was in 2008 -- and I qualified it by saying that I'm agnostic on RE. Try to keep up.

- NGDP shock? lol I l'm going to need some mayonnaise with that baloney.

An NGDP shock is an adverse demand shock, which even fiscal policy seeks to address. Are you seriously suggesting that the financial crisis didn't result in a demand shortfall? That's chronic stupidity.

That's deleveraging, cowboy, not saving as a precuationary measure against future taxes.

Deleveraging began in 2009. Get your damn timetable right.

- Oh, people began saving for future taxes in 2008? Color me surprised.

That's what the data suggest, though once more that's not the crux of my argument, nor even an integral part of it.

- You just DID. I mentioned a monetary theoretical point, and you

No, loser, you mentioned monetarism -- we were talking about policy, and the policy proceeds from the quantity theory. Sure, I wasn't thinking quantity theory, but how could I? That's a fundamentally irrelevant point to ANYTHING I had to say, so I didn't think you were stupid enough to bring it up.

Never mind. You're loud, but unfocused.

Ad hominems when you're so clearly losing an argument aren't going to help you. In fact, intelligent people will see right through them.

- Pay attention? You responded to a theoretical point I raised, bucko, by citing a policy which was irrelevant to the point - you just didn't understand what I was getting at.

You weren't getting at anything -- you mentioned monetarism and RE, and assumed that I knew you were talking about quantity theory, though M2 targeting is the extension of quantity theory with a long-run perspective that fixes M and V.

Of course I understand what you were getting at -- it just happened to be a fundamentally weak and stupid argument, much like the other bullsh1t you've been spewing.

You can save that crap for a debate with Krugman.

So, in other words, you haven't the faintest idea of the nuances of the point I just made -- that this is implicit, NOT a one-for-one trade-off -- so all you can do is attack Krugman and me?

What's funny is, Krugman, like you, doesn't fully understand offset, though the extent to which he knows more than you -- and understands more than you, and laps you in IQ -- is astonishing.
~ResponsiblyIrresponsible

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Chang29
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4/30/2015 1:14:21 AM
Posted: 1 year ago
At 4/21/2015 12:27:43 AM, Benshapiro wrote:
It'll help the economy

Spending another person's money is always a good idea.
A free market anti-capitalist

If it can be de-centralized, it will be de-centralized.
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4/30/2015 1:16:22 AM
Posted: 1 year ago
-Yeah, uh that's not an operational mechanism, and you have yet to identify even one. Every time I bring up a potential option you may be talking about, you say, "no, I'm not talking about that".

What options have you brought up? Humor me -- I've already explained precisely how the Fed may respond, though it's far more nuanced than you're letting on and tailored specifically to the situation. I've already explained, in depth, in another post how the Fed may opt to respond -- modifying the forward guidance, adjusting the FFR target range, moderating asset purchases or initiating them, adjusting IOER, etc. -- and it really is not my fault that it's over your head. This is complex material, and it's hardly for everyone.

- Those who understand a little often get confused, thinking that those who understand more don't know anything at all.

It's hilarious that you're so deluded as to think you actually know much of anything, much less more than me.

I asked you for policy specifics, and your response was "you're ignorant" *golf clap*

My response was to GIVE you those specifics, which I've been repeating all night. Pay the hell attention and actually take the time to comprehend what I'm saying, and perhaps you'd see that.

- Oh, on the "implicit" NGDP target which they don't have?

It's potential output, proxied by the NAIRU, and since in the long run, inflation equals inflation expectations, nominal GDP is inflation expectations plus the level of output consistent with the NAIRU.

So, yes, it does have an implicit NGDP target. Suggesting otherwise is highly ignorant.

- I believe I mentioned most of those, and described their limitations.

You've done nothing of the sort.

Are you sure you know what "ignorance" means?

Yes, I do -- and I'm talking to it.

Having a policy which transmits is ki

Your point must have been cut off, but this is probably just as coherent and comprehensive as anything you would have otherwise said.
~ResponsiblyIrresponsible

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LETeller
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4/30/2015 2:49:35 PM
Posted: 1 year ago
I think your misconception here is based on a perhaps deep exposure to a very narrow range of economic thought.

When people use the acronym NAIRU without snorting, we have to start from the ground up.

I think the sorts of people you're reading and following are pretty much representative of everything that's wrong with economics today. The teachings that led you to where you are today are why students stage walkouts of Mankiw's classes every year, and the same thing happens at the LSE and elsewhere.

Your arrogance is typical of that sort of economics as well. What you don't understand is that others of different schools don't "fail to get it", we fail to take it seriously. Maybe arrogance isn't the right word. Maybe it's just obliviousness to the fact that there are people who know what you know and just think it's baloney at its core.

A few of the things you mention have merit, but many are ex-post aggregates once thought causal (such as the money multiplier and NAIRU) which basically have no explanations that make sense in advance. In arrears, I can always claim a correlation, and then wonder why it's changing (the money multiplier is collapsing! NAIRU is falling!). I read a lot of this sort of stuff and really wonder why, after its spectacular lack of success in the past thirty years or so, that people hang on to this stuff.

I'm just absolutely flabbergasted that you think that the Fed's current zero bound policy has been a success. I suspect there have been little things in the margins that have gone better as s result, but nothing the Fed has to offer is the right hammer.

Central banks basically get involved when everyone else fails to do their jobs: when markets fail, when governments fail to invoke appropriate fiscal policy, and so on.

One particular thing that I find puzzling is your statement sort of to the effect that the base was a really bad measure of anything, coupled with your contention that the Fed ought to watch the money multiplier closely.

I sense that I am on a page that you aren't really aware exists, and I find that kind of fascinating. You seem to be very confused by some of the things I'm saying, but not to know it.

You appear to be filling in the blanks under the assumption that you should be able to assume my point of view, but your assumptions are very off base. That's what makes me wonder about your exposure to anything outside often line of thought of which you seem to be a proponent.

I agree with you that the monetary base is a terrible measure of anything, but I don't think we agree on why. The problem is that the monetary base and government securities issues are what the Fed has to work with. That's it. You can put bells and whistles on it any way you want, but the Fed has no power to "pump money into the economy" or, in my view, to raise interest rates.

As an aside, my personal view is that QE actually is contractionary. All of that interest income that used to go to the private sector as a result of private sector Treasury holdings. That's a direct loss of income to the private sector, and a reduction in actual circulating money (as opposed to reserves). So we've pumped the heck out of reserves, which have a velocity of exactly zero, and have removed perfectly good interest payments from the private sector, and the Fed dutifully "returns them to the Treasury" by not making those payments.

The Fed has also removed a respectable chunk of what money markets use for cash, which may be a part of the increased failures in forwards we've seen over the past few years.

Finally, by removing those securities from circulation, the Fed is doing its part to create shortages of financial assets, which raises the opportunity costs of investments in real capital, so I think that's unhelpful as well. Our current lack of activity makes it hard enough to coax money back into brick and mortar investment, and I can't help but think that removing $4 trillion in perfectly good securities from the market helps move things the direction we want to go.

Obviously, at one time inflation was an objective of QE, although nobody thinks that really err could have been an outcome, because banks don't lend or leverage reserves, and the money multiplier is a fairy tale.

The wealth effect was always thought to be incredibly weak, I'm going to go out on a limb and call it nonexistent.

The one really valuable thing QE did was to let Congress know that they could spend as many trillions as they wanted as the Fed not only stood ready to accommodate that policy, but that the Fed could help politically by disappearing national debt by increasing its Treasury holdings to an unlimited degree.

I have often wondered if Bernanke wasn't doing that intentionally, hoping the dullards in front of whom he must testify twice a year would get the freaking message. But dullards being what they are, the fiscal lessons of QE just blew over their bony little heads.

I thoroughly disagree, still, with your assessment, and those you are quoting, of the Fed's implicit responses to a potential fiscal stimulus package. While the economists who inhabit the Fed are overwhelmingly mainstream, they do have some very sharp people. Bernanke was certainly one, Yellin may be as well. I've never read anything she wrote. She may be amazing, for all I know. I think Bernanke was very politically sensitive and desperately wanted to help Congress to do the right thing. I think you are overly pessimistic about the Fed's reaction inclinations. I think Bernanke would have moved heaven and earth to help this country, had anyone cared to step up and take the responsibility for enacting the sorts of things he had the power to support. As it was, he was a one-man band, and you can't harmonize without somebody singing the melody.

As far as my reference to Greenspan: he was no longer chairman when he said it, but he was specifically referring to his efforts beginning in 2004 to slow the mortgage market by radically raising the ffr. It did absolutely nothing. It was a policy that Bernanke continued briefly, but abandoned when he felt that the number of ARM failures as a result of the Fed's contractionary rate had the potential to throw the economy in a tailspin.

And he was right. There was always a chance to bring order to the financial markets until things began to fall apart, but continuing high rates would have turned a downturn into a certainty.

Also remember who the Fed works for. Congress is free to dictate the Fed's responses in any stimulus package they were to pass. Any objections you have about Fed cancellation of the effects of fiscal policy could simply be legislated away by temporary or permanent alteration of the Fed's mandate.
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4/30/2015 3:27:58 PM
Posted: 1 year ago
At 4/30/2015 2:49:35 PM, LETeller wrote:

How cowardly is it that you didn't even bother to respond directly to my post so that I'd actually get a notification.

I think your misconception here is based on a perhaps deep exposure to a very narrow range of economic thought.

That's highly unlikely, considering that you haven't (a) responded directly to *anything* or honestly engaged anything that I've said and (b) the only person who has misconstrued or misrepresented an argument over this discourse is you.

This isn't even a matter of arrogance. My analysis is based upon my interpretation of the facts and of the available research. I could very well be wrong, though you've given me no reason to believe that I am. In the absence of that, clearly I'm going to continue to advance the interpretation that I think is correct -- and when someone, such as yourself, fundamentally misrepresents my positions, I'm going to call you out and respond hostilely, as I have, especially when you make such asinine claims as "you're overestimating monetary policy" or "policy has been as loose as it gets." I provided you with several mechanisms through which policy could have been more accommodative, and instead of responding directly to my post, you opt to post another giant wall of text. Unlike you, though, I'm not afraid of engaging opposing arguments, so I'm going to respond to every point you made. It would be a salutary exercise for you to at least try to do the same with my arguments -- even if they're, as I suspect, over your head.

When people use the acronym NAIRU without snorting, we have to start from the ground up.

Why would I snort? It's a well-documented, though hard-to-measure, feature of any model of the Phillips curve; by accepting, even, that there's a negative relationship between unemployment and inflation, you accept the NAIRU. It may be hard to measure and to discern -- which is a case I've been making for a while -- but there's plenty of reason to think, both based on research and real-world experience, that some level of unemployment would cause inflationary pressures to build.

I think the sorts of people you're reading and following are pretty much representative of everything that's wrong with economics today. The teachings that led you to where you are today are why students stage walkouts of Mankiw's classes every year, and the same thing happens at the LSE and elsewhere.

I think you're making a lot of broad assumptions which are, at their core, ad-hominem attacks: you want to try to discredit me and whom you think I learned from, in lieu of actually engaging my arguments, all whilst trying to turn it around ex post facto and pin it on me "misunderstanding" anything.

People walked out of Mankiw's class because they thought it was "too conservative." That's hilarious, and fundamentally untrue: I read Mankiw quite a bit, and he's one of the most balanced and objective people I've seen -- much more so than my other good buddy, Paul Krugman. But to even say that I learned "from Mankiw" is also patently false. I don't sheep people with big names -- I do my own research and think for myself, which is something you clearly fail to understand, or you wouldn't be making such a fundamentally asinine point.

Your arrogance is typical of that sort of economics as well.

It isn't arrogance; you perceive it as arrogance because I'm willing to call you out for feigning knowledge you don't have of complex issues that are far over your head -- you're the epitome of why uniformed people *should not* weigh in on economics, and it stuns me that you're actually willing to parade such complete arrogance while *ignoring* every single argument I've put forward. You want to engage in ad-hominem attacks, whereas I want to debate economics: you're constitutionally incapable of doing the latter, so you flock by default to the former, and that doesn't speak well of you in the least bit.

What you don't understand is that others of different schools don't "fail to get it", we fail to take it seriously. Maybe arrogance isn't the right word. Maybe it's just obliviousness to the fact that there are people who know what you know and just think it's baloney at its core.

This is also baloney. I acknowledge that people may disagree with me, though I see it as a necessary condition for me to actually take those people seriously that they actually lay out their views with ample justification and articulate why they're right and I'm wrong, and where our world views clash. Note that you *still* haven't done that; instead of doing that, you're typing out giant, off-topic, self-aggrandizing walls of text. Keep your BS confined to people who are uninformed, unengaged wannabes -- I'm interested in debating reality. I'm not telling you that you're ignorant or uninformed because you clearly disagree with me -- I'm calling a spade a spade, and making an informed conjecture based upon the sheer ignorance you've displayed thus far. Prove me wrong, and I'd love to retract, though I don't see that as a likely occurrence.

A few of the things you mention have merit, but many are ex-post aggregates once thought causal (such as the money multiplier and NAIRU) which basically have no explanations that make sense in advance.

That just isn't true; not only is there empirical work on these models, but we can *see* them at work in the real world: we could see banks hoarding excess reserves and people holding cash following QE; this wasn't an "ex post aggregate" -- whatever the hell that is -- but an accurate assessment of what actually took place, and what took place historically. The NAIRU was demonstrated in full views in the 1960s, 1970s, and even later 1990s. These are facts -- that you choose to disregard them without the slightest bit of justification in no way invalidates them or lifts your own uninformed worldview.

In arrears, I can always claim a correlation, and then wonder why it's changing (the money multiplier is collapsing! NAIRU is falling!). I read a lot of this sort of stuff and really wonder why, after its spectacular lack of success in the past thirty years or so, that people hang on to this stuff.

The irony of this is stunning, because the concepts you're decrying actually do have real-world merit -- though the same isn't true of your other grandiose claims on the inefficacy of monetary policy or the inability for it to have been looser, which I've provided several times is patently false and flagrantly ignorant. That isn't just me talking; that's Econ 101, and any credible economist talking. When any credible thinker looks upon your views as utterly laughable, its best you quit the projection and self-evaluate.

I'm just absolutely flabbergasted that you think that the Fed's current zero bound policy has been a success.

Strawman -- I said it could have and should have done more (i.e., that it was, in many ways, unsuccessful but successful only in relative terms), though I provided empirical research showing that had the Fed *not* done that, unemployment through 2015 would have been 125 basis points higher and inflation 50 basis points lower. I asked you what would have happened had the Fed done nothing, and you once again dodged it entirely. That isn't analysis, nor are you a serious thinker: it's nothing more than cowardice. I challenge you to respond honestly to a single point I've made, in this thread or otherwise. Hell, let's debate this stuff formally.

I suspect there have been little things in the margins that have gone better as s result, but nothing the Fed has to offer is the right hammer

This is based on nothing at all, and is especially trouble when it's clear that you simply don't understand monetary policy. It's easy to write it off when you are so clearly ignorant of it, and of the empirical and historical backing of such proposals. Trying to reason with you is like talking to a
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4/30/2015 3:45:13 PM
Posted: 1 year ago
I'm still responding to this giant wall of text. Unlike the coward you so clearly are, I actually am willing to respond -- directly -- to you.

Part II will be out shortly.
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4/30/2015 3:53:37 PM
Posted: 1 year ago
Central banks basically get involved when everyone else fails to do their jobs: when markets fail, when governments fail to invoke appropriate fiscal policy, and so on.

That was the case in the recent crisis because Congress failed to act; what's funny is, that's monetary offset -- so what a wonderful (second) concession we have here. "Failing to act" in the 1970s was failing to combat hyperinflation, so now we even have symmetric offset. That was the entire point I made in both of these threads, so this discussion is largely over.

The point I've been making is that the central bank, as a general rule, should take the wheel for a number of reasons I've outlined thoroughly.

One particular thing that I find puzzling is your statement sort of to the effect that the base was a really bad measure of anything, coupled with your contention that the Fed ought to watch the money multiplier closely.

The second is 100% wrong. I never said it should watch the multiplier closely -- never once did those words come out of my keyboard, so you are completely full of sh1t and are now exposing the disingenuous, anti-intellectual stooge you truly are.

I said the money multiplier reduces the efficacy of the base as a stance of monetary policy, because it's possible at zero nominal interest rates, amid a low money multiplier and low velocity, for an increase in the base to translate to a SIGNIFICANTLY lower than one-for-one trade for the actual money supply, disconnecting the base almost entirely from broader economic activity. Further, I provided you with four reason the base was a terrible gauge of the stance of policy: lack of a benchmark, disregarding expectations (back to the Japan example), money multiplier shocks and velocity shocks. Let's add that, as a culminating point, the relationship between the base and NGDP is volatile and subject to a multiplicity of additional factors -- including, yes, expectations and the money multiplier.

I sense that I am on a page that you aren't really aware exists, and I find that kind of fascinating.

What self-aggrandizing bullsh1t. I've refuted every damn point you've made and you can't even honestly engage what I've said or bother to respond to it, though it must just be because you're "so advanced." That's nonsense, and the projection is real -- to the contrary, it's clear that you're in way over your head in trying to take me on on complex issues you could never hope to understand. People like you, who refuse to base your world view on facts and adapt accordingly, are what's wrong with people who profess to know a thing or two about economics. There are actually a lot of economists who know just as much -- or, I should say, just as little -- as you. They're ridiculed, and rightly so.

You seem to be very confused by some of the things I'm saying, but not to know it.

That's only true in your fantasy land where the sky is pink, unicorns roam free, and inflation is 10,000 percent.

Once more, I base my positions on facts and reality. Try to keep up, or move aside, because your stupidity and ad hominem attacks in lieu of substance are truly becoming a drag on my time. It's stunning just how ignorant and deluded you actually are.

You appear to be filling in the blanks under the assumption that you should be able to assume my point of view, but your assumptions are very off base.

I never once did that, though you've done that in several cases when you strawmanned my views -- i.e., insinuating that I actually said the Fed would "quash any increase in GDP," which was a fundamental misrepresentation of what I said, and even after explaining to you upwards of three times that this wasn't my position, I still couldn't get that through your sh1t-for-brains head.

That's what makes me wonder about your exposure to anything outside often line of thought of which you seem to be a proponent.

What kind of bullsh1t is this? You're the one dismissing monetary policy, contrary to all the facts and empirics I've provided, because it doesn't suit your own ideology. I've engaged your posts and communicate regularly with people who disagree with me -- I read and even referenced Paul Krugman several times, for instance, who disagrees with me vehemently. So this is so stupid and patently off-base, in the same manner as everything else you've said.

Moreover, my views have evolved substantially over time. I used to be a proponent of fiscal stimulus and skeptical of monetary policy. How did that change? I did some research, took a few classes, and asked questions. I learned to think for myself. Try it; it may be a salutary exercise for you.

I agree with you that the monetary base is a terrible measure of anything, but I don't think we agree on why

I love this concession; earlier you pointed to a $4 trillion -- and it was slightly less than that, but fair enough -- increase in the balance sheet as evidence of a policy that was super loose and couldn't be any looser, and now you're conceding, as though you and I shared the same view this entire time.

You're right that we don't agree why, because that isn't the position you articulated earlier; you're contradicting yourself upon realization that your view couldn't hold up to the slightest bit of scrutiny, and thus felt the need to backtrack. You don't share the *reasons* I've articulated because you don't understand them, even though I've taken the time and effort to repeat them countless times.

The problem is that the monetary base and government securities issues are what the Fed has to work with. You can put bells and whistles on it any way you want, but the Fed has no power to "pump money into the economy" or, in my view, to raise interest rates.

I'm getting really tired of explaining very basic points to you, and you ignoring them entirely and going on to repeat the same bullsh1t I've already debunked. I explained, AT LENGTH, what else the Fed could do and how they could do it, and even provided you with a list of research papers. Once more, talking to you is like trying to convince a wall that the grass is green: you are just fundamentally incapable of comprehending that which you *think*, in your alternate, deluded universe, that you have some secret knowledge on. In reality, you have no idea what you're talking about, and it's best that you develop the humility to admit that. All you're doing is causing yourself to look like a complete fool and, in the process, grating on my last nerve.

I already explained how the Fed could raise rates, too -- IOR and ON RRP/ term RRP, and then drain reserves via either TDF or, down the road, possibly OMO sales or ending reinvestment of principle.

As an aside, my personal view is that QE actually is contractionary.

That just proves how little you know, lol, because that claim is literally bonkers, without the slightest basis in reality. I should really stop responding to you, because this is quite possibly the most ignorant thing I've ever seen -- AND I provided empirical research (see Engen et al. and Gilchrist et al. if you don't believe me) proving you wrong.

Part III is coming soon. Stay tuned, folks.
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4/30/2015 4:13:34 PM
Posted: 1 year ago
All of that interest income that used to go to the private sector as a result of private sector Treasury holdings. That's a direct loss of income to the private sector, and a reduction in actual circulating money (as opposed to reserves)

You can't be serious -- that's the mechanism by which QE is EXPANSIONARY because it causes people to (a) rebalance their portfolios into more risky securities and (b) do more risky things with their money, such as invest, which they can know do because interest rates are lower and QE directly reduced financial frictions -- along with various other forms of liquidity provision the Fed provided.

This point right here should really disqualify you from opining on monetary policy. You have literally no idea what you're talking about, nor is there any logical or empirical basis for any claims you've made. To the contrary, there's evidence for the opposing side, which you refuse to acknowledge because -- contrary to your own rant -- you live in a world that is black and white.

So we've pumped the heck out of reserves, which have a velocity of exactly zero, and have removed perfectly good interest payments from the private sector, and the Fed dutifully "returns them to the Treasury" by not making those payments.

Now you've refuted your own point by conceding that the interest income goes back to the Treasury, and thus back into the economy, anyway -- and the reserves hardly have a velocity of zero, but once more, the flow of asset purchases *is not* the primary transmission of QE to the economy, nor is the impact of long-term interest rates: it's the signalling channel and the hot-potato effect -- and the impact on NGDP expectation which directly influence price-setting behavior and hiring, spending, and investment decisions.

You're also reasoning from a price change: why is the velocity zero? Why is the interest rate zero? Did it fall from the sky? No -- it's because the financial system is awash in liquidity and the Fed was able to successfully mollify financial frictions which were pushing up real rates and thus restraining investment.

Not to mention, if liquidity is your main issue, the Fed pays interest on reserves to the tune of 25 basis points -- which is a lot more than most other short-term securities. How is that contractionary, especially when, once more, it filled the system with about $2.9 trillion in reserves? Even if I bought your BS point on interest income, this would STILL be a net gain for the private sector. This isn't even a technical point: it's basic arithmetic.

Even last year, the Fed returned about $98 billion in remittances to the Treasury -- a record, mind you. $2.9 trillion in excess reserves, clearly, is much larger than $98 billion.

The Fed has also removed a respectable chunk of what money markets use for cash, which may be a part of the increased failures in forwards we've seen over the past few years.

What in the world are you even talking about? Money markets hold short-term Treasuries, but the Fed purchased long-term Treasuries and agency mortgage-backed securities. You can make the financial-imbalances case, but it's (1) stupid; (2) not applicable right now; and (3) terrible even when subjected to a proper balance of risk assessment.

Finally, by removing those securities from circulation, the Fed is doing its part to create shortages of financial assets, which raises the opportunity costs of investments in real capital, so I think that's unhelpful as well.

Raising the opportunity cost? Contraire -- it's *reducing* the opportunity cost by removing the other available options, and it's forcing investors into more risky securities, such as corporate bond yields, thus reducing a broad array of interest rates via arbitrate.

Not to much, what you call a shortage is referred to -- amongst people who know what they're talking about -- as the "stock effect," which holds down Treasury interest rates even after the "flow effect" of QE wore off. There are two channels for that: the supply of Treasuries and the *expected future path of future Treasuries,* and that transmits to an array of other interest rates.

Our current lack of activity makes it hard enough to coax money back into brick and mortar investment, and I can't help but think that removing $4 trillion in perfectly good securities from the market helps move things the direction we want to go.

If the Fed hadn't done that, we would've been stuck with frozen credit markets, disintegrating inflation expectations, financial frictions, no credibility at all, and unemployment on par with the Depression. If you want to see what's that's like, look at Europe until recently. They followed your model, and it didn't go over so well. Hell, look at the US during the Depression -- where, once more, zero rates and the monetary base *did not* provide a proper assessment of the stance of monetary policy.

Obviously, at one time inflation was an objective of QE, although nobody thinks that really err could have been an outcome, because banks don't lend or leverage reserves, and the money multiplier is a fairy tale.

It's not a fairy tale -- you just don't happen to understand it, and it happens to be exceptionally low: that's the reason, once more, that QE wasn't inflationary.

And you need to pay attention: the bank-lending channel is but one transmission mechanism, and a weak one at that. The main transmissions were signalling and portfolio balancing -- as I've explained at least five times in this thread and others.

The wealth effect was always thought to be incredibly weak, I'm going to go out on a limb and call it nonexistent.

It isn't nonexistent -- and you can see plenty of empirical work proving that to be an utter farce -- though (a) it's not a primary channel, though nevertheless a relevant one and (2) household refinancing was far more important than the housing wealth effect due to deleveraging.

Educate yourself:
http://www.jchs.harvard.edu...
https://www.whitman.edu...
http://www.nber.org...
http://www.federalreserve.gov...

The one really valuable thing QE did was to let Congress know that they could spend as many trillions as they wanted as the Fed not only stood ready to accommodate that policy, but that the Fed could help politically by disappearing national debt by increasing its Treasury holdings to an unlimited degree

You're actually contending that the Fed monetized the debt? This proves further how little you know.

One, the Fed isn't "increasing its Treasury holdings." It isn't currently buying any assets, but is only reinvesting principle into agency MBS -- which it bought more of than Treasuries.

Two, the Fed can't buy directly from the Treasury -- it needs to purchase the securities on the secondary market.

Three, it's already indicated that it will eventually unwind the balance sheet. Fiscal policy is utterly irrelevant to the discussion in the case of an independent central bank -- see my points on monetary offset. Expansionary fiscal policy, once more, would result in even TIGHTER monetary policy.

Part IV coming soon! Hopefully it'll be my last one.
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4/30/2015 4:25:25 PM
Posted: 1 year ago
I have often wondered if Bernanke wasn't doing that intentionally, hoping the dullards in front of whom he must testify twice a year would get the freaking message. But dullards being what they are, the fiscal lessons of QE just blew over their bony little heads.

Bernanke actually called for only a temporally looser fiscal policy -- he advocated directly for cuts to entitlements, though facts be darned.

Cross-apply my arguments on monetary offset.

I thoroughly disagree, still, with your assessment, and those you are quoting, of the Fed's implicit responses to a potential fiscal stimulus package.

Then provide a credible argument against it. Thus far, you've provided nothing. You can even look the evolution of the Fed's policy statements amid the crisis, where it mentions "fiscal policy is a drag" on growth -- it's the assessment of the economic outlook which shapes the policy prescription, and a change in the outlook (e.g., a change in fiscal policy) will once more change the reaction function.

While the economists who inhabit the Fed are overwhelmingly mainstream, they do have some very sharp people. Bernanke was certainly one, Yellin may be as well. I've never read anything she wrote. She may be amazing, for all I know. I think Bernanke was very politically sensitive and desperately wanted to help Congress to do the right thing.

I think this is completely and utterly irrelevant to what I'm discussing, and the aforementioned point you made about "disagreeing" with me. It doesn't exactly afford you any credit when you state that you disagree with me, but don't go on to provide any arguments or substance against my case, but only to go on to state something completely contrary.

I do agree, however, that both Yellen, Bernanke, and others are extremely intelligent people. I love that you admitted that you haven't read her stuff -- because I have. She has a lot of great work on the efficiency wage hypothesis, actually. You should read it.

I think you are overly pessimistic about the Fed's reaction inclinations. I think Bernanke would have moved heaven and earth to help this country, had anyone cared to step up and take the responsibility for enacting the sorts of things he had the power to support. As it was, he was a one-man band, and you can't harmonize without somebody singing the melody.

That isn't true. Bernanke himself acknowledged in his 1990s papers on Japan, which he rebuked for not following a more expansionary policy at the ZLB, that it is possible for a central bank to do more. Further, he laid out several proposals during his tenure of Fed Chair of more he could have done -- raising the inflation target, a price-level target like he did in Japan, etc. I laid out several things he himself could have done, including but not limited to reducing the interest rate the Fed pays on reserves and committing to a permanently elevated balance sheet. Bernanke did none of that -- and as the piece by David Beckworth I linked to you noted, Bernanke himself shied away entirely from the notion of a regime change, and when Krugman and others called him out for running from his past research, he called those proposals "reckless." That isn't moving heaven and Earth -- it's backtracking. In that sense, the two of you have a lot in common.

As far as my reference to Greenspan: he was no longer chairman when he said it, but he was specifically referring to his efforts beginning in 2004 to slow the mortgage market by radically raising the ffr. It did absolutely nothing. It was a policy that Bernanke continued briefly, but abandoned when he felt that the number of ARM failures as a result of the Fed's contractionary rate had the potential to throw the economy in a tailspin.

Okay -- and what exactly is the point of this? You mentioned QE a while back, if memory serves. QE was clearly drastically different from raising the FFR and wasn't initiated under Greenspan, so I fail to see how the contractionary policy in the mid 2000s -- which you suggested earlier should have been more contractionary, as it was during the Depression, to ward off the housing bubble (which I also refuted in multiple ways) -- has anything at all to do with QE.

And he was right. There was always a chance to bring order to the financial markets until things began to fall apart, but continuing high rates would have turned a downturn into a certainty.

So you're recanting your earlier point about the Fed failing to respond to the housing bubble. Lovely.

Also remember who the Fed works for. Congress is free to dictate the Fed's responses in any stimulus package they were to pass.

Completely and totally wrong -- Congress is completely barred, under current law, from weighing in on monetary policy decisions. The Fed is goal dependent but instrument INDEPENDENT, so unless Congress were to change the law tomorrow, which is highly unlikely and subject to a series of political hurdles, and rightfully so, this is completely and utterly bullsh1t.

Any objections you have about Fed cancellation of the effects of fiscal policy could simply be legislated away by temporary or permanent alteration of the Fed's mandate.

It could, but it's not -- and it wasn't, and hence my points stand.

And....done.
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LETeller
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4/30/2015 11:51:24 PM
Posted: 1 year ago
How cowardly is it that you didn't even bother to respond directly to my post so that I'd actually get a notification.

- Not intentional. I was on my phone and it wouldn't load a reply.

But thanks for asking :)
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5/1/2015 12:05:58 AM
Posted: 1 year ago

That isn't true. Bernanke himself acknowledged in his 1990s papers on Japan, which he rebuked for not following a more expansionary policy at the ZLB, that it is possible for a central bank to do more. Further, he laid out several proposals during his tenure of Fed Chair of more he could have done -- raising the inflation target, a price-level target like he did in Japan, etc. I laid out several things he himself could have done, including but not limited to reducing the interest rate the Fed pays on reserves and committing to a permanently elevated balance sheet. Bernanke did none of that -- and as the piece by David Beckworth I linked to you noted, Bernanke himself shied away entirely from the notion of a regime change, and when Krugman and others called him out for running from his past research, he called those proposals "reckless." That isn't moving heaven and Earth -- it's backtracking. In that sense, the two of you have a lot in common.


- I think the takeaway is that the effects of all of those efforts in Japan were something short of a miracle.


Okay -- and what exactly is the point of this? You mentioned QE a while back, if memory serves. QE was clearly drastically different from raising the FFR and wasn't initiated under Greenspan, so I fail to see how the contractionary policy in the mid 2000s -- which you suggested earlier should have been more contractionary, as it was during the Depression, to ward off the housing bubble (which I also refuted in multiple ways) -- has anything at all to do with QE.


- You seem to be filling in a lot of blanks here, rather than taking what I say at face value.

I nowhere suggested that policy should have been more contractionary in the 2000s. It was highly contractionary, but did not have the effects Greenspan would have hoped. I'm post Keynesian. What did Keynes say was the proper interest rate policy at the peak of a boom?

I never drew any equivalence between the ffr and QE. You may be confusing what I said: what I said was that QE made control of the ffr through the fed funds market impossible, which is why the Fed began paying IOR and IOER. The point I was making is that the world in which some policies worked at one time no longer exists. The Fed can do all the daily OMO it wants, it will not budge the ffr.

So you're recanting your earlier point about the Fed failing to respond to the housing bubble. Lovely.


- Wow. Just wow. Please cite where I said the Fed failed to respond to the housing bubble?

Really, go back and cite where I said that. I'll wait. You have to quit making up stuff that I said.

Go back and read.

I said the Fed DID respond, robustly. And it didn't work. This is the point of citing Greenspan. He argued that the ffr had become decoupled from longer term interest rates. He raised rates. He responded. He did what doctrine says he should have done.

And the term structure turned upside down.

Also remember who the Fed works for. Congress is free to dictate the Fed's responses in any stimulus package they were to pass.

Completely and totally wrong -- Congress is completely barred, under current law, from weighing in on monetary policy decisions. The Fed is goal dependent but instrument INDEPENDENT, so unless Congress were to change the law tomorrow, which is highly unlikely and subject to a series of political hurdles, and rightfully so, this is completely and utterly bullsh1t.


- Fun fact. Congress creates law ;)

Any objections you have about Fed cancellation of the effects of fiscal policy could simply be legislated away by temporary or permanent alteration of the Fed's mandate.

It could, but it's not -- and it wasn't, and hence my points stand.


- Actually, that costs you the argument. Your point was that fiscal policy SHOULD NOT be used. You just admitted that your objections can all be swept away by some simple wording placed by Congress in the fiscal package.

And....done.

- Yeah, with my last point, your argument is toast. You're arguing how many angels can dance on the head of a pin.

I should be arrested for slavery.
LETeller
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5/1/2015 12:11:04 AM
Posted: 1 year ago
When people use the acronym NAIRU without snorting, we have to start from the ground up.

Why would I snort? It's a well-documented, though hard-to-measure, feature of any model of the Phillips curve; by accepting, even, that there's a negative relationship between unemployment and inflation, you accept the NAIRU. It may be hard to measure and to discern -- which is a case I've been making for a while -- but there's plenty of reason to think, both based on research and real-world experience, that some level of unemployment would cause inflationary pressures to build.


- Phillips curve?

Sorry, I just snorted again.
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5/1/2015 1:33:41 AM
Posted: 1 year ago
At 4/30/2015 11:51:24 PM, LETeller wrote:

I'll respond to this bullsh1t when I get out of class tomorrow, though I can guarantee that it won't do any good because, once more, you insist on dodging almost the entirety of what I said, which is absolutely infuriating. Then to insinuate that *I* have made anything up is stupid, disingenuous, and wrong and causes me to become, rightly, skeptical of communicating with someone such as yourself more interested in ad hominem attacks than actual substance.
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5/1/2015 6:47:53 AM
Posted: 1 year ago
At 4/30/2015 11:51:24 PM, LETeller wrote:
How cowardly is it that you didn't even bother to respond directly to my post so that I'd actually get a notification.

- Not intentional. I was on my phone and it wouldn't load a reply.

But thanks for asking :)

This isn't the least bit believable, and your attempts to respond in giant walls of text and substitute ad hominems for engaging the substance of what I said tells us everything we need to know: that you are not a serious person in the least bit, and thus we ought not take you seriously because you are, clearly, in way over your depth.

Once more, respond honestly to a single argument I've made, and then we'll talk.
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5/1/2015 7:08:08 AM
Posted: 1 year ago
At 5/1/2015 12:05:58 AM, LETeller wrote:
- I think the takeaway is that the effects of all of those efforts in Japan were something short of a miracle.

Did you read ANYTHING that I just said? What you just said is so fundamentally stupid and off-topic, refuted directly by what I just said, that it begs the question of whether you're even trying to appear serious.

Japan didn't follow any of that advice; Japan did the precise opposite -- signaling that the increase in the base was TEMPORARY, and thus investors expected inflation, and thus Japan got deflation. Are you so fundamentally stupid and in over your depth that I need to repeat myself once more? Bernanke gave this advice TO Japan -- but they did not follow it, which exposed his hypocrisy when he went on to call it "reckless."

Do you understand now? It wasn't a miracle; it's only a miracle for people, such as yourself, who are completely and totally misinformed and in over their heads. There are people who have studied this and understood this; you just happen not to be one of them. There's a fundamental distinction that I suggest you learn to value, lest you find yourself in analogous future predicaments.

- You seem to be filling in a lot of blanks here, rather than taking what I say at face value.

You didn't say a god-damned thing. You'll note that, in my cases, I did make inferences -- and I stated as much, and never once misrepresented what you said. But you never once made a single substantive point, so I'm left with a complete void. I'm trying to educate you, but you need to play along just a little bit.

I nowhere suggested that policy should have been more contractionary in the 2000s.
It was highly contractionary, but did not have the effects Greenspan would have hoped. I'm post Keynesian. What did Keynes say was the proper interest rate policy at the peak of a boom?

From Keynes: "Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom." [https://www.marxists.org...]

But that isn't what you said, but we'll get to that.

I never drew any equivalence between the ffr and QE.

Yes, you fundamentally did by commenting on Greenspan relative to QE; Greenspan didn't initiate QE. You can't throw out terms like QE that you fundamentally misunderstand, and expect not to be called out when you f1ck up the timetable of one of the most crucial monetary policy measures in the past decade. I'm going to call you out when you fundamentally have no idea what you're talking about.

You may be confusing what I said: what I said was that QE made control of the ffr through the fed funds market impossible, which is why the Fed began paying IOR and IOER.

That isn't what you said, nor is that what you responded to -- I actually made the point on controlling the FFR, but I provided several ways (IOR, ON RRP, TDF and OMO sales down the road, perhaps Term RRP or segregated cash account, etc.) in which the Fed COULD control the FFR, in spite of QE, though as you also have failed to acknowledge, IOR was a fundamentally contractionary policy.

It's interesting, also, that you separated IOR and IOER. It speaks further to your lack of understanding: there's one interest rate of 25 basis points.

The point I was making is that the world in which some policies worked at one time no longer exists. The Fed can do all the daily OMO it wants, it will not budge the ffr.

That's not the point, nor did I ever suggest that it would move the FFR. It would shift out market expectations of the FUTURE level of the fed funds rate, and thus raise NGDP expectations and reduce long-term interest rates. That was the point of QE -- that and reducing financial frictions; the goal was to signal a willingness to stay lower for longer and embed low rates in market expectations. You dismissed forward guidance entirely, even though it's (1) the most important policy tool at the Fed's disposal and (2) there's empirical work showing that, had it not been for forward guidance, the impact of QE would have been muted.

- Wow. Just wow. Please cite where I said the Fed failed to respond to the housing bubble?

Gladly. You said the following:

"I suppose at this point we probably need to talk about the Fed's contractionary policy options. What are your thoughts on the ffr moves between 2004 and 2007?

Impressive, huh? They sure shut that housing bubble down.
" [http://www.debate.org...]

It's hard to run away from something when it's there in black and white: right there you said the Fed tried but failed to prick the housing bubble.

Really, go back and cite where I said that. I'll wait. You have to quit making up stuff that I said.

The sheer irony and audacity of this remark is classic -- though I can't say I'm surprised that it came from someone of such weak character and a feeble mind as you.

I did cite it -- I've been citing and backing up every claim that I've made. YOU, to the contrary, have made things up, misrepresented, and distorted my words because, once more, you are a fundamentally useless member with nothing to contribute who's in over your depth. Insinuating that I have made ANYTHING up not only speaks to your unmitigated gall, but your disconnect with reality. It's fundamentally disgusting and disingenuous, and any objective person will see right there.

Go back and read.

What wonderful, BS projection -- I advise you to do the same, and to actually RESPOND to the posts I took the time to write. But you won't do that; you won't honestly engage what I said. You'll only run, dodge, evade and ad hom -- because the complexities of the issues you would like to opine on are over your head.

I said the Fed DID respond, robustly. And it didn't work.

Which is all I ever said that you did -- though, again, you're wrong because the intention was never to pop a housing bubble. That wasn't the intention of raising rates in the mid 2000s, but to ward off what Greenspan saw as inflation risk. As late as 2005, Bernanke and Greenspan both said the fundamentals were strong, and that explained rising home prices. NO ONE thought there was a housing bubble, save for maybe Janet Yellen. You're also wrong on your history, and your attempt to accuse ME of misrepresenting you has also fallen flat due not only to your ignorance, but your lack of reading comprehension. I can't exactly say that I'm surprised -- and no one else should be, either.

This is the point of citing Greenspan. He argued that the ffr had become decoupled from longer term interest rates. He raised rates. He responded. He did what doctrine says he should have done.

What does this have to do with anything? It's not false, but that predated QE and IOR. You mentioned Greenspan in the context of QE, and I think it's best you own up to the fact that you're wrong, and that your knowledge of the history of monetary policy moves is nonexistent.

And the term structure turned upside down.

Sure, so?

- Fun fact. Congress creates law ;)

Thank you for completely missing the point. You have no idea what in the world you're talking about, and you already conceded on offset, so responding to you is futile.

Find where I denied that Congress makes law. Just find it -- I challenge you. I said that it's totally irrelevant because the Fed will REACT to laws enacted by Congress, and where Congress fails, the Fed steps in. You already conceded this, so I haven't the faintest idea of how you think this is a novel or even worthy point. I think you've just completely run out of ammunition -- which is wh
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5/1/2015 7:12:16 AM
Posted: 1 year ago
It could, but it's not -- and it wasn't, and hence my points stand.


- Actually, that costs you the argument. Your point was that fiscal policy SHOULD NOT be used. You just admitted that your objections can all be swept away by some simple wording placed by Congress in the fiscal package.

Are you stupid? That is a complete and utter strawman of my argument, and an is/ought fallacy.

I said that the Fed SHOULD take the wheel, and Congress SHOULD par back its stimulus -- never once did I contend that it couldn't expand the stimulus, which would cause the Fed to reduce its stimulus. That was the entire point of my argument, and I said the Fed SHOULD do the heavy lifting because it can, and it's less costly than fiscal stimulus.

That was the entire crux of monetary offset. Please, for the love of God, try to keep up. I keep having to repeat myself, and you keep thinking you're clever with these "gotchas" but you're really not: all you can provide is strawmen and misrepresentations of arguments that are fundamentally over your head, irrespective of my many efforts to explain them to you in depth as slowly as I possible could.

- Yeah, with my last point, your argument is toast. You're arguing how many angels can dance on the head of a pin.

Not even close -- that only applies in a world where you fundamentally strawman and distort what I said, and live in a fact-free, feel-good world where your interpretation or feelings toward facts, rather than the actual facts, dictates reality. I pity you.

I should be arrested for slavery.

So not only are you egregiously stupid, but also bigoted and racially insensitive: how wonderful. Just when I thought you couldn't go full rtard, you never cease to amaze me.
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5/1/2015 7:14:03 AM
Posted: 1 year ago
At 5/1/2015 12:11:04 AM, LETeller wrote:
When people use the acronym NAIRU without snorting, we have to start from the ground up.

Why would I snort? It's a well-documented, though hard-to-measure, feature of any model of the Phillips curve; by accepting, even, that there's a negative relationship between unemployment and inflation, you accept the NAIRU. It may be hard to measure and to discern -- which is a case I've been making for a while -- but there's plenty of reason to think, both based on research and real-world experience, that some level of unemployment would cause inflationary pressures to build.


- Phillips curve?

Sorry, I just snorted again.

You can snort all you want, but it's due to nothing more than your fundamental disconnect with reality and inability to contend with well-established economic models which apply, not only in empirical research, but in the real world. There are problems with the Phillips curve model and the FOMC itself is skeptical of it -- there's a myriad of research on both, but I won't bore you with it, because I know you'd be wasting your time trying to grasp it -- but the lynchpin of the model (the inverse relationship between unemployment and inflation) holds, and that itself is enough to accept the NAIRU.
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LETeller
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5/1/2015 5:35:58 PM
Posted: 1 year ago

This isn't the least bit believable

- ayfkm?

You are a piece of work.

As far as a response, thanks but no thanks.

Your unpleasantness is only matched by your conviction, based on your narrow exposure to one particular sort of idea, that you are a genius, when in fact responses fly over your head, and alternative explanations mean the explainer "just hasn't heard about how you know it works".
ResponsiblyIrresponsible
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5/1/2015 5:43:00 PM
Posted: 1 year ago
At 5/1/2015 5:35:58 PM, LETeller wrote:

This isn't the least bit believable

- ayfkm?

Lol; is that the best you have? I responded to everything you said, so if you had any credibility at all, you'd engage my points.

You are a piece of work.

You, too. Unlike you, though, I don't (a) feign knowledge I don't have or (b) refuse to engage opposing arguments our cowardice.

As far as a response, thanks but no thanks.

I can't say I'm particularly surprised.

Your unpleasantness is only matched by your conviction,

First, you're the one who begin ad hominem attacks. I didn't start returning the favor until you started attacking me.

Second, it's true that I have conviction, but that's based on (a) knowing what I'm talking about and (b) being able and willing to debate and research my ideas -- neither of those apply to you, though they're necessary conditions for one to have conviction, yet you feign knowledge you don't have. That, and your unmitigated and unwarranted confidence, is what pissed me off -- and I think rightfully so.

based on your narrow exposure to one particular sort of idea,

And what might that idea be? You'll note that there was actually a great deal of nuance and qualifiers in my argument, an admission that I would -- like Keynes himself -- reconsider my position if you made a credible opposing point, etc. You're the one who began this conversation without the slightest clue of what I said, and even outright lied about having read either my post or the linked literature -- either that, or your comprehension is just terrible. It's projection to claim that *I'm* narrow-minded, and I think any objective observer would agree.

that you are a genius,

I never asserted anything of the kind. This lack of reading comprehension and self-reflection is why you're so unpleasant to hold discusses with.

when in fact responses fly over your head,

The irony and projection of this is significant; I responded to every single point you made. Any objective observer will see that.

and alternative explanations mean the explainer "just hasn't heard about how you know it works".

That isn't true at all, and you could actually read ANY of my responses in this thread to see just how wrong and misguided you are.
~ResponsiblyIrresponsible

DDO's Economics Messiah