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Embarrassing WSJ Op-Ed

ResponsiblyIrresponsible
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4/30/2015 12:01:28 PM
Posted: 1 year ago
There's a disgraceful op-ed in the WSJ calling, once more, for rate hikes. The sheer cognitive dissonance, though, of pointing out soft Q1 growth -- 2 tenths real, 1 tenth nominal -- and the FOMC's persistent tendency to overestimate growth (though, as Bernanke rightly notes, underestimate employment gains), and then calling for tighter policy is astonishing. It should, truly, shock no one that the best argument the hawks can muster is "raise rates, just because."

That isn't to say that there are *no* arguments for lifting rates sometime later this year. In fact, Loretta Mester, who currently heads the Cleveland Federal Reserve bank, made an argument in a recent speech that a gradual pace of tightening could afford the Fed leverage to conduct policy via a "wait and see" approach amid uncertainty over trend growth, the long-run Wicksellian equilibrium, and the NAIRU. Though she advised former Philadelphia Fed President, Charles Plosser -- who is an egregious embarrassment to any sensible, informed Fed watcher -- since 2006, and the conclusions of much of her work on economies of scales of large banks are questionable, she's clearly a thoughtful, deliberate thinker. The WSJ editorialists, however, are clearly not in her camp.

The main problem with the WSJ is that it cannot have it both ways; you can't say that the economy is in shambles because monetary policy was ineffective -- which is partly true, though there are a number of nuances and qualifiers to that -- and then call for tighter policy, as though this supposedly ineffective policy actually generated a discernible degree of inflation risk.

Op-ed: http://www.wsj.com...
Ben Bernanke's response: http://www.brookings.edu...
Loretta Mester's speech: https://www.clevelandfed.org...

A great line from Bernanke's piece, also, is pasted below. I think it's great that he's no longer Fed Chair -- though he was by all accounts an exceptional Chairman -- because I love to see him speak his mind:

"It's generous of the WSJ writers to note, as they do, that "economic forecasting isn't easy." They should know, since the Journal has been forecasting a breakout in inflation and a collapse in the dollar at least since 2006, when the FOMC decided not to raise the federal funds rate above 5-1/4 percent."

Anyone else feel that burn?
~ResponsiblyIrresponsible

DDO's Economics Messiah
Chang29
Posts: 732
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4/30/2015 10:49:39 PM
Posted: 1 year ago
At 4/30/2015 12:01:28 PM, ResponsiblyIrresponsible wrote:
There's a disgraceful op-ed in the WSJ calling, once more, for rate hikes. The sheer cognitive dissonance, though, of pointing out soft Q1 growth -- 2 tenths real, 1 tenth nominal -- and the FOMC's persistent tendency to overestimate growth (though, as Bernanke rightly notes, underestimate employment gains), and then calling for tighter policy is astonishing. It should, truly, shock no one that the best argument the hawks can muster is "raise rates, just because."

That isn't to say that there are *no* arguments for lifting rates sometime later this year. In fact, Loretta Mester, who currently heads the Cleveland Federal Reserve bank, made an argument in a recent speech that a gradual pace of tightening could afford the Fed leverage to conduct policy via a "wait and see" approach amid uncertainty over trend growth, the long-run Wicksellian equilibrium, and the NAIRU. Though she advised former Philadelphia Fed President, Charles Plosser -- who is an egregious embarrassment to any sensible, informed Fed watcher -- since 2006, and the conclusions of much of her work on economies of scales of large banks are questionable, she's clearly a thoughtful, deliberate thinker. The WSJ editorialists, however, are clearly not in her camp.

The main problem with the WSJ is that it cannot have it both ways; you can't say that the economy is in shambles because monetary policy was ineffective -- which is partly true, though there are a number of nuances and qualifiers to that -- and then call for tighter policy, as though this supposedly ineffective policy actually generated a discernible degree of inflation risk.

Op-ed: http://www.wsj.com...
Ben Bernanke's response: http://www.brookings.edu...
Loretta Mester's speech: https://www.clevelandfed.org...

A great line from Bernanke's piece, also, is pasted below. I think it's great that he's no longer Fed Chair -- though he was by all accounts an exceptional Chairman -- because I love to see him speak his mind:

"It's generous of the WSJ writers to note, as they do, that "economic forecasting isn't easy." They should know, since the Journal has been forecasting a breakout in inflation and a collapse in the dollar at least since 2006, when the FOMC decided not to raise the federal funds rate above 5-1/4 percent."

Anyone else feel that burn?

Another example of the immorality of monetary policy!

Believe in macro economic astrology, lose money by astrology. The writer, believed the Fed's prior statements, and analysis of those statements, thus, as many other people hedged positions to benefit from for a June rate hike. Now those people are feeling the burn of the Fed. They are now financial punished because a meaningless GDP number did not change enough.
A free market anti-capitalist

If it can be de-centralized, it will be de-centralized.
ResponsiblyIrresponsible
Posts: 12,398
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5/1/2015 7:15:52 AM
Posted: 1 year ago
At 4/30/2015 10:49:39 PM, Chang29 wrote:
Another example of the immorality of monetary policy!

Believe in macro economic astrology, lose money by astrology. The writer, believed the Fed's prior statements, and analysis of those statements, thus, as many other people hedged positions to benefit from for a June rate hike. Now those people are feeling the burn of the Fed. They are now financial punished because a meaningless GDP number did not change enough.

Please, for the love of God, go away. None of what you just said had any bearing at all on anything relevant, either to this thread or to reality, and I'm frankly too tired to unpack your argument piece by piece: it isn't worth my time to try to explain to you basic economic fundamentals found in Macro 101 to someone far too close-minded to ever grasp even the simplest, most well-researched and accepted ideas.
~ResponsiblyIrresponsible

DDO's Economics Messiah
Chang29
Posts: 732
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5/1/2015 7:36:11 AM
Posted: 1 year ago
At 5/1/2015 7:15:52 AM, ResponsiblyIrresponsible wrote:
At 4/30/2015 10:49:39 PM, Chang29 wrote:
Another example of the immorality of monetary policy!

Believe in macro economic astrology, lose money by astrology. The writer, believed the Fed's prior statements, and analysis of those statements, thus, as many other people hedged positions to benefit from for a June rate hike. Now those people are feeling the burn of the Fed. They are now financial punished because a meaningless GDP number did not change enough.

Please, for the love of God, go away. None of what you just said had any bearing at all on anything relevant, either to this thread or to reality, and I'm frankly too tired to unpack your argument piece by piece: it isn't worth my time to try to explain to you basic economic fundamentals found in Macro 101 to someone far too close-minded to ever grasp even the simplest, most well-researched and accepted ideas.

Immoral economic thought is destroying freedom and the idea of liberty throughout the world. The economics of individual voluntary action are the most sound economic policy in the history of mankind. Macro-economic theory (equal to astrology) is nothing more than statism.
A free market anti-capitalist

If it can be de-centralized, it will be de-centralized.
ResponsiblyIrresponsible
Posts: 12,398
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5/1/2015 9:29:45 AM
Posted: 1 year ago
At 5/1/2015 7:36:11 AM, Chang29 wrote:
At 5/1/2015 7:15:52 AM, ResponsiblyIrresponsible wrote:
At 4/30/2015 10:49:39 PM, Chang29 wrote:
Another example of the immorality of monetary policy!

Believe in macro economic astrology, lose money by astrology. The writer, believed the Fed's prior statements, and analysis of those statements, thus, as many other people hedged positions to benefit from for a June rate hike. Now those people are feeling the burn of the Fed. They are now financial punished because a meaningless GDP number did not change enough.

Please, for the love of God, go away. None of what you just said had any bearing at all on anything relevant, either to this thread or to reality, and I'm frankly too tired to unpack your argument piece by piece: it isn't worth my time to try to explain to you basic economic fundamentals found in Macro 101 to someone far too close-minded to ever grasp even the simplest, most well-researched and accepted ideas.

Immoral economic thought is destroying freedom and the idea of liberty throughout the world. The economics of individual voluntary action are the most sound economic policy in the history of mankind. Macro-economic theory (equal to astrology) is nothing more than statism.

Great -- and as much as I would like to hear your sophistry, I'm interested in speaking to serious people.
~ResponsiblyIrresponsible

DDO's Economics Messiah
Chang29
Posts: 732
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5/1/2015 1:07:25 PM
Posted: 1 year ago
At 5/1/2015 9:29:45 AM, ResponsiblyIrresponsible wrote:
At 5/1/2015 7:36:11 AM, Chang29 wrote:
At 5/1/2015 7:15:52 AM, ResponsiblyIrresponsible wrote:
At 4/30/2015 10:49:39 PM, Chang29 wrote:
Another example of the immorality of monetary policy!

Believe in macro economic astrology, lose money by astrology. The writer, believed the Fed's prior statements, and analysis of those statements, thus, as many other people hedged positions to benefit from for a June rate hike. Now those people are feeling the burn of the Fed. They are now financial punished because a meaningless GDP number did not change enough.

Please, for the love of God, go away. None of what you just said had any bearing at all on anything relevant, either to this thread or to reality, and I'm frankly too tired to unpack your argument piece by piece: it isn't worth my time to try to explain to you basic economic fundamentals found in Macro 101 to someone far too close-minded to ever grasp even the simplest, most well-researched and accepted ideas.

Immoral economic thought is destroying freedom and the idea of liberty throughout the world. The economics of individual voluntary action are the most sound economic policy in the history of mankind. Macro-economic theory (equal to astrology) is nothing more than statism.

Great -- and as much as I would like to hear your sophistry, I'm interested in speaking to serious people.

This is serious! Macro-economic theory is a destructive force, killing hopes and dreams by the destruction of the value of money itself. The macro-economist calls this carnage expansionary monetary policy, uses models of economy growth that show how inflation is needed to increase GDP (a meaningless number). All of this is done without even thought of the real long term distruction cuase by these policies. The pushers of snake oil policies will tell countries "it would be worse without us".
A free market anti-capitalist

If it can be de-centralized, it will be de-centralized.
ResponsiblyIrresponsible
Posts: 12,398
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5/1/2015 1:08:40 PM
Posted: 1 year ago
At 5/1/2015 1:07:25 PM, Chang29 wrote:
At 5/1/2015 9:29:45 AM, ResponsiblyIrresponsible wrote:
At 5/1/2015 7:36:11 AM, Chang29 wrote:
At 5/1/2015 7:15:52 AM, ResponsiblyIrresponsible wrote:
At 4/30/2015 10:49:39 PM, Chang29 wrote:
Another example of the immorality of monetary policy!

Believe in macro economic astrology, lose money by astrology. The writer, believed the Fed's prior statements, and analysis of those statements, thus, as many other people hedged positions to benefit from for a June rate hike. Now those people are feeling the burn of the Fed. They are now financial punished because a meaningless GDP number did not change enough.

Please, for the love of God, go away. None of what you just said had any bearing at all on anything relevant, either to this thread or to reality, and I'm frankly too tired to unpack your argument piece by piece: it isn't worth my time to try to explain to you basic economic fundamentals found in Macro 101 to someone far too close-minded to ever grasp even the simplest, most well-researched and accepted ideas.

Immoral economic thought is destroying freedom and the idea of liberty throughout the world. The economics of individual voluntary action are the most sound economic policy in the history of mankind. Macro-economic theory (equal to astrology) is nothing more than statism.

Great -- and as much as I would like to hear your sophistry, I'm interested in speaking to serious people.

This is serious! Macro-economic theory is a destructive force, killing hopes and dreams by the destruction of the value of money itself. The macro-economist calls this carnage expansionary monetary policy, uses models of economy growth that show how inflation is needed to increase GDP (a meaningless number). All of this is done without even thought of the real long term distruction cuase by these policies. The pushers of snake oil policies will tell countries "it would be worse without us".

kk.
~ResponsiblyIrresponsible

DDO's Economics Messiah