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Fed Raises Rates

ColeTrain
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12/16/2015 8:40:03 PM
Posted: 11 months ago
Before JMK can do it, here we go. ;)
[http://www.cnbc.com...]

The Fed has raised rates by 25 points.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ResponsiblyIrresponsible
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12/16/2015 9:31:53 PM
Posted: 11 months ago
At 12/16/2015 8:40:03 PM, ColeTrain wrote:
Before JMK can do it, here we go. ;)
[http://www.cnbc.com...]

The Fed has raised rates by 25 points.

This is an absolutely horrid move for reasons I have explained and will explain again--perhaps in more depth--later today.
~ResponsiblyIrresponsible

DDO's Economics Messiah
ColeTrain
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12/16/2015 10:13:31 PM
Posted: 11 months ago
At 12/16/2015 9:31:53 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 8:40:03 PM, ColeTrain wrote:
Before JMK can do it, here we go. ;)
[http://www.cnbc.com...]

The Fed has raised rates by 25 points.

This is an absolutely horrid move for reasons I have explained and will explain again--perhaps in more depth--later today.

Haha, alright. :)
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
TheProphett
Posts: 520
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12/16/2015 10:26:03 PM
Posted: 11 months ago
At 12/16/2015 10:13:31 PM, ColeTrain wrote:
At 12/16/2015 9:31:53 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 8:40:03 PM, ColeTrain wrote:
Before JMK can do it, here we go. ;)
[http://www.cnbc.com...]

The Fed has raised rates by 25 points.

This is an absolutely horrid move for reasons I have explained and will explain again--perhaps in more depth--later today.

Haha, alright. :)

I called it dumb too, for various reasons, but you just laughed me off. :(
Topics I would like to debate: https://docs.google.com...

Epic Quotes:

She's a cunning linguist, but I'm a master debater - Austin Powers


Economic Forum Revival Co-Leader

If you are interested in starting a political journal for the site, please contact me.
ColeTrain
Posts: 4,293
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12/16/2015 10:31:51 PM
Posted: 11 months ago
At 12/16/2015 10:26:03 PM, TheProphett wrote:
At 12/16/2015 10:13:31 PM, ColeTrain wrote:
At 12/16/2015 9:31:53 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 8:40:03 PM, ColeTrain wrote:
Before JMK can do it, here we go. ;)
[http://www.cnbc.com...]

The Fed has raised rates by 25 points.

This is an absolutely horrid move for reasons I have explained and will explain again--perhaps in more depth--later today.

Haha, alright. :)

I called it dumb too, for various reasons, but you just laughed me off. :(

Lol... I wouldn't call it *laughing* you off. To be fair, though, your assertions weren't crystallized at the time...

Besides, you know it's nothing personal!
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
TheProphett
Posts: 520
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12/16/2015 10:33:20 PM
Posted: 11 months ago
At 12/16/2015 10:31:51 PM, ColeTrain wrote:
At 12/16/2015 10:26:03 PM, TheProphett wrote:
At 12/16/2015 10:13:31 PM, ColeTrain wrote:
At 12/16/2015 9:31:53 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 8:40:03 PM, ColeTrain wrote:
Before JMK can do it, here we go. ;)
[http://www.cnbc.com...]

The Fed has raised rates by 25 points.

This is an absolutely horrid move for reasons I have explained and will explain again--perhaps in more depth--later today.

Haha, alright. :)

I called it dumb too, for various reasons, but you just laughed me off. :(

Lol... I wouldn't call it *laughing* you off. To be fair, though, your assertions weren't crystallized at the time...

Besides, you know it's nothing personal!

Ah sure. Play the polite game.
Topics I would like to debate: https://docs.google.com...

Epic Quotes:

She's a cunning linguist, but I'm a master debater - Austin Powers


Economic Forum Revival Co-Leader

If you are interested in starting a political journal for the site, please contact me.
ColeTrain
Posts: 4,293
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12/16/2015 10:37:40 PM
Posted: 11 months ago
At 12/16/2015 10:33:20 PM, TheProphett wrote:
At 12/16/2015 10:31:51 PM, ColeTrain wrote:
At 12/16/2015 10:26:03 PM, TheProphett wrote:
At 12/16/2015 10:13:31 PM, ColeTrain wrote:
At 12/16/2015 9:31:53 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 8:40:03 PM, ColeTrain wrote:
Before JMK can do it, here we go. ;)
[http://www.cnbc.com...]

The Fed has raised rates by 25 points.

This is an absolutely horrid move for reasons I have explained and will explain again--perhaps in more depth--later today.

Haha, alright. :)

I called it dumb too, for various reasons, but you just laughed me off. :(

Lol... I wouldn't call it *laughing* you off. To be fair, though, your assertions weren't crystallized at the time...

Besides, you know it's nothing personal!

Ah sure. Play the polite game.

-.-

I never claimed that it'd be a great idea, I just said that there's no *big* problems with doing so. Employment is at a stage where it's feasible and the inflationary risks aren't near as disconcerting as they were when the Fed raised rates last time.

But really, I wasn't laughing you off, it was friendly discussion... Do you really think I was just laughing you off? If so, I'm sorry, that's not at all what I'd intended.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
TheProphett
Posts: 520
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12/16/2015 10:39:02 PM
Posted: 11 months ago
At 12/16/2015 10:37:40 PM, ColeTrain wrote:
At 12/16/2015 10:33:20 PM, TheProphett wrote:
At 12/16/2015 10:31:51 PM, ColeTrain wrote:
At 12/16/2015 10:26:03 PM, TheProphett wrote:
At 12/16/2015 10:13:31 PM, ColeTrain wrote:
At 12/16/2015 9:31:53 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 8:40:03 PM, ColeTrain wrote:
Before JMK can do it, here we go. ;)
[http://www.cnbc.com...]

The Fed has raised rates by 25 points.

This is an absolutely horrid move for reasons I have explained and will explain again--perhaps in more depth--later today.

Haha, alright. :)

I called it dumb too, for various reasons, but you just laughed me off. :(

Lol... I wouldn't call it *laughing* you off. To be fair, though, your assertions weren't crystallized at the time...

Besides, you know it's nothing personal!

Ah sure. Play the polite game.

-.-

I never claimed that it'd be a great idea, I just said that there's no *big* problems with doing so. Employment is at a stage where it's feasible and the inflationary risks aren't near as disconcerting as they were when the Fed raised rates last time.

But really, I wasn't laughing you off, it was friendly discussion... Do you really think I was just laughing you off? If so, I'm sorry, that's not at all what I'd intended.

I mean, my self esteem was greatly lowered by your derogatory comments, but I forgive you. If we are going to play the interest rate game, take it slow, maybe by increments of a quarter of one percent. No rocket ship lift-off.
Topics I would like to debate: https://docs.google.com...

Epic Quotes:

She's a cunning linguist, but I'm a master debater - Austin Powers


Economic Forum Revival Co-Leader

If you are interested in starting a political journal for the site, please contact me.
ColeTrain
Posts: 4,293
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12/16/2015 10:49:31 PM
Posted: 11 months ago
At 12/16/2015 10:39:02 PM, TheProphett wrote:

I mean, my self esteem was greatly lowered by your derogatory comments,

Sorry! :( I feel really bad now... didn't realize that...

but I forgive you.

okay....

If we are going to play the interest rate game, take it slow, maybe by increments of a quarter of one percent. No rocket ship lift-off.

Mm. Maybe. I agree that 25 was a little much, but if they were to ever raise rates, I feel this was the best time to start (even if they should have cut it back a little).
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
TheProphett
Posts: 520
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12/16/2015 10:51:25 PM
Posted: 11 months ago
At 12/16/2015 10:49:31 PM, ColeTrain wrote:

Lol, I don't have the emotional volatility of.... someone who has thin skin. I actually have thick skin, but nothing you ever said was wrong in any way xD. Its just funny to see you react that way, like you genuinely did something to hurt my feelings, which was never done. Anyways, yeah I agree. Can't wait for the economist article to come out about it. I'll be sure to start a PM conversation or a thread about it.
Topics I would like to debate: https://docs.google.com...

Epic Quotes:

She's a cunning linguist, but I'm a master debater - Austin Powers


Economic Forum Revival Co-Leader

If you are interested in starting a political journal for the site, please contact me.
ColeTrain
Posts: 4,293
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12/16/2015 10:55:36 PM
Posted: 11 months ago
At 12/16/2015 10:51:25 PM, TheProphett wrote:
At 12/16/2015 10:49:31 PM, ColeTrain wrote:

Lol, I don't have the emotional volatility of.... someone who has thin skin. I actually have thick skin, but nothing you ever said was wrong in any way xD. Its just funny to see you react that way, like you genuinely did something to hurt my feelings, which was never done.

Better safe than sorry. :P But no, I really didn't realize that they were perceived as derogatory. I don't want my comments to be taken as such, as that's now how they were/are intended. I am glad, nevertheless, that I *didn't* hurt your feelings. :)

Anyways, yeah I agree. Can't wait for the economist article to come out about it. I'll be sure to start a PM conversation or a thread about it.

Haha, alright. You and famous need to get that MW post out ASAP... ;)
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ResponsiblyIrresponsible
Posts: 12,398
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12/16/2015 11:15:18 PM
Posted: 11 months ago
Here are the main reasons this was a horrible move:

(a) Employment is *not* nearly as stable as the Fed would like it to be. Indeed, they certainly achieved their criterion of "some" further improvement in the labor market, but that criterion itself was far too lenient and the undergirding logic circular.

Yellen concedes that there's underlying slack, but she won't tell you how much--this is because she doesn't know. If Janet doesn't know, you don't know, nor do I. But this becomes an issue of risk assessment: if we run hot, they might reenter; if not, inflation might rise ever so slightly, and then we can tighten to bring it down. The latter might be a bit painful temporarily--no one argues that a steep pace of rate hikes is necessarily fun--but the former would slam the door so as to *ensure* that those workers are structurally unemployed, in the process undermining the economy's long-term potential. I'm not willing to accept the trade-off associated with the former.

(b) They argue that most of the factors holding down inflation are "transitory." It is true that most of the shortfall is due to falling energy and non-energy imports, but their conclusion is, frankly, positively ludicrous: projections by the IEA suggest the supply glut will persist at least through the end of the decade, and China remains in transition, meaning its consumption of oil will likely stay low even as its cyclical weakness diminishes in coming years--and even making that assumption itself is far too generous. Global policy divergence has never been greater, even prior to today's rate hike, so it's very likely that the dollar will continue to rise: as the dollar rises, import prices plummet. These aren't "transitory developments."

(c) They're relying on the Phillips curve framework. This is utter nonsense: the Phillips curve hasn't been statistically significant for the past 15 years, and there's virtually no relation between past and current inflation. There is no reason to think that diminishing slack will lead to wage pressures, or even that wage pressures will result in price pressures.

(d) They assume that inflation expectations are well-anchored, but concede that market-based measures, like TIPS spreads, continue to fall and even that survey-based measures have trended downward. These are, in light of a statistically insignificant employment gap, extremely important in determining current inflation, so low inflation becomes a self-reinforcing spiral.

There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.
~ResponsiblyIrresponsible

DDO's Economics Messiah
Skepsikyma
Posts: 8,280
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12/16/2015 11:23:52 PM
Posted: 11 months ago
At 12/16/2015 11:15:18 PM, ResponsiblyIrresponsible wrote:
There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.

Can I get an 'End the Fed'?
"The Collectivist experiment is thoroughly suited (in appearance at least) to the Capitalist society which it proposes to replace. It works with the existing machinery of Capitalism, talks and thinks in the existing terms of Capitalism, appeals to just those appetites which Capitalism has aroused, and ridicules as fantastic and unheard-of just those things in society the memory of which Capitalism has killed among men wherever the blight of it has spread."
- Hilaire Belloc -
ResponsiblyIrresponsible
Posts: 12,398
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12/16/2015 11:27:11 PM
Posted: 11 months ago
At 12/16/2015 11:23:52 PM, Skepsikyma wrote:
At 12/16/2015 11:15:18 PM, ResponsiblyIrresponsible wrote:
There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.

Can I get an 'End the Fed'?

END THEEEEEEE FEEEDDDDDDDDDD!!!!!!!!
~ResponsiblyIrresponsible

DDO's Economics Messiah
ColeTrain
Posts: 4,293
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12/16/2015 11:27:24 PM
Posted: 11 months ago
At 12/16/2015 11:23:52 PM, Skepsikyma wrote:
At 12/16/2015 11:15:18 PM, ResponsiblyIrresponsible wrote:
There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.

Can I get an 'End the Fed'?

Abolish the Federal Reserve. There's one.
Sign up if you're in. :P

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"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ColeTrain
Posts: 4,293
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12/16/2015 11:31:53 PM
Posted: 11 months ago
At 12/16/2015 11:15:18 PM, ResponsiblyIrresponsible wrote:
Here are the main reasons this was a horrible move:
(a) Employment is *not* nearly as stable as the Fed would like it to be. Indeed, they certainly achieved their criterion of "some" further improvement in the labor market, but that criterion itself was far too lenient and the undergirding logic circular.

Didn't you already agree that employment is essentially full? 5% is pretty good, honestly.

Yellen concedes that there's underlying slack, but she won't tell you how much--this is because she doesn't know. If Janet doesn't know, you don't know, nor do I. But this becomes an issue of risk assessment: if we run hot, they might reenter; if not, inflation might rise ever so slightly, and then we can tighten to bring it down. The latter might be a bit painful temporarily--no one argues that a steep pace of rate hikes is necessarily fun--but the former would slam the door so as to *ensure* that those workers are structurally unemployed, in the process undermining the economy's long-term potential. I'm not willing to accept the trade-off associated with the former.

Plausible.

(b) They argue that most of the factors holding down inflation are "transitory." It is true that most of the shortfall is due to falling energy and non-energy imports, but their conclusion is, frankly, positively ludicrous: projections by the IEA suggest the supply glut will persist at least through the end of the decade, and China remains in transition, meaning its consumption of oil will likely stay low even as its cyclical weakness diminishes in coming years--and even making that assumption itself is far too generous. Global policy divergence has never been greater, even prior to today's rate hike, so it's very likely that the dollar will continue to rise: as the dollar rises, import prices plummet. These aren't "transitory developments."

Partially due to, I'm sure, the IMF.

(c) They're relying on the Phillips curve framework. This is utter nonsense: the Phillips curve hasn't been statistically significant for the past 15 years, and there's virtually no relation between past and current inflation. There is no reason to think that diminishing slack will lead to wage pressures, or even that wage pressures will result in price pressures.

Yeah.

(d) They assume that inflation expectations are well-anchored, but concede that market-based measures, like TIPS spreads, continue to fall and even that survey-based measures have trended downward. These are, in light of a statistically insignificant employment gap, extremely important in determining current inflation, so low inflation becomes a self-reinforcing spiral.

It normally does with monetary policy like this.

There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.

So... are you calling it pathetic and incompetent because of how high it was raised, or just because it was raised at all? I don't see any significant issues with raising it a *little* bit.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
Skepsikyma
Posts: 8,280
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12/16/2015 11:33:06 PM
Posted: 11 months ago
At 12/16/2015 11:27:11 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 11:23:52 PM, Skepsikyma wrote:
At 12/16/2015 11:15:18 PM, ResponsiblyIrresponsible wrote:
There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.

Can I get an 'End the Fed'?

END THEEEEEEE FEEEDDDDDDDDDD!!!!!!!!

https://siestakeyster.files.wordpress.com...
"The Collectivist experiment is thoroughly suited (in appearance at least) to the Capitalist society which it proposes to replace. It works with the existing machinery of Capitalism, talks and thinks in the existing terms of Capitalism, appeals to just those appetites which Capitalism has aroused, and ridicules as fantastic and unheard-of just those things in society the memory of which Capitalism has killed among men wherever the blight of it has spread."
- Hilaire Belloc -
ResponsiblyIrresponsible
Posts: 12,398
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12/16/2015 11:35:45 PM
Posted: 11 months ago
At 12/16/2015 11:33:06 PM, Skepsikyma wrote:
At 12/16/2015 11:27:11 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 11:23:52 PM, Skepsikyma wrote:
At 12/16/2015 11:15:18 PM, ResponsiblyIrresponsible wrote:
There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.

Can I get an 'End the Fed'?

END THEEEEEEE FEEEDDDDDDDDDD!!!!!!!!

https://siestakeyster.files.wordpress.com...

I'd replace the Fed with a bunny, a computer, and a bottle of gin.
~ResponsiblyIrresponsible

DDO's Economics Messiah
ResponsiblyIrresponsible
Posts: 12,398
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12/16/2015 11:41:18 PM
Posted: 11 months ago
At 12/16/2015 11:31:53 PM, ColeTrain wrote:
At 12/16/2015 11:15:18 PM, ResponsiblyIrresponsible wrote:
Here are the main reasons this was a horrible move:
(a) Employment is *not* nearly as stable as the Fed would like it to be. Indeed, they certainly achieved their criterion of "some" further improvement in the labor market, but that criterion itself was far too lenient and the undergirding logic circular.

Didn't you already agree that employment is essentially full? 5% is pretty good, honestly.

I don't recall every saying that: I said the Fed views it as full, and it could be, but I'm unconvinced, and that uncertainty breeds my call for caution.

Yellen concedes that there's underlying slack, but she won't tell you how much--this is because she doesn't know. If Janet doesn't know, you don't know, nor do I. But this becomes an issue of risk assessment: if we run hot, they might reenter; if not, inflation might rise ever so slightly, and then we can tighten to bring it down. The latter might be a bit painful temporarily--no one argues that a steep pace of rate hikes is necessarily fun--but the former would slam the door so as to *ensure* that those workers are structurally unemployed, in the process undermining the economy's long-term potential. I'm not willing to accept the trade-off associated with the former.

Plausible.

(b) They argue that most of the factors holding down inflation are "transitory." It is true that most of the shortfall is due to falling energy and non-energy imports, but their conclusion is, frankly, positively ludicrous: projections by the IEA suggest the supply glut will persist at least through the end of the decade, and China remains in transition, meaning its consumption of oil will likely stay low even as its cyclical weakness diminishes in coming years--and even making that assumption itself is far too generous. Global policy divergence has never been greater, even prior to today's rate hike, so it's very likely that the dollar will continue to rise: as the dollar rises, import prices plummet. These aren't "transitory developments."

Partially due to, I'm sure, the IMF.

How? The yuan decision is totally meaningless.

(c) They're relying on the Phillips curve framework. This is utter nonsense: the Phillips curve hasn't been statistically significant for the past 15 years, and there's virtually no relation between past and current inflation. There is no reason to think that diminishing slack will lead to wage pressures, or even that wage pressures will result in price pressures.

Yeah.

(d) They assume that inflation expectations are well-anchored, but concede that market-based measures, like TIPS spreads, continue to fall and even that survey-based measures have trended downward. These are, in light of a statistically insignificant employment gap, extremely important in determining current inflation, so low inflation becomes a self-reinforcing spiral.

It normally does with monetary policy like this.

I disagree: this is pretty much unprecedented, primarily due to the longevity of the downturn. Expectations have been well anchored for the past 20 years.

There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.

So... are you calling it pathetic and incompetent because of how high it was raised, or just because it was raised at all?

The fact that it was raised at all: the actual numerical increase is meaningless--don't reason from a price change!--but what matters is what this move *signals* and its impact on nominal-income expectations. And it's not good.

I don't see any significant issues with raising it a *little* bit.

There are many. I'm too tired to write them out again, lol.
~ResponsiblyIrresponsible

DDO's Economics Messiah
Chang29
Posts: 732
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12/16/2015 11:42:19 PM
Posted: 11 months ago
At 12/16/2015 11:15:18 PM, ResponsiblyIrresponsible wrote:
Here are the main reasons this was a horrible move:



(a) Employment is *not* nearly as stable as the Fed would like it to be. Indeed, they certainly achieved their criterion of "some" further improvement in the labor market, but that criterion itself was far too lenient and the undergirding logic circular.

Yellen concedes that there's underlying slack, but she won't tell you how much--this is because she doesn't know. If Janet doesn't know, you don't know, nor do I. But this becomes an issue of risk assessment: if we run hot, they might reenter; if not, inflation might rise ever so slightly, and then we can tighten to bring it down. The latter might be a bit painful temporarily--no one argues that a steep pace of rate hikes is necessarily fun--but the former would slam the door so as to *ensure* that those workers are structurally unemployed, in the process undermining the economy's long-term potential. I'm not willing to accept the trade-off associated with the former.

(b) They argue that most of the factors holding down inflation are "transitory." It is true that most of the shortfall is due to falling energy and non-energy imports, but their conclusion is, frankly, positively ludicrous: projections by the IEA suggest the supply glut will persist at least through the end of the decade, and China remains in transition, meaning its consumption of oil will likely stay low even as its cyclical weakness diminishes in coming years--and even making that assumption itself is far too generous. Global policy divergence has never been greater, even prior to today's rate hike, so it's very likely that the dollar will continue to rise: as the dollar rises, import prices plummet. These aren't "transitory developments."

(c) They're relying on the Phillips curve framework. This is utter nonsense: the Phillips curve hasn't been statistically significant for the past 15 years, and there's virtually no relation between past and current inflation. There is no reason to think that diminishing slack will lead to wage pressures, or even that wage pressures will result in price pressures.

(d) They assume that inflation expectations are well-anchored, but concede that market-based measures, like TIPS spreads, continue to fall and even that survey-based measures have trended downward. These are, in light of a statistically insignificant employment gap, extremely important in determining current inflation, so low inflation becomes a self-reinforcing spiral.

There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.

I agree that the Fed is incompetent. Are you with me about taking away power from unaccountable bureaucrats?

With a couple of prods from me you will be fully supporting this decision, just to disagree with me.
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12/16/2015 11:44:23 PM
Posted: 11 months ago
At 12/16/2015 11:42:19 PM, Chang29 wrote:
I agree that the Fed is incompetent. Are you with me about taking away power from unaccountable bureaucrats?

No, I'm saying they're incompetent because they didn't do *more.* You're advocating real business cycle theory, or some other sh1t where prices are evidently perfectly flexible and monetary policy perpetually neutral.

That, or you're just a moron. I tend toward the latter, tbh.

With a couple of prods from me you will be fully supporting this decision, just to disagree with me.

Lmfao.

Once again, my posts are totally over your head. All is well that ends well.
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Chang29
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12/16/2015 11:53:01 PM
Posted: 11 months ago
At 12/16/2015 11:44:23 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 11:42:19 PM, Chang29 wrote:
I agree that the Fed is incompetent. Are you with me about taking away power from unaccountable bureaucrats?

No, I'm saying they're incompetent because they didn't do *more.* You're advocating real business cycle theory, or some other sh1t where prices are evidently perfectly flexible and monetary policy perpetually neutral.

That, or you're just a moron. I tend toward the latter, tbh.

With a couple of prods from me you will be fully supporting this decision, just to disagree with me.

Lmfao.

Once again, my posts are totally over your head. All is well that ends well.

This delusional moron is headed to the beach for some breakfast, later.
A free market anti-capitalist

If it can be de-centralized, it will be de-centralized.
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12/16/2015 11:54:50 PM
Posted: 11 months ago
At 12/16/2015 11:53:01 PM, Chang29 wrote:
At 12/16/2015 11:44:23 PM, ResponsiblyIrresponsible wrote:
At 12/16/2015 11:42:19 PM, Chang29 wrote:
I agree that the Fed is incompetent. Are you with me about taking away power from unaccountable bureaucrats?

No, I'm saying they're incompetent because they didn't do *more.* You're advocating real business cycle theory, or some other sh1t where prices are evidently perfectly flexible and monetary policy perpetually neutral.

That, or you're just a moron. I tend toward the latter, tbh.

With a couple of prods from me you will be fully supporting this decision, just to disagree with me.

Lmfao.

Once again, my posts are totally over your head. All is well that ends well.

This delusional moron is headed to the beach for some breakfast, later.

Have fun, brah. Bring me back a scone or something.
~ResponsiblyIrresponsible

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Robkwoods
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12/17/2015 5:58:44 PM
Posted: 11 months ago
At 12/16/2015 11:27:24 PM, ColeTrain wrote:
At 12/16/2015 11:23:52 PM, Skepsikyma wrote:
At 12/16/2015 11:15:18 PM, ResponsiblyIrresponsible wrote:
There are more reasons, but this generally shreds their analysis today. It was absolutely pathetic, and frankly I'm appalled at the sheer incompetence at the Fed.

Can I get an 'End the Fed'?

Abolish the Federal Reserve. There's one.
Sign up if you're in. :P

1. Milton Friedman
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12/17/2015 6:10:21 PM
Posted: 11 months ago
At 12/17/2015 5:58:44 PM, Robkwoods wrote:

That is far too simplistic--he wanted to abolish the idea of a *discretionary* Fed and replace it with a computer tasked with an M2 targeting rule: i.e., the Fed would increase the base each year such that M2 grows by something like 3 percent.

Then he recanted that position in the 90s when velocity unexpectedly soared. Sounds like an NGDP rule to me which, hint, is far from "ending the Fed."

Ironically, Milton Friedman would be for far more expansionary monetary policy today, as he was during the Depression. It's always fascinating when anti-Fed'ers -- Rand Paul did this a while ago, though so great was his ignorance that he didn't even know Friedman's dead -- cite Friedman: he's not an ally.
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12/17/2015 6:54:36 PM
Posted: 11 months ago
At 12/17/2015 6:10:21 PM, ResponsiblyIrresponsible wrote:
At 12/17/2015 5:58:44 PM, Robkwoods wrote:

That is far too simplistic--he wanted to abolish the idea of a *discretionary* Fed and replace it with a computer tasked with an M2 targeting rule: i.e., the Fed would increase the base each year such that M2 grows by something like 3 percent.

Then he recanted that position in the 90s when velocity unexpectedly soared. Sounds like an NGDP rule to me which, hint, is far from "ending the Fed."

Ironically, Milton Friedman would be for far more expansionary monetary policy today, as he was during the Depression. It's always fascinating when anti-Fed'ers -- Rand Paul did this a while ago, though so great was his ignorance that he didn't even know Friedman's dead -- cite Friedman: he's not an ally.

Yeah, that is quite embarrassing for Rand Paul.

I will admit that I am currently at the limits of my current knowledge on monetary policy. Cause this shti is mind numbing.

But based on the original intent of the fed, they have been far from successful.
One job, control the quantity of money. That's it! How hard can that be? This is typical of central planning, it is terrible at doing the task it set out to do.

Discretionary or subjective policy tends to be terrible. I think his want to abolish comes from his notion that they are, on balance, a failure. The only reason they are still around is because they are a government entity.

I would agree that MF is for expanding monetary policy. I think this is needed for continued growth. In his vision for sustain free market growth you require more money, but as a means of it actually being created by the market. Not artificially by central planning.
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12/17/2015 7:18:03 PM
Posted: 11 months ago
At 12/17/2015 6:10:21 PM, ResponsiblyIrresponsible wrote:
At 12/17/2015 5:58:44 PM, Robkwoods wrote:

Ironically, Milton Friedman would be for far more expansionary monetary policy today, as he was during the Depression. It's always fascinating when anti-Fed'ers -- Rand Paul did this a while ago, though so great was his ignorance that he didn't even know Friedman's dead -- cite Friedman: he's not an ally.

Now that I re-read you statement. Friedman was 100% on board to remove the Fed. His suggestion for reform was the policy that needed to be implemented given that it existed.
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12/17/2015 7:19:09 PM
Posted: 11 months ago
At 12/17/2015 6:54:36 PM, Robkwoods wrote:
Yeah, that is quite embarrassing for Rand Paul.

Indeed.

I will admit that I am currently at the limits of my current knowledge on monetary policy. Cause this shti is mind numbing.

Lol. I would agree, though I've been at it for about a year and a half now, so I'm a bit more used to it.

But based on the original intent of the fed, they have been far from successful.

I would disagree with this. I think it's possible, and practical, to nitpick somewhat--and I would--about them following an asymmetrically-weighted reaction function with an excessively high inertial coefficient, but generally they've done exceptionally well at keeping inflation low and stable. Relative to the Depression, they've also responded far more aggressively to shocks than they have in the past.

One job, control the quantity of money. That's it! How hard can that be? This is typical of central planning, it is terrible at doing the task it set out to do.

It's not responsible for controlling the quantity of money. In the past it had explicit targets for broad measures of the money supply (though it's a bit hard to target M1, M2, M3, excess reserves, etc etc, at the same time, and hitting one often resulted in missing on another), but now the goal effectively is to get employment somewhere around the NAIRU and inflation at 2 percent. In the process, it might adjust the size of the monetary *base*--though it's stopped doing that since October of last year when it ended its QE3 purchases--but banks, not the Fed, set the money supply. The relationship between the base and the actual money supply has also broken down since the crisis, as banks held more excess reserves and investors held cash, and even the relationship between M1 and NGDP has broken down to a decline in velocity.

Part of that is the Fed's fault for implementing IOR, but it was arguably necessary if you place any weight--and you reasonably could--on the sustainability of MMMF's.

Discretionary or subjective policy tends to be terrible.

To the contrary, rules-based policies are utterly terrible. Arguably, the reason the Fed's response to the crisis was lackluster--reasonable, but lackluster--was *because* its policy was too inertial (a.k.a., de-facto rules-based) and it was unwilling to deviate from its effective "rule" of a 2 percent inflation target, which was implicit at the time. There is no meaningful way--and the literature on this is very one-sided--to capture all of the factors that affect monetary policy into a single, simple, mathematical rule, which is why proposals by the teabagger Congress to compel the Fed to publish some form of a Taylor Rule and explain deviations from that rule are so asinine.

I think his want to abolish comes from his notion that they are, on balance, a failure. The only reason they are still around is because they are a government entity.

A lot wrong here:

First, they're not--it's just objectively true (and you can look at the literature on this) that the crisis would have been far worse in the absence of the Fed, especially with fiscal policy asleep at the wheel.

Second, Friedman said they hadn't done *enough.* He would've had a more aggressive Fed, though in that case his M2-targeting rule would've been more aggressive. Ironically, it also would've been even more aggressive--with even more QE--today, especially if he acknowledged the decline in velocity and focused on the PY, or NGDP, aggregate instead of the "M" component in MV.

Third, the Fed is not a government entity. That's just hogwash. Congress maintains oversight over the Fed, but it's a private, independent institution.

I would agree that MF is for expanding monetary policy. I think this is needed for continued growth.

Then you shouldn't want to abolish the Fed, which is diametrically opposed to that very reasonable aim of supporting growth, lol...

In his vision for sustain free market growth you require more money, but as a means of it actually being created by the market. Not artificially by central planning.

Oh my goodness, the "central planning" canard again, lol. It's about as asinine as the whole "artificial interest rate" thing. Ironically, an M2 targeting rule is just as much, if not more, "central planning." At least under discretion, the Fed adjusts the base and lets banks determine the broad monetary aggregates.

Private money is also (a) not Milton Friedman's proposal and (b) positively looney, and has never and will never work.
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12/17/2015 7:20:36 PM
Posted: 11 months ago
At 12/17/2015 7:18:03 PM, Robkwoods wrote:
At 12/17/2015 6:10:21 PM, ResponsiblyIrresponsible wrote:
At 12/17/2015 5:58:44 PM, Robkwoods wrote:

Ironically, Milton Friedman would be for far more expansionary monetary policy today, as he was during the Depression. It's always fascinating when anti-Fed'ers -- Rand Paul did this a while ago, though so great was his ignorance that he didn't even know Friedman's dead -- cite Friedman: he's not an ally.

Now that I re-read you statement. Friedman was 100% on board to remove the Fed. His suggestion for reform was the policy that needed to be implemented given that it existed.

No, this is wrong. Once again, Friedman wanted to end the Fed *in its current form* and replace it with a computer tasked with an explicit target for M2--that would become the new Fed. Associating him with End-the-Feder's or free banking loons (the private-money thing you just mentioned) is just wrong and a complete misreading of Friedman.
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Robkwoods
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12/17/2015 8:44:35 PM
Posted: 11 months ago
At 12/17/2015 7:19:09 PM, ResponsiblyIrresponsible wrote:
At 12/17/2015 6:54:36 PM, Robkwoods wrote:
Yeah, that is quite embarrassing for Rand Paul.

Indeed.

I will admit that I am currently at the limits of my current knowledge on monetary policy. Cause this shti is mind numbing.

Lol. I would agree, though I've been at it for about a year and a half now, so I'm a bit more used to it.

But I am learning so there is that.

But based on the original intent of the fed, they have been far from successful.

I would disagree with this. I think it's possible, and practical, to nitpick somewhat--and I would--about them following an asymmetrically-weighted reaction function with an excessively high inertial coefficient, but generally they've done exceptionally well at keeping inflation low and stable. Relative to the Depression, they've also responded far more aggressively to shocks than they have in the past.

Keeping Inflation low and stable doesn't need central planning. Inflation stops when you stop making money. It really is that simple.

One job, control the quantity of money. That's it! How hard can that be? This is typical of central planning, it is terrible at doing the task it set out to do.

It's not responsible for controlling the quantity of money. In the past it had explicit targets for broad measures of the money supply (though it's a bit hard to target M1, M2, M3, excess reserves, etc etc, at the same time, and hitting one often resulted in missing on another), but now the goal effectively is to get employment somewhere around the NAIRU and inflation at 2 percent. In the process, it might adjust the size of the monetary *base*--though it's stopped doing that since October of last year when it ended its QE3 purchases--but banks, not the Fed, set the money supply. The relationship between the base and the actual money supply has also broken down since the crisis, as banks held more excess reserves and investors held cash, and even the relationship between M1 and NGDP has broken down to a decline in velocity.

Obviously that isn't the case now, but that was the original intent.

Part of that is the Fed's fault for implementing IOR, but it was arguably necessary if you place any weight--and you reasonably could--on the sustainability of MMMF's.

Discretionary or subjective policy tends to be terrible.

To the contrary, rules-based policies are utterly terrible. Arguably, the reason the Fed's response to the crisis was lackluster--reasonable, but lackluster--was *because* its policy was too inertial (a.k.a., de-facto rules-based) and it was unwilling to deviate from its effective "rule" of a 2 percent inflation target, which was implicit at the time. There is no meaningful way--and the literature on this is very one-sided--to capture all of the factors that affect monetary policy into a single, simple, mathematical rule, which is why proposals by the teabagger Congress to compel the Fed to publish some form of a Taylor Rule and explain deviations from that rule are so asinine.

You went the wrong direction with that. Discretionary or subjective policy tends to be terrible compared to Objective policy. There is only one thing that should effect monetary policy; that is the amount of Goods and Services. We are our own worst enemy when it comes to this stuff.

I think his want to abolish comes from his notion that they are, on balance, a failure. The only reason they are still around is because they are a government entity.

A lot wrong here:

First, they're not--it's just objectively true (and you can look at the literature on this) that the crisis would have been far worse in the absence of the Fed, especially with fiscal policy asleep at the wheel.

In what way, because literature I have seen says quite the opposite. Would there have been a depression, sure; but it surely would not have been worse. In history, where there has been a steep declined in the stock of money there has been a severe depression. Paraphrased from MF.

Second, Friedman said they hadn't done *enough.* He would've had a more aggressive Fed, though in that case his M2-targeting rule would've been more aggressive. Ironically, it also would've been even more aggressive--with even more QE--today, especially if he acknowledged the decline in velocity and focused on the PY, or NGDP, aggregate instead of the "M" component in MV.

Yes, that is how he would have proceeded simply because they existed. They had a job to do and they didn't do it. He was playing Monday Morning QB.

Third, the Fed is not a government entity. That's just hogwash. Congress maintains oversight over the Fed, but it's a private, independent institution.

Yeah private *wink* *wink*

I would agree that MF is for expanding monetary policy. I think this is needed for continued growth.

Then you shouldn't want to abolish the Fed, which is diametrically opposed to that very reasonable aim of supporting growth, lol...

Those things aren't connected you don't need a Fed to expand monetary policy. We have a Treasury; which was exactly where the equation would be used.

In his vision for sustain free market growth you require more money, but as a means of it actually being created by the market. Not artificially by central planning.

Oh my goodness, the "central planning" canard again, lol. It's about as asinine as the whole "artificial interest rate" thing. Ironically, an M2 targeting rule is just as much, if not more, "central planning." At least under discretion, the Fed adjusts the base and lets banks determine the broad monetary aggregates.

Here
"Any system which gives so much power and so much discretion to a few men, [so] that mistakes R09;R09; excusable or not R09;R09; can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic R09;R09; this is the key political argument against an independent central bank. . .To paraphrase Clemenceau: money is much too serious a matter to be left to the Central Bankers."

Private money is also (a) not Milton Friedman's proposal and (b) positively looney, and has never and will never work.

Removal of the Fed does not mean Private money is the next solution. We have done private money before, didn't really work that well for us, as far as being a Nation.
"A government which maintained law and order, defined property rights, served as a means whereby we could modify property rights and other rules of the economic game, adjudicated disputes about the interpretation of the rules, enforced contracts, promoted competition, provided a monetary framework, engaged in activities to counter technical monopolies and to overcome neighborhood effects widely regarded as sufficiently important to justify government intervention, and which supplemented private charity and the private family in protecting the irresponsible " would clearly have important functions to perform. The consistent [classical] liberal is not an anarchist."