The Fed's central mission for the last 30 years is rescuing Wall Street and Federal Government from their bad actions! They STILL have near $7 Trillion of DEBT on their books from 2008 rescue!
Main Street/investing has basic DIED....travel to area's where the RICHEST Bankers, Government, Tech people don't live or go...it is unpainted houses, empty strip malls and drugged zombie death!
I call for a 3% tax on the GROSS of "All" Wall Street trades(stocks, bonds, options, etc) or moving money offshore...FORCE them to INVEST, not money spin! The richest person in NJ...hegefund guy that front runs the market using math/physic! The economic REWARDS are to SPIN MONEY...no investing required! Much of Private Equities incentive is to run companies into the ground and strip pensions, assets, land...fire EVERYONE! A couple examples...Toy-R-US, Sears, etc
The FED GIVES wall street a lower cost of capital...so they can FRONT RUN the people of the USA...something like 20% of housing is OWNED by Wall Street Entities! Their corporate shell protects ANY personal or business liability!
The Entire Housing Market set to make the 2008 Financial Crisis look like a bump in the road! The average family of 4 OWES $520,000+ Federal Debt. Go look in vacation areas of fliptopia ....vacation homes occupied less than 3 months of the year....$1, $10, $100 Million...and they have INCREASED a 100 fold in the last 30 years. An empty 1/3 of acre not on the water in Naples Florida...$20 Million dollars!
We have REACHED THE TIPPING POINT...I am guessing the 100 year RESET is ON US!
All wonderful suggestions and I expect that the Fed will do what they can. However, unless the Executive and Legislative branches of our government do their parts, the Fed is going to be left with few options if inflation spikes and unemployment falls. Monetary policy can only do so much when fiscal policy does not cooperate.
Brilliant as usual. John, I would love to amplify your message to my 11k plus LInkedIn base and get you more subscribers. I can't find you on LinkedIn.
All intelligent and cogent recommendations, however it is doubtful that either party or our dysfunctional congress will address these issues or the impending meltdown as we approach $40T in fiscal debt. It seems to me that as with tariffs, Adam Smith's ghost will appear as the next crisis emerges from Wall Street, perhaps starting with Treasury debt but quickly becoming systemic...
John, it sounds like you are suggesting a swing to the "rules" side of the old "rules versus discretion" debate, but you don't really say so. Your points make perfect sense, but they don't really address the fact that the Fed is run by a bunch of fallible, emotional humans in a highly political environment. Wouldn't some rules lead to a better equilibrium?
That was informative, especially the distinction between changes in relative prices and a rise in the price level. Not clear, though, why you say the the Fed alone is not responsible for inflation? Isn’t it always and everywhere a monetary phenomenon?
Do I understand correctly that FTPL implies that, if the government will not forswear stimulus and not build fiscal buffers, then raising policy rates by the Fed in response to a supply shock would result in higher, not lower inflation?
A couple of points: 1. true bondholder picked up the bill in terms of real returns. I think we can add also that wages in real terms have been absorbing the shock 2. if the FED should stop trusting forecasts than there are two conclusions: models are wrong and / or let the army of economists go. they can rely on investment banks for low quality forecasts....
The WSJ version is an improvement over the original version submitted for publication. Normative statements, typical of the writing of economists, are replaced by positive statements. Other changes improve readability, correct factual errors, and condense paragraphs, all with a view to increasing reader comprehension of the author's essential original thoughts.
In sum, this is an example of English Grammer 401 meeting the technical wizard's stream of consciousness. It does happen quite alot of the time, and it fully demonstrates the advantages of a formal Fine Arts post-secondary school education. Where the technical wizard excels in analyses of physical and/or economic systems and the application and control of the same to solve important issues relating to production, utilization, and the financing and control relating to the management thereof, the English major is vital to the communication and comprehension of the technical wizard's wizardry by the generalist manager and the users and customers of the technical innovations in everyday life. Embrace it.
One must believe that the money printing post Covid was for recession prevention. This is a difficult argument to defend when the economy was in recovery mode already. It is easier and likely more accurate to support the ideology of progressive Democrat politics as a spending motivator. What we got in return was a phenomenal increase in the growth of government, not so much the private sector. Astronomical amounts of money were wasted; the private sector economy stagnated other than politically favored industries (climate change). Energy, still the life blood of any thriving economy, became a major issue in itself as well as contributing to increasing prices. Energy was a 100% politically driven self-inflicted factor.
Not to have consequential influence on our trade balances with obsessive scrutiny of the relationships with our trading partners must have future consequences to America, none of which can be imagined to be positive. "Business as usual" is not a solution to anything including economics, security and the balance of power in a world far from a Kum By Yah landscape. One can have opinions on how the issue of trade policy as it effects virtually everything can be addressed, but criticism without defensible alternatives to the role of tariffs in their economic, political and negotiating value is unacceptable.
The FED is political. The market is less so. I would continue to trust the collective wisdom of millions versus the that of a few who, given the fact they are human, will have biases, blind spots and political alignment.
A simple (maybe naive) question to your first statement: "On Wednesday, the Fed announced no change in interest rate, noting rising stagflationary risks to both inflation and unemployment. But the big challenges lie ahead. What will emerge from the conclave?" This sounds like following the Taylor Rule. Does it mean, you suggest a more forward-looking Taylor Rule to be applied? What would that mean for NK model results?
The Fed's central mission for the last 30 years is rescuing Wall Street and Federal Government from their bad actions! They STILL have near $7 Trillion of DEBT on their books from 2008 rescue!
Main Street/investing has basic DIED....travel to area's where the RICHEST Bankers, Government, Tech people don't live or go...it is unpainted houses, empty strip malls and drugged zombie death!
I call for a 3% tax on the GROSS of "All" Wall Street trades(stocks, bonds, options, etc) or moving money offshore...FORCE them to INVEST, not money spin! The richest person in NJ...hegefund guy that front runs the market using math/physic! The economic REWARDS are to SPIN MONEY...no investing required! Much of Private Equities incentive is to run companies into the ground and strip pensions, assets, land...fire EVERYONE! A couple examples...Toy-R-US, Sears, etc
The FED GIVES wall street a lower cost of capital...so they can FRONT RUN the people of the USA...something like 20% of housing is OWNED by Wall Street Entities! Their corporate shell protects ANY personal or business liability!
The Entire Housing Market set to make the 2008 Financial Crisis look like a bump in the road! The average family of 4 OWES $520,000+ Federal Debt. Go look in vacation areas of fliptopia ....vacation homes occupied less than 3 months of the year....$1, $10, $100 Million...and they have INCREASED a 100 fold in the last 30 years. An empty 1/3 of acre not on the water in Naples Florida...$20 Million dollars!
We have REACHED THE TIPPING POINT...I am guessing the 100 year RESET is ON US!
All wonderful suggestions and I expect that the Fed will do what they can. However, unless the Executive and Legislative branches of our government do their parts, the Fed is going to be left with few options if inflation spikes and unemployment falls. Monetary policy can only do so much when fiscal policy does not cooperate.
Brilliant as usual. John, I would love to amplify your message to my 11k plus LInkedIn base and get you more subscribers. I can't find you on LinkedIn.
I'm on LinkedIn but not very active.
All intelligent and cogent recommendations, however it is doubtful that either party or our dysfunctional congress will address these issues or the impending meltdown as we approach $40T in fiscal debt. It seems to me that as with tariffs, Adam Smith's ghost will appear as the next crisis emerges from Wall Street, perhaps starting with Treasury debt but quickly becoming systemic...
John, it sounds like you are suggesting a swing to the "rules" side of the old "rules versus discretion" debate, but you don't really say so. Your points make perfect sense, but they don't really address the fact that the Fed is run by a bunch of fallible, emotional humans in a highly political environment. Wouldn't some rules lead to a better equilibrium?
"Borrow long." Who would be the buyer? :-)
That was informative, especially the distinction between changes in relative prices and a rise in the price level. Not clear, though, why you say the the Fed alone is not responsible for inflation? Isn’t it always and everywhere a monetary phenomenon?
It is not. It is always an everywhere a joint monetary-fiscal phenomenon, both in its cause and in its cure.
But how can fiscal action (such as borrowing and spending) be inflationary if the total
stock of money is not increased?
Do I understand correctly that FTPL implies that, if the government will not forswear stimulus and not build fiscal buffers, then raising policy rates by the Fed in response to a supply shock would result in higher, not lower inflation?
A couple of points: 1. true bondholder picked up the bill in terms of real returns. I think we can add also that wages in real terms have been absorbing the shock 2. if the FED should stop trusting forecasts than there are two conclusions: models are wrong and / or let the army of economists go. they can rely on investment banks for low quality forecasts....
The WSJ version is an improvement over the original version submitted for publication. Normative statements, typical of the writing of economists, are replaced by positive statements. Other changes improve readability, correct factual errors, and condense paragraphs, all with a view to increasing reader comprehension of the author's essential original thoughts.
In sum, this is an example of English Grammer 401 meeting the technical wizard's stream of consciousness. It does happen quite alot of the time, and it fully demonstrates the advantages of a formal Fine Arts post-secondary school education. Where the technical wizard excels in analyses of physical and/or economic systems and the application and control of the same to solve important issues relating to production, utilization, and the financing and control relating to the management thereof, the English major is vital to the communication and comprehension of the technical wizard's wizardry by the generalist manager and the users and customers of the technical innovations in everyday life. Embrace it.
One must believe that the money printing post Covid was for recession prevention. This is a difficult argument to defend when the economy was in recovery mode already. It is easier and likely more accurate to support the ideology of progressive Democrat politics as a spending motivator. What we got in return was a phenomenal increase in the growth of government, not so much the private sector. Astronomical amounts of money were wasted; the private sector economy stagnated other than politically favored industries (climate change). Energy, still the life blood of any thriving economy, became a major issue in itself as well as contributing to increasing prices. Energy was a 100% politically driven self-inflicted factor.
Not to have consequential influence on our trade balances with obsessive scrutiny of the relationships with our trading partners must have future consequences to America, none of which can be imagined to be positive. "Business as usual" is not a solution to anything including economics, security and the balance of power in a world far from a Kum By Yah landscape. One can have opinions on how the issue of trade policy as it effects virtually everything can be addressed, but criticism without defensible alternatives to the role of tariffs in their economic, political and negotiating value is unacceptable.
The FED is political. The market is less so. I would continue to trust the collective wisdom of millions versus the that of a few who, given the fact they are human, will have biases, blind spots and political alignment.
A simple (maybe naive) question to your first statement: "On Wednesday, the Fed announced no change in interest rate, noting rising stagflationary risks to both inflation and unemployment. But the big challenges lie ahead. What will emerge from the conclave?" This sounds like following the Taylor Rule. Does it mean, you suggest a more forward-looking Taylor Rule to be applied? What would that mean for NK model results?