Topic: Inflation

Federal Reserve Raises Rate Target, Likely To Pause For Some Time

– May 5, 2023

“In March, the median FOMC member projected the federal funds rate target would close the year above 5.0 percent. But the federal funds futures market is pricing in better-than-even odds that the target rate is less than 5.0 percent following the September meeting.” ~ William J. Luther

Financial Markets, Government, Inflation, Unemployment

The Path to Full Stagflation

– May 3, 2023

“The US economy looks to be pointed in a troubling direction. Federal unemployment data shows record low unemployment, but state-level data paints a different picture: one where the current ‘stagflation lite’ conditions could soon become fully stagflationary.” ~ Peter C. Earle

Central Banking, Inflation, Monetary Policy

Have We Crested the Inflation Wave?

– April 7, 2023

“My view is the Fed should pause its rate hikes in the short-run. Disintermediation might be the cause of recent money-supply trends. In the long-run, the Fed should resume forward guidance, but not on interest rates.” ~ Alexander William Salter

Government, Inflation, Monetary Policy

Inflation Slowed in February, But Remained High

– April 1, 2023

“Recent experience should prompt calls for the Fed to adopt a symmetric average inflation target when it reevaluates its mandate in 2024 and 2025.” ~ William J. Luther

Economic History, Fiscal Policy, Inflation, Monetary Policy

Monetary Policy and that Old-Time Fiscal Religion

– March 26, 2023

“Nominal income targeting can potentially restore the old-time fiscal religion. Like the classical gold standard, this approach stabilizes total spending in the economy, rendering counter-cyclical fiscal policy unnecessary and ineffective.” ~ Bryan P. Cutsinger & Louis Rouanet

Government, Inflation, Monetary Policy

Money and Inflation Are Still Related

– March 26, 2023

“M2 in 2020 and 2021 increased by the largest percentages in the last 60 years. To the surprise of the Federal Reserve (although not everyone), inflation resulted.” ~ John Devereux & Gerald P. Dwyer

Crisis, Financial Markets, Inflation, Monetary Policy

Fed Raises Rate, But Signals Potential Pause in May

– March 23, 2023

“In 2021 they were looking for help from recovering supply chains. Now, they are looking for help from tight financial markets. It’s time FOMC members help themselves — or, God help us all.” ~ William J. Luther

Government, Inflation, Monetary Policy

Moral hazard is a fact of life. The Fed should focus on inflation.

– March 23, 2023

“To the shame of two generations of economists-turned-policy-advisors, moral hazard is a fact of life. We don’t need to add permanent dollar depreciation to this mess.” ~ Alexander William Salter

Central Banking, Inflation, Monetary Policy

The Fed Isn’t Powerless

– March 10, 2023

“Responsible students of monetary policy must vigorously resist the ‘powerless Fed’ myth. All it does is absolve central bankers of responsibility for what, on the basis of good theory and mounting evidence, is primarily their fault to begin with.” ~ Alexander William Salter

Government, Inflation, Monetary Policy

There’s No Such Thing as a Wage-Price Spiral

– March 8, 2023

“The recent uptick in inflation is worrying, and the Fed needs to get a handle on the situation before higher inflation expectations become entrenched. But the Fed doesn’t need to take a sledgehammer to labor markets to ease the economy’s pricing pressures.” ~ Alexander William Salter

Financial Markets, Inflation, Monetary Policy

Understanding Inflationary Finance

– March 8, 2023

“Providing revenue to the state is one of the reasons (and, perhaps the primary reason) governments worldwide monopolize the issuance of high-powered money.” ~ Bryan Cutsinger

Financial Markets, Inflation, Monetary Policy

More Interest Rate Hikes Ahead

– March 6, 2023

“Fed officials will likely continue tightening, and to a greater extent than previously projected. Their overreaction will not undo the damage of acting too late. It will make matters worse.” ~ Nicolás Cachanosky