Topic: Inflation

Is Larry Summers Channeling Benjamin Anderson?

– October 13, 2021

“The post-2008 framework has incentivized the destabilization of monetary policy. The sooner we recognize this fact, the sooner we can seriously discuss a solution to the problem.” ~ James L. Caton


Is Inflation Above the Fed’s Target?

– October 7, 2021

“A credible Fed would anchor expectations to its target growth path. Unfortunately, the Fed has not been credible in the past. That leaves us with a much more difficult question today: what should the Fed do when it hasn’t done what it should have done?” ~ William J. Luther


The Federal Reserve Is Not Credible

– October 1, 2021

“Having persistently undershot its inflation target for nearly a decade, the Fed now looks poised to err in the opposite direction.” ~ William J. Luther


Permanent or Transitory Inflation: An Analytical Framework

– August 28, 2021

“Inflation is not a high price level; it is a persistent increase in the price level. Whether inflation persists depends on what Fed officials do next.” ~ Nicolás Cachanosky


How Does the Federal Reserve Evaluate Policy?

– August 27, 2021

“If inflation does not relent in approaching months, this call for a modest tightening will likely develop support from other ranking members of the Fed. I’m willing to bet that support for tightening will be strongly correlated with the value of the loss function presented here.” ~ James L. Caton


The Great Inflation Debate Is Missing Why Inflation Matters

– August 26, 2021

“The public debate over inflation is a great opportunity to focus on what really matters: subjecting monetary policymakers to the rule of law. Unfortunately, we’re currently squandering that opportunity to repeat pop-macroeconomic fallacies.” ~ Alexander W. Salter


How High Will Inflation Be in 2021?

– August 6, 2021

“Inflation will be noticeably higher in 2021 than it has been in some time. An important question is whether it will be followed by the widely predicted lower inflation or by higher inflation in subsequent years.” ~ Gerald P. Dwyer


Is Our Current Inflation Temporary? Look at the Numbers

– July 31, 2021

“John Williams, the New York Fed President, is expecting 3% inflation this year. I’m expecting inflation in 2021 to be above 5%. In six months, we’ll be able to look at the actual numbers and see whose estimate was closer.” ~ Randall G. Holcombe


Is Inflation Really a Problem?

– July 29, 2021

“Inflation has real costs when it’s unpredictable. We want monetary institutions to keep generalized price increases on a steady, anticipable path. Since central banks often go out of their way not to be understood, we might have a valid complaint against them after all.” ~ Alexander W. Salter


Is Inflation Merely Catching Up?

– July 25, 2021

“The price level today is greater than what it was expected to be in the absence of a pandemic and what the Fed implicitly said it would be given its two-percent inflation target. The price level has more than caught up with expectations. The question, now, is whether it will continue to grow so rapidly, remain elevated, or subside.” ~ William J. Luther


Why is Monetary Policy Focusing on the Overnight Lending Market?

– July 21, 2021

“Borrowing in the overnight lending market allows for the Federal Reserve to access a larger pool of funds from a diversity of financial institutions. As a result, the Fed can borrow these funds at lower rates and avoid attracting negative attention that would be generated by an increase in the interest rate target and the interest rate paid on reserves.” ~ James L. Caton


Higher Inflation Depresses Equity Valuation

– July 9, 2021

“The CPI will probably increase by 3-5% for all of 2021. That is not nearly as bad as the 1970s, when the rate averaged 7.4% p.a. (and peaked at 13.3% in late 1979), but it’s still bad for equity valuations.” ~ Richard M. Salsman