Aggregate Demand and Aggregate Supply: Keep It Simple, Stupid!

– November 28, 2022

“This simple model is a good first approximation to aggregate economic performance. Economists know this. Unfortunately, they sometimes ignore it for partisan reasons.” ~ Alexander William Salter


To Temper the Effects of Monetary Restraint, We Need Pro-Growth Fiscal Policy

– November 21, 2022

“To temper the effects of monetary tightening, avoid a prolonged recession, and ultimately ignite economic prosperity, we need an executive and Congress willing to pursue pro-growth fiscal policy. ” ~ Kat Dwyer


Inflation Remains Stubbornly High

– November 11, 2022

“The neutral real interest rate is thought to be around 0.25 percent, suggesting the Fed may need to raise its nominal interest rate target another 175 to 200 basis points just to get to neutral.” ~ William J. Luther


Economic Growth Doesn’t Cause Inflation. Here’s Why

– November 10, 2022

“It’s important to get the basic economic relationships right when discussing monetary policy. Economic growth isn’t inflationary. Journalists and central bankers should stop saying otherwise.” ~ Alexander William Salter


Rising Inflation Expectations Pose a New Threat to Fed Efforts

– October 20, 2022

“Herding, of sorts, may thwart the effects of contractionary monetary policy measures to some degree. The Fed has a tough job ahead of it, one which may have just become a bit tougher.” ~ Peter C. Earle


Inflated Hopes and Burst Bubbles

– October 18, 2022

“The Fed’s chief task is to restore its lost credibility. In retrospect, the switch to average inflation targeting was a mistake. It gave the Fed plausible deniability for noisier, less predictable policy.” ~ Alexander William Salter


King Dollar’s Uncertain Throne

– October 12, 2022

“With continuing dollar appreciation the likelihood of trade tensions and protectionism increase, as do the possibilities of organized labor agitation. King Dollar is secure for now, but as in all palaces – intrigues persist.” ~ Peter C. Earle


Against Interest Rate Reductionism

– October 4, 2022

“Monetary policy is about money, not interest rates. Central bankers should stop trying to implement monetary policy by messing with relative prices. There are better measures and more effective transmission mechanisms.” ~ Alexander William Salter


The Unquestioned Monopoly

– October 3, 2022

“Despite the arguments made against monopoly and the arguments made in favor of competition, there is one monopoly that largely goes unquestioned. I’m referring, of course, to the monopoly over currency issuance.” ~ Joshua R. Hendrickson


Is The Fed Trying To Inflate Away US Debt?

– September 28, 2022

“The ease with which the concept is expressed, as if debt were an ice cube left on a driveway on a summer day, betrays the numerous costs associated with such a scheme. And that holds whether the undertaking is intentional or not.” ~ Peter C. Earle


Interest Rates and Fed Tightening

– September 28, 2022

“While interest rates can sometimes be useful as a policy barometer, the various monetary measures (from the monetary base at narrowest to total nominal expenditures at broadest) matter far more.” ~ Alexander William Salter


Revisiting the Pokéflation

– September 26, 2022

“During the massively expansionary monetary response to the Covid outbreak, the price of Pokemon cards and other assets shot to unprecedented levels. Contractionary monetary policy now has the opposite effect.” ~ Peter C. Earle & April Liu