Topic: Monetary Policy

Economic History, Inflation, Monetary Policy

No, This Is Not 1970s Style Stagflation

– August 19, 2022

“The FOMC’s current policy stance has precipitated a recession that may modestly deepen as it tardily-but-effectively pursues its commitment to restraining inflation.” ~ James L. Caton

Central Banking, Economic Education, Inflation, Monetary Policy

Price Stability and Nominal GDP Targeting

– August 18, 2022

“While we should not stubbornly insist on first-best policy if the second-best is all we can get, neither should we ignore the question of which policy is first-best. As long as we are reconsidering the Fed’s mandate, nominal GDP targeting should be on the table.” ~ Alexander William Salter

Central Banking, Economic Education, Government, Monetary Policy

Should the Federal Reserve Set its Own Goals?

– August 12, 2022

“A target that is not determined solely by the Federal Reserve is less subject to changes solely due to deliberations at the Federal Reserve. It will enhance monetary policy’s effectiveness.” ~ Gerald P. Dwyer

Crisis, Government, Inflation, Monetary Policy

Accounting for Inflation

– August 11, 2022

“The great irony is that inflation would have been transitory if only the Fed had stabilized nominal spending. Prices would have risen above trend to reflect below-trend production and then returned to trend as production recovered.” ~ William J. Luther & Morgan Timmann

Crisis, Inflation, Monetary Policy

Prices Rose Even Faster In June

– August 6, 2022

“Inflation has been too high for too long. Bringing inflation back down should be the Federal Reserve’s top priority.” ~ William J. Luther

Central Banking, Government, Inflation, Monetary Policy

Price Stability and the Fed

– August 4, 2022

“Politics is compromise. Half a loaf is better than no loaf at all. Price stability is the half-loaf of monetary policy rules. It seems foolish to go hungry simply because haute cuisine is unaffordable.” ~ Alexander William Salter

Central Banking, Economic Education, Monetary Policy

There Are Good Reasons for Monetary Rules

– August 3, 2022

“A good monetary rule does not only identify an appropriate course of action in advance. It also requires monetary policymakers to take that course and, in doing so, reduces the uncertainty businesses and consumers face.” ~ Nicolás Cachanosky

Crisis, Government, Inflation, Monetary Policy

The Corrective Contraction

– August 2, 2022

“This mild recession will soon pass. Lower growth due to a higher trend inflation rate can persist forever—and will if the Fed fails to do its job.” ~ William J. Luther

Crisis, Inflation, Monetary Policy

Inflation and the Fed’s Failure to Act

– August 1, 2022

“Fed officials must prioritize monetary stability over political objectives such as inequality and climate policy. To simplify its operations, the Fed should consider returning to the pre-2008 corridor system of monetary policy.” ~ Thomas L. Hogan

Central Banking, Inflation, Monetary Policy

Should the Fed Stimulate Growth?

– July 28, 2022

“Rather than consider whether the Fed should stimulate growth, we should recognize that its primary task is to prevent over- and under-production.” ~ William J. Luther

Crisis, Inflation, Monetary Policy

The Race to Tame Inflation Expectations

– July 25, 2022

“If the FOMC thinks inflation should be higher than 2 percent on average, it should adopt a higher inflation target—say, 3 percent—and compensate for periods of excess inflation by also promoting inflation rates below the average target for extended periods.” ~ James L. Caton

Economic Education, Economic History, Government, Monetary Policy

Not so Modern Monetary Theory

– July 24, 2022

“If the issue of an unbacked or insufficiently-backed currency exceeds the amount needed to pay the tax, and even exceeds the amount in demand as a medium of exchange, the value of that currency will fall (or, there will be inflation).” ~ Gary M. Pecquet & Clifford F. Thies