Topic: 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


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


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


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


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


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


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


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


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


Is the Fed Finally Serious About Inflation?

– July 21, 2022

“Chair Powell has repeatedly claimed that the Fed will use its tools to create price stability. Will he and other Fed officials finally bring inflation back toward their stated two percent target?” ~ Thomas L. Hogan


Fed Must Act Now to Stop Runaway Inflation

– July 15, 2022

“Fed Chair Jerome Powell promised more than six months ago that the Fed would ‘use our tools to make sure that higher inflation does not become entrenched.’ Its actions, however, indicate otherwise.” ~ Thomas L. Hogan


Monetarism Remains a Useful Guide on Inflation

– July 12, 2022

“If the Federal Reserve raises interest rates too quickly, sharply declining M2 growth will signal the risk of recession. Monitoring M2 growth can help in making sure the Fed tightens monetary policy at the appropriate pace, not too fast and not too slow.” ~ Peter N. Ireland