Topic: Monetary Policy

Fed Officials Think Inflation Should Remain High Through 2024

– December 23, 2021

“It seems the Fed is not committed to hitting its average inflation target. Inflation will be transitory in the sense that the rate will eventually return to 2 percent. But the price level will likely remain elevated.” ~ William J. Luther


How Much Can the Supply Chain Explain the Rise of Inflation?

– December 15, 2021

“Once we move from the realm of small price level movements to a more permanent and higher inflation rate scenario, it is more likely that the source of the rise in the price level is on the monetary side—even if the government doesn’t want to admit it.” ~ Nicolás Cachanosky


Will the Fed Do Enough to Bring Down Inflation?

– December 11, 2021

“The Fed must act boldly and swiftly to course correct. Otherwise, inflation expectations could become unanchored––leaving the Fed to choose between restoring its credibility by engineering a recession or tolerating high inflation in perpetuity.” ~ William J. Luther


Powell Pivots as Inflation Picks Up

– December 3, 2021

“Powell recommended ditching the term transitory. ‘We tend to use it to mean that it won’t leave a permanent mark in the form of higher inflation,’ he told the Senate Committee. ‘I think it’s probably a good time to retire that word and try to explain more clearly what we mean.’” ~ William J. Luther


A Smarter Debt Limit Bill

– December 3, 2021

“Senate Republicans are expected to indulge in yet another futile game of bluff poker over the symbolic debt limit. They always fold in the end because Congress has no choice but to pay for obligations it has already incurred.” ~ Alan Reynolds & Steve Stein


Despite Fed Asset Purchases, Lending Remains Depressed

– December 2, 2021

“The Fed’s recent asset purchases appear to have significantly expanded the money supply. But given the small changes in bank lending, it is not clear what their overall effects will be on inflation and the economy.” ~ Thomas L. Hogan


Three Common Myths About Money and Inflation

– November 20, 2021

“If we oversimplify inflation, we won’t know how to fight it, or whether we should fight it at all. Political responses to economic turmoil are bad enough without the additional complication of widespread misperceptions amongst the public.” ~ Alexander William Salter


What Does ‘Transitory Inflation’ Really Mean?

– October 29, 2021

“Whether the Fed will conduct policy to render the recent episode of inflation transitory in either sense of the term remains to be seen. My view, informed by market expectations, is that the rate of inflation will eventually decline to something in the neighborhood of 2 percent.” ~ William J. Luther


Crowding Out Under Quantitative Easing

– October 27, 2021

“The data speaks loudly. An accommodative monetary policy has failed to facilitate a robust economic recovery. And an artificially low federal funds rate is pumping up the federal debt and weighing on private investment.” ~ James L. Caton


Limited Government and Money: A Review of Money and the Rule of Law

– October 26, 2021

“Truly limited government involves limiting the discretion of the Federal Reserve. A solution involves imposing binding rules on both the Fed and Congress. The rules must specifically restrict the creation of ‘liquidity and credit except in specific ways that are general, predictable, and robust.'” ~ Daniel Sutter


In Defense of Bank Deposits: An Open Letter to Professor Omarova

– October 16, 2021

“I can’t help thinking that someone placed in charge of a quarter of the nation’s banks ought to recognize the valuable services they perform, and recognize them well enough to be willing to oppose any plan that would prevent them from continuing to perform those services.” ~ George Selgin


Inflation and Consumer Welfare: Don’t Forget the Supply Side!

– October 15, 2021

“Let’s keep our eye on the supply side. We should be making every effort, policy-wise, to ease restrictions on production and exchange. That will help both in the short run and the long run.” ~ Alexander W. Salter