Friday, April 29, 2011

Bad Ideas

The general reaction to Bernanke's press conference is reinforcing what I expressed here, which is that having cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed Chair hold regular press conferences is a bad idea. Everyone is now taking an ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365rwise bland and no-news occasion, and trying to make hay out of it. The Fed cannot gain anything by going out of its way to draw attention to itself.

On cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 left, in addition to what I wrote about here, Krugman has predictably weighed in with his own two cents' worth. Basically, Krugman is back with Samuelson and Solow in 1960. He thinks that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is a Phillips curve, and that monetary policy is about choosing a point on it. We can get less unemployment at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 expense of higher inflation. From Krugman's point of view cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 tradeoff looks pretty good right now. Inflation is in fact too low so we actually have nothing to lose. We can get more inflation and less unemployment, and sacrifice absolutely nothing. But cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is a problem, which is this one. Phillips curve or not, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is not a damn thing cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed can do that it has not done already, so Krugman should not spend his time bocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ring Ben Bernanke.

Krugman also gets upset about Bernanke's word usage. Apparently Ben does not say "unemployment" enough. Here, we have to go back to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first law of central banking, which is that a central banker should not speak too much about things over which he or she has little or no control. The Fed can do a great job of pegging some overnight nominal interest rate, and controlling inflation over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 medium term, but ultimately we have to deal with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 neutrality of money over some horizon and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 vagaries of financial markets, so everything else is up for grabs. Speak too much about things you cannot control well, like cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 stock market or cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 unemployment rate, and you own cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m. As a result, you'll have to claim responsibility when things go badly, even when it's not your fault.

Krugman may be full of hot air, but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 average New York Times reader does not know that. I'm sure plenty of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m are incensed this morning, thinking that Ben Bernanke hates cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 unemployed and is in league with Ron Paul.

Speaking of Ron, he has been getting a lot of action too. See this, for example. To give Ron Paul credit, he has actually picked up on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Phillips curve idea, and that thinking about monetary policy in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 way Krugman does is malarky. For example, Krugman says:
The Fed normally takes primary responsibility for short-term economic management, using its influence over interest rates to cool cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 economy when it’s running too hot, which raises cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 threat of inflation, and to heat it up when it’s running too cold, leading to high unemployment.
Ron Paul at least seems to get cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 idea that monetary policy is mainly about controlling inflation, and that we don't control inflation by controlling cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 unemployment rate. Ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365rwise, poor Ron is badly misguided, as I discuss at length here. In cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 interview I link to he makes a big deal about cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 "tripling of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 money supply," obviously not recognizing that reserves that just sit overnight look a lot more like Treasury bills than currency.

Ron Paul of course is probably running for President. Bernanke has injected himself into a political forum and Ron Paul, a politician, is using cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 opportunity to furcá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r his goals at Bernanke's expense. I'm sure plenty of right-wing Ron Paul supporters are following Ron Paul's lead, and are incensed this morning at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed's bad behavior.

Thus, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 left is unhappy, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 right is unhappy, and probably cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 people in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 middle don't care much, ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r than that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 prices of food and gasoline are increasing at a high rate, which can't be good for Ben Bernanke eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r.

5 comments:

  1. Steve,

    You wrote, "Basically, Krugman is back with Samuelson and Solow in 1960. He thinks that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is a Phillips curve, and that monetary policy is about choosing a point on it."

    That this is not at all what Samuelson and Solow said in that 1960 paper. Abba Lerner's comment on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 paper, in fact, takes cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m to task for not recommending more inflation in exchange for higher employment.

    ReplyDelete
  2. So you are saying cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re were some people that were even more wrong than Samuelson and Solow?

    ReplyDelete
  3. I don't know about "more wrong" as Samuelson and Solow seemed to advocate cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 cost-push view of inflation and incomes policies. That was wrong too!

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  4. I think we can say this was a bad paper by two people who, on most days, were excellent economists.

    ReplyDelete