2/ 24 Inflation comes in hot . . . an upside "surprise" to those who never learned history

Economy
1

The Fed Funds Rate…minus inflation … equals the “real interest rate.”

In the modern US there are not many examples of negative real interest rates. It is typically considered an extreme pro-inflationary measure to be used only in the extreme short term.

Not so for this Fed. As Noble-winning lefty economist Paul Krugman noted last year, the Fed’s steering committee is a non-diverse echo-chamber of like-minded ideologues. The US has had negative real interest rates off-and on (mostly on) since the dot.com bubble burst and the towers fell.

It is not surprising that the Fed “got it wrong,” economics is not an exact science. But the Fed consistently “gets it wrong” on the same side. Throw a hundred darts, when all of them wind up left-of-center it is not a coincidence.

From the article

The core personal-consumption expenditures price index, also known as the core PCE deflator, rose 4.7% year over year in January, up from 4.4% in December and higher than the 4.3% growth economists surveyed by FactSet had expected. The increase in core PCE for December, initially reported as 4.4%, was revised to 4.6%, showing price growth at the end of last year was hotter than previously thought.

https://www.barrons.com/articles/pce-index-inflation-data-report-today-af33056c

2

Here is a snippet from Krugman’s apology and admission.

It is good tht Dr. Krugman recognizes the problem.
It is big of him to apologize.

But the Fed’s FOMC continues exactly the way it was, as a Keynesian echo chamber. The problem ahs not been fixed.

Krugman
Krugman700×400 74.5 KB

3

Once again as I laid in bed this morning reading this news I thought heres another thread for Gaius.

Then I had to have a shower cos thinking of Gaius while in bed just makes me feel dirty LOL. :grinning::grinning::grinning::grinning:

1 Like
4

LOL

Well on some boards, and committees a diversity-of-thought would be a big plus.
But diversity of ideology does NOT mean “hire twelve liberals of different races and sexual preferences.” It is not achieved by hiring twelve liberals of different races and sexual preferences.

What we are seeing today is yet another example of the Fed throwing darts and all the darts landing left-of-center. I don’t expect the Fed to hit the bullseye every time, Heck they don’t have to hit it even once. But when all the darts land left of center, that is not a coincidence. They are doing something wrong

5

Was looking for other inflation thread to post this. Inflation had surge in December to January.

2 Likes