It was circulated last night and I read it early this morning. Just after reading it, I read Arnold's post and since then I've been wondering how the basic idea "it's never about the issue, but about control" is closely related to R. Higgs' ratchet effect. The Fed has never been about unemployment and inflation (two symptoms of malfunction but no measures of macro performance) when it was just Arnold's monetary authority but a means to control the systems of payments; and it has not been about last-resort insurance but a means to control banks first as lenders when rescuing "insolvent" banks and then as intermediary when executing government's indemnity programs.
The Fed balance sheet, like interest rates, should not be a target of monetary policy. The Fed's job is to keep the PL on a steady trajectory (and get it back when is has gone off) and keep the economy's resources fully employed.
Add "Permanent Emergency" to the lexicon of great American oxymorons. Brought to you by the great American morons otherwise known as politicians and government bureaucracy.
Three Central Banks Watch, 6/11
Higgs’ Ratchet is a way underrated driver of human behavior in groups.
Its called QE Infinity, aka soft default. How else do you avoid the reckoning from a $33 trillion govt debt?
I suggest to read this post
https://tomknighton.substack.com/p/its-never-about-the-issue-but-about?s=w
It was circulated last night and I read it early this morning. Just after reading it, I read Arnold's post and since then I've been wondering how the basic idea "it's never about the issue, but about control" is closely related to R. Higgs' ratchet effect. The Fed has never been about unemployment and inflation (two symptoms of malfunction but no measures of macro performance) when it was just Arnold's monetary authority but a means to control the systems of payments; and it has not been about last-resort insurance but a means to control banks first as lenders when rescuing "insolvent" banks and then as intermediary when executing government's indemnity programs.
EB is completely correct- we are heading to Argentina in a slow boat.
The Fed balance sheet, like interest rates, should not be a target of monetary policy. The Fed's job is to keep the PL on a steady trajectory (and get it back when is has gone off) and keep the economy's resources fully employed.
Add "Permanent Emergency" to the lexicon of great American oxymorons. Brought to you by the great American morons otherwise known as politicians and government bureaucracy.
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