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Why I Dissented
11–20 of 65 posts
Re: Why I Dissented
#12Would someone mind to provide a bit more context around what this is about? I'm feeling rather lost reading this.
Re: Why I Dissented
#13I don't agree with the premise (that the dual mandate set by Congress of maximum employment and 2% inflation should be the overarching goal of the Fed) or the conclusion (that the Fed should wait on raising interest rates), but I appreciate the transparency and attention to detail of Mr. Kashkari's analysis. More public officials should publish the reasoning behind their decisions.
> that the Fed should wait on raising interest rates I don't agree either. If the economy tanks again, there is almost nothing that can be done, being that one of the usual steps is to lower interest rates to spur growth.
they could always use quantitative easing.
the argument "we need to raise rates so we can lower them if the economy tanks" doesn't fit well with me. its sort of like saying lets take poison so that if we get sick we can stop taking poison and feel better.
it might hold some water if there was inflation, but there's not. deflation is still a bigger risk.
I think the fed should use interest rates to fight inflation, and QE to fight unemployment.
Re: Why I Dissented
#14Glad to hear that someone on the Fed has some sense. The confusion of "target" with "ceiling" has been disastrous for the economic recovery. Raising rates now is a terrible idea. Moderate inflation is good for an economy based on credit, _especially_ so when so many individuals are overburdened by overwhelming student loan debt and underwater mortgages. Running under 2% core inflation for the past nine years has destroyed any chance of wage growth or natural debt relief. If anything, we need a few years of 3-4% inflation to make up lost time. Wages need to go up and relative debt loads need to go down, but they never will at 1% inflation when the Fed tightens the screws anytime we get close to 2%.
Re: Why I Dissented
#15Glad to hear that someone on the Fed has some sense. The confusion of "target" with "ceiling" has been disastrous for the economic recovery. Raising rates now is a terrible idea. Moderate inflation is good for an economy based on credit, _especially_ so when so many individuals are overburdened by overwhelming student loan debt and underwater mortgages. Running under 2% core inflation for the past nine years has dest…
Doe low rates necessarily cause wage inflation? It might cause inflation in the price of assets or goods while wages stay steady.
Re: Why I Dissented
#16Earlier quoted context omitted.
> that the Fed should wait on raising interest rates I don't agree either. If the economy tanks again, there is almost nothing that can be done, being that one of the usual steps is to lower interest rates to spur growth.
they could always use quantitative easing. the argument "we need to raise rates so we can lower them if the economy tanks" doesn't fit well with me. its sort of like saying lets take poison so that if we get sick we can stop taking poison and feel better. it might hold some water if there was inflation, but there's not. deflation is still a bigger risk. I think the fed should use interest rates to fight inflation, an…
> its sort of like saying lets take poison so that if we get sick we can stop taking poison and feel better.
Raising interest rates isn't poison.
Also, at the moment deflation isn't a bigger risk. It says right in the article inflation is slowly rising, not falling.
Re: Why I Dissented
#17Earlier quoted context omitted.
> that the Fed should wait on raising interest rates I don't agree either. If the economy tanks again, there is almost nothing that can be done, being that one of the usual steps is to lower interest rates to spur growth.
they could always use quantitative easing. the argument "we need to raise rates so we can lower them if the economy tanks" doesn't fit well with me. its sort of like saying lets take poison so that if we get sick we can stop taking poison and feel better. it might hold some water if there was inflation, but there's not. deflation is still a bigger risk. I think the fed should use interest rates to fight inflation, an…
> it might hold some water if there was inflation, but there's not. deflation is still a bigger risk.
I've always wondered if the worry about deflation is overblown. We still have a lot of things that people and businesses buy that have inelastic demand which will not change regardless of whether or not we are experiencing deflation.
Also, when looking at expenses related to computer hardware, it has been going down relative to its capability. That hasn't led to a delay in purchases from either consumers or businesses from what I understand.
Re: Why I Dissented
#18Earlier quoted context omitted.
they could always use quantitative easing. the argument "we need to raise rates so we can lower them if the economy tanks" doesn't fit well with me. its sort of like saying lets take poison so that if we get sick we can stop taking poison and feel better. it might hold some water if there was inflation, but there's not. deflation is still a bigger risk. I think the fed should use interest rates to fight inflation, an…
> it might hold some water if there was inflation, but there's not. deflation is still a bigger risk. I've always wondered if the worry about deflation is overblown. We still have a lot of things that people and businesses buy that have inelastic demand which will not change regardless of whether or not we are experiencing deflation. Also, when looking at expenses related to computer hardware, it has been going down…
I think you're misunderstanding macro-economic deflation vs. technology advancing.
Mass production and technological advancement reduce prices, sure, but whole economic deflation makes debt's real value increase, basically exponentially punishing people holding debt while favoring lenders, where as inflation obviously does the opposite. So, the majority of people with a mortgage, car or student debt get screwed during a deflationary event.
Re: Why I Dissented
#19Earlier quoted context omitted.
they could always use quantitative easing. the argument "we need to raise rates so we can lower them if the economy tanks" doesn't fit well with me. its sort of like saying lets take poison so that if we get sick we can stop taking poison and feel better. it might hold some water if there was inflation, but there's not. deflation is still a bigger risk. I think the fed should use interest rates to fight inflation, an…
> its sort of like saying lets take poison so that if we get sick we can stop taking poison and feel better. Raising interest rates isn't poison. Also, at the moment deflation isn't a bigger risk. It says right in the article inflation is slowly rising, not falling.
"Raising interest rates isn't poison."
Higher interest rates are intended to slow down the economy by making borrowing harder.
"Also, at the moment deflation isn't a bigger risk. It says right in the article inflation is slowly rising, not falling."
1.74% is very low, and on the wrong side of target inflation. ~3% inflation is considered historic, and we are no where close to getting there. not even a little bit. if that anemic .03 growth went even a smidgen on the wrong side of 0, that would be bad. so yeah, deflation is still a bigger risk.
Re: Why I Dissented
#20The author operates from the assumption that keeping rates low is stimulative. While true in many and most circustamnces, the Fed took rates to zero on an emergency basis in the 2007-2009 crisis. While originally stimulative over time the evidence that zero rates are providing stimulus is weak in fact it's likely that the harm it does to pensioners, savers and others dependent on the debt markets is not only anti stimulative- it may set us up for a new crisis. In short, the piece is done by someone with no econoic training and super prone to grandstanding and the piece feels exactly like that.