tag:blogger.com,1999:blog-2098432983500045934.post1211514129412236170..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Alt-PolicyThe Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2098432983500045934.post-25750676947225812232017-09-19T11:14:34.027-04:002017-09-19T11:14:34.027-04:00"Lets turn the question around:
If a high Fed..."Lets turn the question around:<br />If a high Fed fund rate causes low inflation then how come<br />40 years ago when the Fed rate was at its highest level inflation was very high?"<br /><br />You turned the question around the wrong way. You should ask<br />If a high Fed fund rate causes low inflation then how come<br />40 years ago when inflation was very high, the Fed rate was at its highest level?<br /><br />The answer then is obvious: because "a high Fed fund rate causes low inflation".<br /><br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-54478113895368855712017-09-17T22:19:24.999-04:002017-09-17T22:19:24.999-04:00
As far as I can see the story has never had a rin...<br />As far as I can see the story has never had a ring of truth.<br /><br />Lets turn the question around:<br />If a high Fed fund rate causes low inflation then how come<br />40 years ago when the Fed rate was at its highest level inflation was very high? <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-44047177111316009562017-09-17T20:48:00.531-04:002017-09-17T20:48:00.531-04:00Interest rates don't cause inflation. Spending...Interest rates don't <i>cause</i> inflation. Spending causes inflation, but only demand-pull inflation. Rising costs as with oil or finance cause cost-push inflation. Expectations may cause inflation, but are more likely to keep it going than to get it started.<br /><br />The slow growth of spending for the past 8 years, along with slow growth of debt and low interest rates, explain a good part of why inflation remained low. <br /><br />"Do you not care.."<br /><br />I am aware that the onset of financial crisis creates a break with the past, so that stories which ring true for a lifetime suddenly are true only for the "normal" economy and not for the "crisis" economy.<br /><br />To my way of thinking, to correctly understand the normal economy is the important task <b>because the crisis arises in the normal economy</b>.<br /><br />To think of the crisis economy as normal is most certainly wrong.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-62719436905320102142017-09-17T20:09:58.793-04:002017-09-17T20:09:58.793-04:00"it occurs to me that using high real interes..."it occurs to me that using high real interest rates to achieve an inflation target has the unintended consequence of increasing aggregate financial costs to the economy."<br /><br />If high Fed fund rate causes low inflation and low Fed fund<br />creates high inflation, then how come 8 years of the lowest <br />Fed fund rate has mot produced extremely high inflation? <br />Instead we find the lowest inflation in nearly 50 years?<br /><br />Do you not care that the stories that you have been quoting so frequently do not square with the observable facts?<br /><br />jimnoreply@blogger.com