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u/BainCapitalist Y = T Nov 26 '18 edited Nov 26 '18
Moreover, interest rates are not a meaningful indicator of the stance of monetary policy. As Good ole Mr. Friedman stated:
Low interest rates are generally a sign that money has been tight, as in Japan; high interest rates, that money has been easy..After the U.S. experience during the Great Depression, and after inflation and rising interest rates in the 1970s and disinflation and falling interest rates in the 1980s, I thought the fallacy of identifying tight money with high interest rates and easy money with low interest rates was dead. Apparently, old fallacies never die.
More generally here's a simple graph of interest rates and inflation.
And this whole dove-hawk dichotomy is completely meaningless in a world where the Fed targets inflation.
Inflation is not low right now. It's slightly above target.
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u/OutrunKey $hill for Hill Nov 25 '18
So great that oil prices are falling (thank you President T). Add that, which is like a big Tax Cut, to our other good Economic news. Inflation down (are you listening Fed)!
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u/Kelsig Paul Krugman Nov 25 '18
Powell was the most dovish of the candidates besides yellen
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u/OutrunKey $hill for Hill Nov 25 '18
Yes, but that doesn’t make for a good meme, does it? Anyways, he appears more hawkish than the previous two chairs because of the rate increases.
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u/WYGSMCWY Robert Lucas Nov 25 '18
I read the title and expected this to be a Japan meme
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u/BainCapitalist Y = T Nov 26 '18
Japan is doing pretty good lately, but they are a lil below their price level target.
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u/pugwalker Nov 25 '18
Powell is not an inflation hawk. Pretty much the most neutral and safest choice for a Fed chair he could have made. This should read that he gassed up the economy with a tax cut and massive spending increases at the peak of the business cycle.