I gave the UCSD economic roundtable lecture Friday June 11 on inflation and the future of the Fed. It summarizes quickly a number of themes from previous Grumpy writings, and if you enjoy videos you might find it fun. Youtube link in case the above embed does not work.
I happened on the New York Fed website, proclaiming on its landing page that it is now
"...dedicated to understanding and finding solutions to the numerous forms of inequality that communities of color experience and working with communities in our District to address deep-seated inequities,"
in case you want documentation that the Federal Reserve is taking on inequality and racial issues.
Yup! The central bank combats global warming and now inequality.
ReplyDeleteA lovely method for central planning.
Central banks have it all figured out. They will print money to fix inequality, climate change, pandemics, and financial crisis.
ReplyDeleteAll 12 of the regional Fed banks have research staffs producing volumes and volumes of economics papers that I sense no one ever reads. This is in addition to the national staff.
ReplyDeletePerhaps the 12 branches will become involved in politico-economic development in their districts.
The branch system, with the curious alternating representation on on the FOMC...well, a bit of a relic.
Back in the late 1980s I attended a luncheon hosted by the then new president of the Chicago Fed. (Previously I was a member the economics research staff there.) The new president asked us what areas of economy research his staff should be conducting. One glib commercial bank economist said that the Chicago Fed should be a bully pulpit in an effort to solve regional economic problems. When it was my turn to respond, I suggested that his staff solve the problem of determining the correct level of the federal funds rate, which would vary over time, such that the Fed not aggravate the amplitudes of business cycles. After having solved this riddle, perhaps the staff could venture into other areas of research. I was never invited back to subsequent luncheons.
DeleteBack in the late 1980s I attended a luncheon hosted by the then new president of the Chicago Fed. (Previously I was a member the economics research staff there.) The new president asked us what areas of economy research his staff should be conducting. One glib commercial bank economist said that the Chicago Fed should be a bully pulpit in an effort to solve regional economic problems. When it was my turn to respond, I suggested that his staff solve the problem of determining the correct level of the federal funds rate, which would vary over time, such that the Fed not aggravate the amplitudes of business cycles. After having solved this riddle, perhaps the staff could venture into other areas of research. I was never invited back to subsequent luncheons.
DeleteGreat talk! I am not fully convinced on your comment that velocity doesn't matter. Aren't the latest CPI numbers related, in a way, to the "velocity" with which people are starting to use the dollars they had saved in their banks?
ReplyDeleteVery interesting and suggestive. However, I think a crucial difference between keynesianism and monetarism is the case of employment (unemployment). E.g., Tobin thought unemployment depends on effective aggregate demand. Monetarism states that unemployment depends on the labour market plus micro variables ("flexible markets, regulations, education"). This is, of course, the discussion.
ReplyDeleteTake a look at the representation on the 12 regional fed boards. Not much private capital or local businesses represented anymore. It should be no surprise that equity and social justice are the main topics anymore.
ReplyDelete