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Old 09-01-2011, 11:55 PM
sugarkang sugarkang is offline
Join Date: Oct 2008
Location: Cali, Small-Govt Liberal
Posts: 2,186
Default Re: Booze and Money (Tim Fernholz & Megan McArdle)

Originally Posted by Parallax View Post
Richard Fisher who was one of the 3 dissenters in the last FOMC decision only has bachelors degree in economics. Now according Megan, not only he is fit to take monetary policy decisions, but his dissent shows subtle assessments of future inflation expectations. However when it comes to Kenneth Rogoff who is an economics proffessor at Harvard she brushes Rogoff's call for a 6% inflation with a 'but his field is not exactly monetary theory'. And that is journalism in US.
This is a good point as far as the Fisher / Rogoff treatment. However, accusing Megan of poor journalism for dismissing hyperinflation is actually weird when you step back from the plain logic of the argument. Also, Krugman already suggested targeting 5% inflation at MIT in January. There were crickets in the room from the other distinguished economists. I'd say it's pretty unfair to call this a journalism problem.

Beside bankers there is another class of people who hate inflation and that is those who save a lot and don't have much debt. Everyone who reads Megan's blog knows that she does not have that much debt (beside the residential mortgage she and her husband both pay) and that in fact she hates debt.
While I certainly understand the argument in favor of inflation, don't you think it's a problem that the government has been disincentivizing and punishing traditional saving for decades? Remember when saving was the responsible thing to do and people who took risky bets needed to suffer the consequences? At some point, that's the policy we should return to.

If I recall correctly she even had a post where she described not using credit cards anymore and paying cash for everything. So her not liking a little more inflation when she and her husband are both gainfully employed with low debt is quite understandable as a case of holding self serving beliefs.
She could just as easily load up on TIPS if inflation were imminent.
Fed's current policy of sitting on their hands is irresponsible, indefensible and unforgivable.
The only people that are absolutely sure about this seem to be Keynesians. And yet, Europe renounced Keynes and went for austerity. Japan just appointed a new PM who seems to be in favor of austerity. I don't think it's that clear, even if I, personally, favor spending now.

PS-2: Megan also repeated the nonsense about people not buying treasuries.
What do you mean by this?
The mixing of populations lowers the cost of being unusual.
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