The Fed is determined to raise rates because somehow it's felt to not be normal to have ZIRP for so long regardless of economic conditions. Here's that man, Scott Sumner:
"Marcus Nunes has a new post that quotes from the recent FOMC meeting:
"There was push back against hesitating. A number of officials argued that a rate increase could convey confidence to the world about the economic outlook and that the Fed needed to move in acknowledgment of the progress the economy had already made toward normalcy."
"Yes, tighter money from the Fed is just what global markets are looking for right now, to regain confidence."
http://www.themoneyillusion.com/?p=30154#comments
"Marcus Nunes has a new post that quotes from the recent FOMC meeting:
"There was push back against hesitating. A number of officials argued that a rate increase could convey confidence to the world about the economic outlook and that the Fed needed to move in acknowledgment of the progress the economy had already made toward normalcy."
"Yes, tighter money from the Fed is just what global markets are looking for right now, to regain confidence."
http://www.themoneyillusion.com/?p=30154#comments
The Fed seems to see the economic picture in very benign terms.
http://www.wsj.com/articles/fed-july-policy-meeting-minutes-leave-mixed-markers-on-rates-1440006546
It kind of makes me think of the Investors Business Daily News. I get the IBD delivered and every single day for the last month it claims that the market is in an 'uptrend under pressure.' The Dow literally fell eight days and the market is still in an uptrend-even if under pressure?
Today the market just tanked 350 points and the S&P is under long time support of 2040. It will be interesting to see if the Fed in the B section still thinks its in an uptrend under pressure or otherwise.
And it will be interesting to see if the Fed still thinks the biggest problem in the world is making the Neo-Fisherians happy.
P.S. What's happened to Kocherlotta? How did a Minneapolis guy like him get here? He's actually criticizing the Fed's obsession with normalcy-which makes it sound like Warren Harding.
http://teachingamericanhistory.org/library/document/return-to-normalcy/
http://www.themoneyillusion.com/?p=30151
How will his buddy Stephen Williamson-one of the biggest NFer around handle that?
O/T: Mike, I find it amusing that MF now regularly takes another commentator to task, in the following manner:
ReplyDelete"Do you know what is a waste of time? Reading your fallacious posts over and over again.
You should reprogram yourself. There is a bug in your processing code."
Yeah Tom that's Ray Lopez. Everybody gives Ray crap for saying money is neutral even in the short term.
ReplyDeleteHe says in hyperinflation it may not be neutral.
In many ways people thought that Ray and MF were birds of a feather but MF emphatically does not think money is neutral. And after all, if money is neutral why criticize monetary policy like Major does?
I used to think that Ray was like Major but I now see he marches to his own drummer and am not quite sure what that drummer is-like what is his economic theory?
He seems like a nice enough guy and he reads and comments on my blog now and again so I have nothing bad to say about him.
Here is his comment on my Carter piece.
"Agreed, the Carter economy was not so bad, except for some 'scary inflation' (which does not really matter, as the evidence shows money is neutral), compared to the Reagan economy. In fact, in the 1970s, except for inflation volatility, real GDP was actually slight higher than in the 1980s and 90s"
(see: http://www.efficientfrontier.com/ef/902/fiduc.htm)
- See more at: http://lastmenandovermen.blogspot.com/2015/08/reconsidering-jimmy-carter.html#sthash.7PamDtA3.dpuf
I'm pretty skeptical that money is neutral but I do like his view that inflation was harmless in the 70s. It's a welcome corrective to the inflationphobes who greatly overstate it's nefarious effects.