This is a note to my long time readers that I have earlier this year moved my blogging to Substack. At Substack, posts are called newsletters, and so no one has any doubt about the focus of my newsletter, I´ve named it “Money Fetish”. Below a link to my latest “post”. Hope you like it […]| Historinhas
Fifty years ago, Milton Friedman published in the JPE “A Monetary Theory of Nominal Income”. I highlight two passages from the paper. Correspondence of the Monetary Theory of Nominal Income with Experience I have not before this written down explicitly the particular simplification I have labelled the monetary theory of nominal income—though Meltzer has referred […]| Historinhas
The “bits” are the components of the equation of Exchange in growth form: M+V=P+Y, where M is the growth rate of money supply, V the growth of velocity (the inverse of money demand), and P+Y the growth of aggregate nominal spending, or NGDP growth. For the past few months, many look at the high (unprecedented) […]| Historinhas
Unlikely. Also, it´s likely not worse and suffers from the same shortcoming of inflation targeting, being based on the false premise of the existence of a Phillips Curve. I plan to show, hopefully convincingly, that the New Keynesian model (the centerpiece of which is the New Keynesian Phillips Curve) is grossly unsuitable for monetary policy […]| Historinhas
Minnesota Fed Neel Kaskari published today “Why I dissented”, to explain the reasons for his dissent in the latest FOMC Meeting. His dissent has a dovish slant, but does not differ materially from the consensus view. In short, the relationship between inflation & unemployment, known as the Phillips Curve, is still very much alive in […]| Historinhas
Lael Brainard´s speech on the Fed´s new “longer-run goals and strategies makes reference to a “New Normal”: [I only highlight her references to the labor market] “The new statement on goals and strategy responds to these features of the new normal in a compelling and pragmatic way by making four important changes. First, the statement […]| Historinhas
David Beckworth brings attention to this interview with James Bullard where it he implies that the new AIT framework is equivalent, or approximates NGDP-LT. That´s not true. The Great Recession was the result of the Fed “downgrading” the NGDP target level, and then continuing to practice NGDP-LT at a lower trend path (accompanied by a […]| Historinhas
The first thing to note is that inflation is not a price phenomenon (don´t reason from a price change is relevant here), but a monetary phenomenon. For example, changes in relative prices (due to a…| Historinhas
The Fed´s new Statement on Longer-Run Goals and Monetary Policy Strategy is all about “making-up”; be it about inflation below target or unemployment shortfalls. The Fed is not changing its ultimat…| Historinhas
As I will show, it has also been doing NGDP-LT, albeit with a “variable” Level Trend. It´s amazing that it took them one and a half years to come up with a framework that had been in place for so l…| Historinhas
