OT macro picture:
I know it's his job to worry about inflation, and to do a careful balancing act between recession and inflation, trying to avoid both. And, until recently, that's what he did. But his recent statements, and even more so his actions, tell me he currently sees zero inflation risk, none at all. He clearly is willing to bring the Fed Funds rate to 3, 2, 1%, whatever it takes. From early 1999 till very recently, I was very worried the Fed might have to choke off the economy, deliberately, to choke off inflation. Now, I'm not worried (and more importantly, neither is the Fed).
And the government has also changed it's attitude, even more abruptly. Until last Tuesday, the Democrats were pledging to maintain the "Clinton legacy" of budget surpluses. There was a consensus in both parties that the non-Social Security part of the budget would not be allowed to go into deficit. That consensus has swung around 180 degrees, to a new consensus that says: "we're going to spend, spend, spend, to get us through this crisis".
The V isn't all that lovely. The bottom of a V is lower than the bottom of a U. We just don't stay there very long, with the V. |
