Bernanke favors an inflation target rule, and this would be a promising reform for the central bank.
No it wouldn't. How does one "target" inflation? When inflation gets to x%, then FED raises rates y%? By the time the FED gets enough data to react to the Borg threat, all that's left of the Federation is nanites. This is how they work now. The problem is, what if inflation occurs in assets like it did in stocks in the late '90s? What the FED did was to crash the stock market. They stopped the "inflation". Is that what Bernanke wants?
The forward-looking financial and commodity-price indicators would make even better targets,
To arbitrarily separate out certain price classes in order to make a policy which shouldn't be made at all, hardly can be considered constructive. Maybe Kudlow means that when the stock market falls, the FED should pump. As for "forward-looking financial indicators" that's like fixing the price of stocks or Tbonds. Kudlow is remarkably stupid and getting more so every day as his TV exposure pulls him towards the Stiglitz left.
but an inflation rule would still be an improvement over the Greenspan standard: acting on whatever he's thinking as he steps out of the bathtub in the morning.
AG is doing exactly what Kudlow wants and so far, has only ruined most stock market investors. Kudlow belittles AG for luckily succeeding at what required no intervention to achieve. Prices don't rise much because most of the world will work for wages way below the cost of labor where the wealth resides.
AG is doing one thing right and that is his FED's intervention has had minimal impact on economy at the cost of maximal stock market volatility. Indeed, it may not be possible for FED to impact economy at all. The gold monster sits out there waiting to gobble the will to do good to the world.
Another name surfacing for an empty Fed seat is Robert McTeer closer to the throne. He's a technological-gales-of-creative-destruction follower of Joseph Schumpeter, the legendary economist and critic of Marx and Keynes. He looks at real-time market prices and monetary trends, not lagging indicators.
Well Larry, are you saying this closet Keynesian doesn't look at your lagging indicators like Bernanke's inflation targets?
He opposes speed limits to growth. In short, he's just what the Fed needs.
During the late '90s Kudlow repeatedly claimed FED was running money supply too low and rates too high. FED rationalized their high money growth by claiming they could get away with it because productivity allowed it. The money caused inflation in stock market prices. Kudlow wasn't saying anything about such inflation nor did he think that speed limits were advisable. He said exactly as much.
Enough time spent on this fool. Why don't we discuss his salary inflation and the speed limits that should be placed on his rap with that other CNBC clown. |
