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Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated
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From: S. maltophilia6/22/2022 1:58:06 PM
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Secret_Agent_Man

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......He’ll [Powell]also be compelled to explain how the technocrats managed to get things so wrong. I have a modest suggestion. They didn’t get it “wrong,” because to suggest as much is to tacitly assume that they had it “right” previously — to assume that the decline in macro volatility over the past several decades (figure below) was in large part attributable to independent central banks with inflation mandates. I don’t think that’s true. I don’t think they ever had “control” over inflation in the first place. Inflation is a phenomenon, not some setting that can be fine-tuned by dialing up other settings.

Those who argue developed market central banks can “absolutely” create and extinguish inflation in the real economy generally rely on the most extreme examples to make the point. If the Fed sent everyone checks for $5 million directly, the US would have hyperinflation, they studiously note, as if that’s a revelation. Paul Volcker, they’ll say, “tamed” inflation through a resolute, unwavering campaign of painful, but ultimately necessary, rate hikes, and we should all thank him for it. A less flowery retelling is that Volcker bludgeoned inflation into submission by way of a singleminded, unapologetically doltish commitment to undercutting the economy.

To call any of that “control” is a ludicrous stretch — like saying I have control over a dog because I can whip it into a feral frenzy by feeding it three pounds of hamburger meat then quickly bring it to heel by firing a shotgun through the ceiling.

In-between extremes, central banks never ......

heisenbergreport.com
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