The Fed announcement

Get the details almost anywhere else, read Scott Sumner too.  I’ve been tied up, but I have been able to follow my Twitter feed.

Evan Soltas wrote:

It needs to be said that today’s FOMC statement is a major intellectual win for econ bloggers and academics.

Neil Irwin:

What they’re doing is basically the Evans approach minus explicit numerical targets for unemployment/inflation that trigger tightening.

Ross Douthat:

When the true history of the Obama era is written, it will be a joint biography of Ben Bernanke and John Roberts.

Binyamin Applebaum:

Bernanke: We’re not trying to increase inflation, but we might act more slowly to reduce inflation if it should happen to happen.

I say the rate of price inflation is going up.  I see this as a free lunch, and I am quite curious to find out just how big or small of a free lunch it is going to be.

Comments

where are the assorted links!

This is a huge deal.

"When the true history of the Obama era is written, it will be a joint biography of Ben Bernanke and John Roberts"

Because that is how Presidential biographies and histories work.

So many histories of the Reagan era involve Warren Burger; just as you can't get a good history of FDR's era without having to wade through piles of material on Charles Evans Hughes and Eugene R. Black.

Unless that is a call to publishers for a book proposal, in which case kudos, Mr. Douthat.

Yes. And when we talk about the economy under Reagan we are talking, in very large measure, about the economy under Volcker.

I think the size of the free lunch depends on the blow back from hard money types. Getting a deal done on deficit reduction allows the Fed to cement this open ended policy.

If folks are going to vote their stock portfolios this election will be no contest at all. I think Bernanke is doing the right and only thing given the Republican intransigence in Congress to provide a proper stimulus. If he can keep the inflation lion at bay and the economy makes a slow and steady improvement over the next 18 months, the Republican party as we know it in its present incarnation will cease to exist to be replaced by some thoughtful conservatives.

Glad that you are so forthright about it. Bernanke is awesome, he is getting rid of the nasty republicans and at the same time saving the economy, and it is not costing anyone a penny!

I have seen and respected your comments, so I know you are serious here. We really are dealing with two truly incompatible worldviews.

You only have to look at your stock portfolio or 401(k) to be able to answer the question, "...are you better off now than you were four years ago?" I'm fiscally conservative in my own life and would be tempted to vote for a moderate Republican but unfortunately that species has been all but rendered extinct by the the current bunch of loonie tunes who are in charge. It is really too bad that there is not an alternative these days for those of us who are libertarian on all social issues and fiscally conservative.

"It is really too bad that there is not an alternative these days for those of us who are libertarian on all social issues and fiscally conservative"

Yeah, somebody should start a third-party and nominate a former two-term state governor who fits those qualifications or something.

"You only have to look at your stock portfolio "
well I look at that, and then at my parents who derive all their income from bonds which return almost nothing because of ZIRP, and then I look at my three sons who will be paying for all of this, and their children who will still be paying for this in some way..

I am sorry, but one of my goals from now will be to make sure that such as your children pay as much as possible for all of this, and such as my children pay as little as possible.

Fiscal policies are mostly federal and there is no escape from that for me except emigrating again. Social policies are mostly state-level and I can choose where I make my life.

One of the happiest days of my life.

If you should buy when there is blood on the street, you should sell when otherwise reasonable people start talking about free lunch.

Isn't all this joy rather predicated on the Fed's willingness and ability to remove stimulus in a timely manner? I'm sceptical, the Fed's recent history suggests it will be slow to unwind policy and that we'll be left with an even uglier outcome. I hope I'm wrong

It's a free lunch except for those of us who still pay taxes, who will be paying for all the Federal dependents whose checks will automatically go up with prices.

That is one cost. But another cost is pensions funds. They were heavy into stocks, got burned, decided to go more into bonds to balance out their risks, and what happens? A lot of them are on the edge as it is.

Of course, the cheerleaders know all this. They are just confident that it will create growth that will cancel out all the bad effects. That is why it is a "free lunch".

Couldn't the field of economics be characterized as the search for free lunches? First it was deficit spending, then it was tax cuts, now it's inflation. I wonder what will be next.

The history of government is the history of selling people free lunches at a large profit.

"free lunches" should have scare quotes.

I'm not saying it will, but if this move fails to deliver or has very negative consequences in the future, what will be saying about bloggers and academic economists then?

If this doesn't work I'll become an anti-fed libertarian.

Ok, how do we define "not working" for you?

No major decline in unemployment. Jobs saved doesn't count.

No dice, unemployment can go down just by people leaving the workforce (and it has).

The argument that the plan was not implemented on a big enough scale is always available to economists.

No kidding!

Link

I think that's a fair claim to make if you said, before the results came in, that the plan is not big enough.

Nothing. This particular species has proved to be highly resilient. What happens to their theories and predictions in real life is of little importance.

Remember, never reason from a free lunch.

Evan I am totally agree with your thoughts. Keep doing these type of work.

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