Larry Summers is starting to blog on his blog


"Larry Summers is starting to blog on his blog". Why? Maybe somebody has promised to make it worth his while. Nudge, nudge; wink, wink.

Very comforting that Larry Summers knows exactly what interest rates should now be.
Harvard University really teaches awesome economics stuff.
(Does he also know the proper prices of steel, shoes, pizza, and rock concert tickets?)

That's like saying the owner of a pizza store doesn't know how to price a pizza slice. He has to give it some price.

Larry Summers is the owner of the Federal Reserve?

Okay, it's like saying a pizza restaurateur can't opine on the proper price of a pizza slice

I disagree. Cowen's third law does not apply to pizzerias.

"He has to give it some price."

Says who? He could auction it off.

What if the Federal Reserve auctioned off the next prospective rate change? I wonder who would win and what the rate would be? Hell, who would participate?

Not in that way. You just use an appropriately constructed futures market to do your forecasting for you, then react to it mechanically.

So Summers is the owner of the US economy? He has a payroll to meet, a very good understanding of his competition, knows his costs and risk?

Very good analysis by Larry. If he continues in the vein I see a bright future for him. More seriously Scott Summer and others must be wondering why they opposed his Fed candidacy.

Yes, Larry appears more dovish than Yellen. However, my rule of thumb for a Chairmen's dovish/hawkish stance is: Take the dove/hawk scale pre-fed Borg assimilation and tick towards the Hawk side by 2 or 3. By that metric, Summers would've raised rates if not sooner.

1. The government does not like to pay interest any more than you do.
2. With other "safe government" rates lower than our own, there is no need to pay more.

A bit late to the party, but Damodaran also had a great primer on interest rates a week ago

Well, duh.

The Fed's mandate is to target price stability and employment, not "normal interest rates."

The last time interest rates were at an extreme one good thing was followed by a whole slew of bad things. Will it be different this time? I'm an Episcopalean, which means I pretty much will accept anything, but only if it's done in moderation. Maybe we need more Episcopaleans making economic policy.

I'm not sure there was a last time. In the late 90's we thought rates were "low" and that Japan was a ridiculous outlier. Now we are all in the Japan range, no end in sight.

Because people read come across this post much later when something different is on Summers' front page, here's a permalink:

Meanwhile: Emerging markets call on Fed to lift rates and end uncertainty

As a side note: I love Larry Summers.

If you're someone who is hated by both the SJW/populist-left as well as the Zero Hedgie/populist-right, you know you're in the right.

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