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Eric Lonergan

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7 Feb, 4 tweets, 2 min read

https://twitter.com/ojblanchard1/status/1358122330329927680

1) Includes ‘a very large increase in interest rates’. The empirical overconfidence here is shocking.

https://twitter.com/ojblanchard1/status/1358122330329927680

2) If every important empirical macro claim you have made about inflation, output gaps and unemployment has been wrong for three decades, every policy suggestion should start with ‘I know very, very little about this’.

@ojblanchard1

3) @ojblanchard1 needs to start every macro policy recommendation with: “I didn’t see the collapse in global real interest rates over the last two decades coming, & I still don’t understand it”; “ditto the collapse in inflation”; “ditto any ‘trade-off’ between unemployment & CPI”

4) Janet Yellen’s last speech as Fed chair was a lesson in empirical humility. She has wisdom in abundance. federalreserve.gov/newsevents/spe…

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Eric Lonergan

@ericlonners

14 Jun 20

There are two qualitatively different forms of anger visible on our streets. We describe them in Angrynomics.

We need to more articulate in describing this emotion. There are types of anger and they should be labelled.

There is an economics of anger. Anger resolves collective action problems. ‘Loss of temper’ is a credible threat. It is a commitment not to be locally rational.

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Eric Lonergan

@ericlonners

10 Mar 20

Macro policy response: 1) It is reasonably clear that targeted support is required, which is likely to be needed for around three months, to sustain corporate cashflows, service all creditors, and maintain wages.

2) In most parts of the developed world this should be done by the fiscal authorities, with the assistance of central banks. CBs can offer technical assistance, particularly in regard to the financial sector. They can also make clear that there is *no* budget constraint.

3) Central banks should offer cover by saying ‘there is huge fiscal space, given where bond yields are, and furthermore we will buy any bonds the government needs to issue.’ Interest rate cuts are irrelevant at this point.

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Eric Lonergan

@ericlonners

21 Sep 19

Monetary and fiscal reform (thread)

1) what ‘secular stagnation’ ignores is that monetary policy didn’t work well when interest rates were a lot higher.

2) And neither has fiscal policy worked well. Because we have continued to have recessions, including an obvious bad one.

Read 10 tweets

Eric Lonergan

@ericlonners

15 Sep 19

1) Thread: This week’s ECB decision is historic. They have done something very similar to proposal here philosophyofmoney.net/dual-interest-…

2) Dual rates is monetary rocket-fuel. Be in no doubt. Media coverage appears oblivious to significance.

3) ECB has moved to a zero interest rate on excess reserves up to 6x required reserves. Banks with excess reserves below this level can now borrow reserves at negative rates and deposit with ECB, generating positive carry.

Read 13 tweets