.@POTUS @JoeBiden gave a powerful #SOTU speech taking on Putin and pointing to a range of critical national priorities. History will remember the cause of freedom much longer than anything about the Fed’s fund rate.
Unfortunately, just as losing weight is almost entirely about eating fewer calories, controlling inflation is largely about managing deficits and monetary policy.
That depends on paying for new spending, including the sizable defense increases that are likely necessary in the current security environment. And it depends on strong anti-inflationary monetary policies.
The @federalreserve has been way behind the curve. One of reasons this is damaging is that shocks can come along that make catching up difficult.
I wish the President had placed less emphasis on anti-inflation policies that are at best peripheral and possibly counterproductive.
Shifting demand to American producers with ‘Buy America’ polices that stop firms and consumers from buying at the lowest cost, no matter how politically attractive, are inflationary. This is something all economists should agree on, right @paulkrugman?
Blaming inflation on corporate greed or holding out the prospect that capacity can be expanded rapidly is at best diversionary.
The best micro-policies involve reducing tariffs, the Jones Act repeal (allowing foreign entry into shipping), reducing regulation of fossil fuels and focusing government procurement on buying fast and cheap.
Inflation is going to be wage-driven this year. With ongoing 6 percent wage inflation, and especially tight labor markets, the @federalreserve has a very difficult challenge ahead.
There is much more risk of too little monetary tightening than too much, especially if the Administration and its Fed appointees do not focus on price stability as a necessary precondition for strong employment performance.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
