the horror thesis :
"When you put lags, forecasting errors, and time-inconsistency together, you get something much nastier than a Phillips curve.You get a stop-go cycle
with an inflationary bias"!!
the horror narrative:
You get a stop-go cycle with an inflationary bias. You keep the expansion phase going too long, because you don’t want to take the bitter medicine of disinflation until after the next election. Then, like a poorly disciplined patient with drug-resistant tuberculosis, you stop taking your disinflation pills as soon as you feel a little better, but before the cure is complete. The cycle goes around and around. The top of each cycle has a higher rate of inflation than the one before, and the bottom has a higher rate of unemployment."
" Here is the full chart of how things played out after those early days of seemingly successful meddling in the early 1960s. Taking the 1960s and 1970s as a whole, it looks like the macroeconomists of the day were less the superheroes who lifted the car out of the ditch than the impaired drivers who put it there."
.
the ideal altrenative to fine tuning hubris
1)" follow preset policy rules"
" and if they can’t bring themselves to do that,"
2) " they should tweak the policy dials only a little at a time
and wait cautiously to see what happens "
note we got that plan 2 in winter 09 and these modest technocrats
stuck to their guns right to the last ditch pre fall 10 donkey massacre
and since then ?
well why change now
just try to re elect the black face nice neolib potus
