Saturday, June 2, 2012

gentle ben answers question numero uno

 ".. does it make sense to actively seek a higher
inflation rate in order to  achieve a slightly
increased pace of reduction in the unemployment rate? "

nicly framed that ...no




"The view of the committee is that that would be very,
reckless."

note he hides in the WEs  here

"the Federal Reserve, has  spent 30 years
building up credibility for low and stable inflation "

" which has proved extremely valuable,"

ben have u an example ?

"we've been able to take strong accommodative
actions in the last four or five years to support the
economy without leading to a destabilization of inflation."

" To risk that asset, for, what I think would be
quite tentative and  perhaps doubtful gains, on the real side 
would be an unwise thing to do."

"perhaps doubtful" "real  gains"
this sez

despite talk of liquidity trap
using creative tools at the  ZERP
the  fed can impact up or down
the rate of inflation of product prices
sure he can he just said so ...

but  the fed can not  impact the rate of real  spending
simply by  increasing the announced
 targeted  rate of inflation
 over some  longer term (two to five year ?)

or even  if you used your creative vpowers
to push  up inflation to an annual rate of 5% ben ?

oh weary weary inquirer
so much is left unsaid  here