For a millisecond I thought the WSJ was on to George Warren

That´s because I still remember this 4 year old Scott Sumner post, where he talks about (his role model) George Warren:

FDR takes office in March, promising to boost wholesale prices back up to pre-Depression levels.  He uses several tools, but the most effective was loosely based on Irving Fisher’s “compensated dollar plan.”  Fisher’s plan was to raise the price of gold one percent each time the price level fell one percent.  An obscure agricultural economist named George Warren was a big fan of Fisher’s idea, and sold it to FDR with all sorts of fancy charts.

And it worked.

Just like an “obscure Bentley U professor “ is “making waves” in 2013!

But the WSJ article was about “2013 Fed Voter ‘George Warns’ of Risks in Current Policy”.:

As she prepares to take on a direct role in setting monetary policy this year, the leader of the Federal Reserve Bank of Kansas City said Thursday she sees big risks associated with the aggressive course of action currently being taken by the central bank.

“We must not ignore the possibility that the low-interest rate policy may be creating incentives that lead to future financial imbalances,” Federal Reserve Bank of Kansas City President Esther George said. She added the central bank’s stance could ultimately “hamper attainment of the [Federal Open Market Committee's] 2 percent inflation goal in the future.”

It´s like a game of ‘musical chairs’; Lacker goes out and George comes in. Plus ça change

Update: If she wants to learn about the inadequacies (or danger) of her IT obsession she would do well to read this simple and elegant Nick Rowe post:

The Bank of Canada has been very successful in keeping inflation on target. Which is what the Bank of Canada was supposed to do.

But keeping inflation on target has failed to prevent recessions caused by deficient aggregate demand. Which is what keeping inflation on target was supposed to do.

The problem is not the Bank of Canada. The problem is the Bank of Canada’s inflation target.

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4 thoughts on “For a millisecond I thought the WSJ was on to George Warren

  1. From http://en.wikipedia.org/wiki/Esther_George
    Esther George received a BSBA degree in Business Administration from Missouri Western State University an MBA degree from the University of Missouri-Kansas City. She is a graduate of the American Bankers Association Stonier Graduate School of Banking and the Stanford Graduate School of Business.

  2. Oh, please… not another one. These hawkish bankers are like glamor boys/girls, take one down and another takes their place. The stupidity of stating something like we shouldn’t feed the starving economy because it might end up fat is just way out there given the current set of circumstances. The Fed’s job is to shut up and print money, especially when the 20 year treasuries are looking really bad. Print, Baby, Print.

  3. A serious question:

    If the Fed need credibility, and needs it not only as inflation fighter but as growth-spur, can the Fed tolerate these loose cannons, like George or Fisher?

    Okay, I am a market player and I hear George and Fisher in their sweat-drenched hysterics about inflation. How does that make me feel about the Fed?

    Is the FOMC needed anymore?

    Should the Fed speak with one voice?

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