“Coins missing in the fountain”, while some won´t be missed

Stanley Fisher had a ½ confirmation. He´s been confirmed as Board of Governors member but still awaits confirmation as Vice-Chair (how ridiculous can that be?)

Lael Brainard is on the ‘confirmation queue’, while Jerome (who?) Powell is on “probation” waiting to be “allowed to continue” in his post for another term.

After these Board seats are filled, one will remain empty!

As Ozy put it in January:

Thanks in part to their lengthy 14-year terms, Brainard and the other Fed newbies will help the president leave a stamp on the most watched economic body in the world long after he’s left 1600 Penn.

But if the Fed continues ‘messing-up’, it will be a worthless ‘penny stamp’.

Stanley Fisher ‘lucked-out’ (US definition) during his tenure at the Bank of Israel, when the country managed to avoid the worst of the international crisis.

It´s encouraging (at least for market monetarists) to observe that that was very likely due to the fact that Israel managed to maintain nominal aggregate demand (NGDP) on a level trend, not falling prey, like the US and others, to the siren song of the oil price rise.



Apparently he doesn´t even know that was the case because in his ‘farewell speech’ last year he said offhandedly:

There are those who support setting a nominal GDP target. I think that this is very impractical. The data that we receive on nominal GDP are very unstable.  There are changes of whole percentage points between the various estimates of GDP. For this reason, I think that there is no reason to use nominal GDP as a target.

One piece of good news: As of today Jeremy “in all the cracks” Stein will be there no more!

3 thoughts on ““Coins missing in the fountain”, while some won´t be missed

  1. I could play with Fischer’s statement a little and it would still make as much sense:
    There are those who support setting a 2% inflation ceiling target. I think that this is very impractical. The data that we receive on inflation are very unstable. There are changes of whole percentage points between the various estimates of inflation (CPI core and headline, and PCE core and headline – they are all different!). For this reason, I think that there is no reason to use inflation as a target.

  2. The Fed, the most powerful economic institution in the United States and perhaps the Western World (says Beckworth) and nobody in the public even knows who is getting appointed for 14 years terms (the regional bank presidents are even more mysterious). Then the Fed holds secret meetings, and declares monetary policy. Well, obfuscates about monetary policy.

    Some of this is the public’s fault—they are watching Bonanza reruns, not the Fed. But the media deserves a huge portion of blame, for not telling the public how important is the Fed. And the Fed deserves blame, for consistently seeking secrecy and opacity in its decision-making process.

    As a result, a cloistered Fed has come to dominate not only monetary policy, but the framing and discussion of monetary policy. Americans are more worried about some Islamic hillbillies in Afghanistan than a Fed that is wiping out prosperity.

    Obviously, central bankers globally have become addicted to the idea of targeting inflation, and then targeting inflation to ever lower levels, unless you are Charles Plosser, in which case even that isn’t good enough, and he wants the utopia of deflation.

    It took Japan 20 years to shuck off the central bankers—do we in the USA have 15 more years to go?

  3. Very appropriate riposte to Fischer is from the BEA itself, as unearthed by Mark Sadowski @
    [i have just copied and pasted his whole reply to another commenter … i love “generally not smaller than” ie bigger!]

    There’s two main ways of measuring the size of the revisions of the components of national income and product accounts: 1) Mean Revision (MR) and 2) Mean Absolute Revision (MAR). For rate targeting MAR is the more appropriate measure, and in fact the MAR of inflation is usually smaller than the MAR of NGDP. However, for level targeting MR is more appropriate.

    Interestingly, at least in the US (Page 27):

    “The MRs for the price indexes for GDP and its major components are generally not smaller than those for real GDP and current-dollar GDP and its major components.”


    In fact over 1983-2009 the MR for the final revision to quarterly NGDP is 0.14 whereas over 1997-2009 the MR for the final revision to the GDP deflator and the PCEPI is 0.20 and 0.12 respectively. And over time the revisions have trended downward:


    So I suspect that the MR for NGDP is actually smaller than PCEPI over 1997-2009.

    Which means all the stuff you hear about NGDP revisions being larger than inflation revisions, and hence NGDP Level Targeting (NGDPLT) is less practical than Inflation Targeting (IT), is pure grade A garden fertilizer, in addition to being totally beside the point.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.