Lo and behold! Feldstein needs to see it in a “wide screen”

Here´s Feldstein:

´…the Fed is planning a path for short-term interest rates that is likely to raise the rate of inflation too rapidly in the next two years. The December FOMC minutes show that members expect to have a negative real federal-funds interest rate until sometime in 2017, much too low for an economy already at full employment. The danger is that very low interest rates in this environment would lead to a higher rate of inflation and higher long-term rates. The Fed could prevent that faster rise in inflation by increasing the federal-funds rate more rapidly this year and next. …

The Fed needs to recognize that its employment goals have essentially been reached and that the inflation rate will reach its target of 2% in the foreseeable future. The economy would be better served by a more rapid normalization of short-term interest rates.

The “Cinemascope” version:

Feldstein once more

PS David Glasner has more details:

…In the absence of evidence that the Fed is affecting inflation expectations, it is a blatant and demonstrable fallacy to maintain that the Fed is forcing interest rates to deviate from equilibrium values that would, but for Fed intervention, otherwise obtain. No doubt, there are indeed many assets that are overpriced, but, for all Professor Feldstein knows, there are just as many that are underpriced.

So Professor Feldstein might really want to take to heart a salutary maxim of Ludwig Wittgenstein: Whereof one cannot speak, thereof one must be silent.

3 thoughts on “Lo and behold! Feldstein needs to see it in a “wide screen”

  1. For central bankers, and a large swath of economists, the, the first topic, the last topic, and the only topic is inflation. If there is no inflation, then the topic is the dangers of future inflation…

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