Fasten seat belts...
Fed’s Lacker says fiscal stimulus likely to prompt rate hikes https://t.co/FRClsR8i8r pic.twitter.com/NYqtJWapIL— Bloomberg Economics (@economics) November 15, 2016
Fed’s Lacker says fiscal stimulus likely to prompt rate hikes https://t.co/FRClsR8i8r pic.twitter.com/NYqtJWapIL— Bloomberg Economics (@economics) November 15, 2016
7 comments:
Guuuundlaaaaach: "Rise in yields almost over." Hahhahahahahaa.
Mike the risk is they lose this thing to the upside imo.... could get hairy....
This is the conventional view. Monetary and fiscal policy are countervailing forces.
A large part of the idea behind cb independence is countervailing force. The Fed is tasked with countering the expected effects of fiscal policy.
This is why many oppose the dual mandate and want the cb to focus only on price stability.
Kind of reminds me of the tight monetary policy vs. expansive fiscal policy of the 1980s.
Well imo we're going to learn the hard way that all that monetarism is 100% bs...
I wouldn't be surprised if Trump attempts to take over the Fed. As I've written before (and will blog again about soon), the Supreme Court has been gradually chipping away at the independence of fourth branch of government agencies like the Fed (reasonably, in my view, since the Constitution stopped at three branches). If Trump walked into the Eccles Building and told the FRB governors they're fired, he might actually get away with it. Granted, the smart play would be to pick and win this legal battle with a lower profile independent agency first-- the Nuclear Regulatory Commission, say-- but no one really expects President The Donald to be subtle.
So there are two institutions which can influence demand: the central bank and second, politicians / treasury. That makes as much sense as a car with two steering wheels controlled by a man and woman having a marital row.
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