Thursday, January 20, 2022

Biden “inflation!” Policy

 

Lays the problem 100% at the feet of the Fed to solve… which means periodic rate increases and a monthly reduction of system Reserve balances “to lend out!”…. ie textbook monetarism 101…

Supposed to kick off in March… fewer rate increases with more reserve reduction this year would result in the most financially favorable trade off between these two Fed policy parameters…






10 comments:

NeilW said...

And when the Fed fails to rein it in because supply side limitations, then what?

Matt Franko said...

They probably keep doing the same thing expecting a different result….

Matt Franko said...

The reserve reduction would be helpful as far as making more credit available but the rate increases will result in an immediate reduction in NPV of all financial assets so that will work against the reserve reduction…

I’m hoping they layoff the rate increases and start to promote the reserve reduction…. “UNprinting money!”….

Monetarists would have to love that..,

Matt Franko said...

In JAN 2019 Trump stopped the rate increases cold and they continued with reserve reductions at 50b per month… NDX rose 25% from Jan 2 thru April 29th 2019..

But this year sounds like Biden is with them all the way…

mike norman said...

Biden gives green light to Fed to raise and raise and raise and...

Matt Franko said...

Seems that way right now Mike…

Peter Pan said...

Will they get the timing right for the midterms?

Matt Franko said...

Depends on real supply side factors like Neil says so I don’t know they may think it’s purely a monetary phenomenon

Unknown said...

Throwing a crust to the Righty media! Rises won't be that great.

Matt Franko said...

“ crust to the Righty media!”

LOL he’s under the direct influence of the commies in the Liberal Arts academe…