...will suffice when justifying current monetary policy. The following quote is from the President of the Minneapolis Fed, toeing the line for whatever his chosen ministry wishes to do.
And thus, as if by magic, a "best possible forecast" is found to be more useful than a current measurement. Presumably, these officials don't think the Efficient Market Hypothesis applies to inflationary measures, nor do they believe that current markets in TIPS discount expected inflation.
Basing the Fed reaction function (and subsequent incentive set for the greater economy) on hand-waiving forecasts is not exactly prudent given the Fed's less than perfect record of forecasting the economy.
Current monetary policy is typically thought to affect inflation with a one- to two-year lag. This means that we should always judge the appropriateness of current monetary policy using our best possible forecast of inflation, not current inflation.
Wednesday, October 31, 2012
Tuesday, October 30, 2012
Well then...
...let the qui bono theories commence. On the eve of Halloween, no less.
WARSAW (Reuters) - Polish investigators found traces of explosives on the wreckage of the government jet that crashed in Russia two years ago, killing Poland's president and 95 others, daily Rzeczpospolita reported on Tuesday.
Without citing sources, the newspaper said prosecutors and explosive experts who examined the remains of the plane in Russia found signs of TNT and nitroglycerin on the wings and in the cabin, including on 30 seats.
Traces of explosives were also found in the area where the Tu-154 crashed during its approach to a small airport near the Russian city of Smolensk on April 10, 2010, the daily reported.
Benghazi
I made the point in a previous post that the assassination of U.S. personnel in Benghazi appeared to be a politically motivated, perhaps even personal, attack against U.S. presence there. I made the point that there are historical echoes as well and made the comparison with Robert Burnes and the Empire of Great Britain.
Much more will be learned from this debacle, but one thing appears certain: intelligence failures are inevitable on hostile ground and perhaps even more so on "friendly" ground.
More fallout from the events include the sacking of the AFRICOM commander in addition to sober conversations regarding the over-extension of U.S. political power without access to immediate and forceful military follow-up.
And of course the fact this intertwines U.S. interests with Africa as a whole is not lost here. It now appears that whomever occupies the White House come November, the Obama Doctrine will still come to fruition, if not by overt design then certainly by necessity.
Much more will be learned from this debacle, but one thing appears certain: intelligence failures are inevitable on hostile ground and perhaps even more so on "friendly" ground.
More fallout from the events include the sacking of the AFRICOM commander in addition to sober conversations regarding the over-extension of U.S. political power without access to immediate and forceful military follow-up.
And of course the fact this intertwines U.S. interests with Africa as a whole is not lost here. It now appears that whomever occupies the White House come November, the Obama Doctrine will still come to fruition, if not by overt design then certainly by necessity.
Sunday, October 28, 2012
Summing up monetary policy...
...and its inability to produce the desired effects the Fed wishes, a paper is making the rounds.
Finally, some tacit admission among academia that the bulk of fiat "money" is created ex nihilo via bank loans (and the corresponding deposits). This implies monetary creation is much more a function of lending environment than interest rates or other factors.
Finally, some tacit admission among academia that the bulk of fiat "money" is created ex nihilo via bank loans (and the corresponding deposits). This implies monetary creation is much more a function of lending environment than interest rates or other factors.
In a financial system with little or no reserve backing for deposits, and with
government-issued cash having a very small role relative to bank deposits, the creation of
a nation’s broad monetary aggregates depends almost entirely on banks’ willingness to
supply deposits. Because additional bank deposits can only be created through additional
bank loans, sudden changes in the willingness of banks to extend credit must therefore not
only lead to credit booms or busts, but also to an instant excess or shortage of money, and
therefore of nominal aggregate demand.
Supply and demand...
Interesting article by Mr. Pinker in the New Yorker. I tend to agree with some of his points, but the use of some sort of collective cultural memory when describing murder rates leaves much to be desired. A more simple explanation lies in the demand for violence, which is likely constant with humans, and the ability to experience physiologically significant proxies that satisfy the urge.
I argue the advent of hyper-realistic video games satisfies the killing urge and the resultant sales of various military simulation games certainly gives credence that both the supply and demand are there. Video games provide endless simulations that provide bloody restitution for various transgressions, and provide evolutionary "satisfactory" proxies for real conflict.
Admittedly, it’s hard to believe that today’s Southerners and Westerners carry a cultural memory of sheepherding ancestors. But it may not be the herding profession itself that nurtures a culture of honor so much as living in anarchy. All societies must deal with the dilemma famously pointed out by Hobbes: in the absence of government, people are tempted to attack one another out of greed, fear and vengeance. European societies, over the centuries, solved this problem as their kings imposed law and order on a medieval patchwork of fiefs ravaged by feuding knights. The happy result was a thirty-fivefold reduction in their homicide rate from the Middle Ages to the present. Once the monarchs pacified the people, the people then had to rein in the monarchs, who had been keeping the peace with arbitrary edicts and gruesome public torture-executions. Beginning in the Age of Reason and the Enlightenment, governments were forced to implement democratic procedures, humanitarian reforms and the protection of human rights.
I argue the advent of hyper-realistic video games satisfies the killing urge and the resultant sales of various military simulation games certainly gives credence that both the supply and demand are there. Video games provide endless simulations that provide bloody restitution for various transgressions, and provide evolutionary "satisfactory" proxies for real conflict.
Admittedly, it’s hard to believe that today’s Southerners and Westerners carry a cultural memory of sheepherding ancestors. But it may not be the herding profession itself that nurtures a culture of honor so much as living in anarchy. All societies must deal with the dilemma famously pointed out by Hobbes: in the absence of government, people are tempted to attack one another out of greed, fear and vengeance. European societies, over the centuries, solved this problem as their kings imposed law and order on a medieval patchwork of fiefs ravaged by feuding knights. The happy result was a thirty-fivefold reduction in their homicide rate from the Middle Ages to the present. Once the monarchs pacified the people, the people then had to rein in the monarchs, who had been keeping the peace with arbitrary edicts and gruesome public torture-executions. Beginning in the Age of Reason and the Enlightenment, governments were forced to implement democratic procedures, humanitarian reforms and the protection of human rights.
The Extraction...
...continues in the Middle Kingdom. Readers here are not surprised.
From the New Yorker:
By all accounts, China today has a growing Swiss Factor. Uncle House, like many other accused officials, was found to have family abroad, some with Australian citizenship, a condition that makes it easier for them to flee if he gets in trouble. (Official records indicate that eighteen thousand corrupt officials have fled the country since 1990, taking with them a hundred and twenty billion dollars.)
And of course even Greenwich seems like a safe haven:
From the New Yorker:
By all accounts, China today has a growing Swiss Factor. Uncle House, like many other accused officials, was found to have family abroad, some with Australian citizenship, a condition that makes it easier for them to flee if he gets in trouble. (Official records indicate that eighteen thousand corrupt officials have fled the country since 1990, taking with them a hundred and twenty billion dollars.)
And of course even Greenwich seems like a safe haven:
As China's economy is in its slowest expansion rate since 2009, some of the country's wealthier citizens are looking to invest their money overseas, in the shape of sprawling, expensive properties in Fairfield County.
"The upper middle class has a lot of disposable cash, but they're not sure about the political and economic future of China," Yang said. "So they're moving it overseas."
Friday, October 26, 2012
Rejoinder...
...and of course, as if written by a hollywood film writer, the obvious distraction tactic du jour follows...this would be hilarious comedy if it were not real life.
BEIJING, Oct 26 (Reuters) - China reserves the right to take strong
countermeasures if Japan "creates incidents" in the waters around a
group of disputed uninhabited islands in the East China Sea, a Chinese
vice foreign minister said on Friday.
"We are watching very closely what action Japan might take regarding
the Diaoyu islands and their adjacent waters," Zhang Zhijun said at an
unusual late night news briefing. "The action that Japan might take
will shape China's countermeasures."
Sino-Japanese relations took a dive after the Japanese government
bought the islands, called Senkaku in Japan and Diaoyu in China, from
a private Japanese owner in September, triggering violent protests and
calls for boycotts of Japanese products across China.
"If Japan continues down its current wrong path and takes more
erroneous actions and creates incidents regarding the Diaoyu Islands
and challenges China, China will definitely take strong measures to
respond to that," Zhang said.
BEIJING, Oct 26 (Reuters) - China reserves the right to take strong
countermeasures if Japan "creates incidents" in the waters around a
group of disputed uninhabited islands in the East China Sea, a Chinese
vice foreign minister said on Friday.
"We are watching very closely what action Japan might take regarding
the Diaoyu islands and their adjacent waters," Zhang Zhijun said at an
unusual late night news briefing. "The action that Japan might take
will shape China's countermeasures."
Sino-Japanese relations took a dive after the Japanese government
bought the islands, called Senkaku in Japan and Diaoyu in China, from
a private Japanese owner in September, triggering violent protests and
calls for boycotts of Japanese products across China.
"If Japan continues down its current wrong path and takes more
erroneous actions and creates incidents regarding the Diaoyu Islands
and challenges China, China will definitely take strong measures to
respond to that," Zhang said.
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