A rule of law allows individuals living in an open society to know the limits of behavior up front; these rules are fixed (unless changed by popular consent) and so provide an environment free of interference and prejudice from government. Players know the rules and conduct themselves accordingly.
A rule of monetary guidance is also required; required that is for an economy to thrive. Players will remain at the sidelines without it. Hiring wilts when economic policy is discretionary, variable, and uncertain. Don’t believe us? See the study Uncertainty and the Slow Labor Market Recovery by Leduc and Liu, SF Fed. On second thought - you don’t need to do that; it’s intuitive for goodness sake.
We do not have a simple rule of guidance in the US (nor does the UK now that Carney has changed the rules). As a result, this “recovery” pales compared to a real one. Growth the past four quarters has been pathetic, not the 5.2% average four year growth of the 80’s recovery. Why? Risk takers have quailed.
There is hope however in the person of Don Kohn, a candidate for Fed chair. Don, unlike Yellen or Summers, understands the benefits of non-interventionist central banking. Fingers crossed.
Finally, what about transmission to the bottom line, over the near term? Those interested in anticipating FI price change must buy a ticket to the carnival. It is no longer one’s view for near-term real sector change that matters, it is instead what one planner – Bernanke - expects regarding near-term change in the economy; but not even that – it is what the market crowd thinks that Bernanke the barker will think about near-term change in the economy and, what discretionary tool he may next pull out of his hat. That is why so many able folk have gone fishing.
Speaking of gone fishing, my granddaughter of 4 recently pulled a big brown trout out of a WA state lake with her 4’ pink fishing rod, a lake where supposedly no brown existed – only carp and bluegill. Her Dad helped a tad, but mostly got in the way.
Robert Craven
A rule of monetary guidance is also required; required that is for an economy to thrive. Players will remain at the sidelines without it. Hiring wilts when economic policy is discretionary, variable, and uncertain. Don’t believe us? See the study Uncertainty and the Slow Labor Market Recovery by Leduc and Liu, SF Fed. On second thought - you don’t need to do that; it’s intuitive for goodness sake.
We do not have a simple rule of guidance in the US (nor does the UK now that Carney has changed the rules). As a result, this “recovery” pales compared to a real one. Growth the past four quarters has been pathetic, not the 5.2% average four year growth of the 80’s recovery. Why? Risk takers have quailed.
There is hope however in the person of Don Kohn, a candidate for Fed chair. Don, unlike Yellen or Summers, understands the benefits of non-interventionist central banking. Fingers crossed.
Finally, what about transmission to the bottom line, over the near term? Those interested in anticipating FI price change must buy a ticket to the carnival. It is no longer one’s view for near-term real sector change that matters, it is instead what one planner – Bernanke - expects regarding near-term change in the economy; but not even that – it is what the market crowd thinks that Bernanke the barker will think about near-term change in the economy and, what discretionary tool he may next pull out of his hat. That is why so many able folk have gone fishing.
Speaking of gone fishing, my granddaughter of 4 recently pulled a big brown trout out of a WA state lake with her 4’ pink fishing rod, a lake where supposedly no brown existed – only carp and bluegill. Her Dad helped a tad, but mostly got in the way.
Robert Craven
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