201805.31
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Ptolemy Strikes Again

Perhaps it is revenge for 2015’s residual seasonality breakout. Or maybe it is just being celebrated as delicious irony. Did the BEA just take revenge on the Fed? In early 2015, first the Philadelphia branch of the Federal Reserve and then its San Francisco arm both published essays essentially accusing the BEA of being unaware…

201805.11
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All The World’s A (Imagined) Labor Shortage

Last year’s infatuation with globally synchronized growth was at least understandable. From a certain, narrow point of view, Europe’s economy had accelerated. So, too, it seemed later in the year for the US economy. The Bank of Japan was actually talking about ending QQE with inflation in sight, and the PBOC was purportedly tightening as…

201803.09
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China Prices Include Lots of Base Effect, Still Undershoots

By far, the easiest to answer for today’s inflation/boom trifecta is China’s CPI. At 2.9% in February 2018, that’s the closest it has come to the government’s definition of price stability (3%) since October 2013. That, in the mainstream, demands the description “hot” if not “sizzling” even though it still undershoots. The primary reason behind…

201802.14
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So, Where Is It?

The Fed in its Beige Book as well as in the speeches of several of its officials has referenced a labor shortage for years now. On the one hand, that is understandable given the trajectory of the unemployment rate. All the way back in 2013, during the so-called taper tantrum, it was the rapid drop…

201802.09
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Inflation? Not Even Reflation

The conventional interpretation of “reflation” in the second half of 2016 was that it was simply the opening act, the first step in the long-awaiting global recovery. That is what reflation technically means as distinct from recovery; something falls off, and to get back on track first there has to be acceleration to make up…

201801.10
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Inflation Correlations and China’s Brief, Disappointing Porcine Nightmare

Two years ago, China was gripped by what was described as an epic pig problem. For most Chinese people, pork is a main staple so rapidly rising pig prices could have presented a serious challenge to an economy already at that time besieged by massive negative forces. It was another headache officials in that country…

201712.26 3

From ‘Definitely Transitory’ to ‘Imperfect Understanding’ In One Press Conference

When Janet Yellen spoke at her regular press conference following the FOMC decision in September 2017 to begin reducing the Fed’s balance sheet, the Chairman was forced to acknowledge that while the unemployment rate was well below what the central bank’s models view as inflationary it hadn’t yet shown up in the PCE Deflator. Of…

201712.13
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Two Very Different Monetary Cases, And Their One Common Theme

When we look back at the period known as the Great Inflation there is a tendency, I believe, to truncate the episode only to the most well-known parts. What many people remember are things like gas lines, where oil problems and embargoes left Americans at several points in the seventies too often stuck for trying…

201709.29
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Non-Transitory Meandering

Monetary officials continue to maintain that inflation will eventually meet their 2% target on a sustained basis. They have no other choice, really, because in a monetary regime of rational expectations for it not to happen would require a radical overhaul of several core theories. Outside of just the two months earlier this year, the…