fbpx

models

Rational Expectations or Bubbles

By |2015-03-10T11:40:30-04:00March 10th, 2015|Markets|

The FOMC has been talking, so we hear, about changing “forward guidance” to indicate a potential rate hike sooner rather than later. They had already changed the basis of “forward guidance” back in September which largely negated what forward guidance actually meant. The concept is only pliable in the manner in which monetary theory has to follow “rational expectations.” Whenever [...]

Departing Science, Inflation Evidence

By |2014-03-18T16:34:36-04:00March 18th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

In the Spring of 1991, Lee Hoskins, then the President of the Cleveland Fed, penned an article that defended his view of inflation against what he considered the mainstream critiques of that position. President Hoskins favored zero inflation, a thought long since banished from anything in the orthodox literature. He even went so far as to argue that zero inflation [...]

Meeting of the Minds

By |2014-02-21T15:36:14-05:00February 21st, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

As late as September 2008, the FOMC’s primary concern remained inflation. There were caveats and characterizations abounding through the conversation, but each time they kept coming back to uncomfortably high inflation and the extrapolations of that through their models. The old Philips Curve dies hard, and even with the financial turmoil already rotting through the entire edifice, policy discussion was [...]

Fisher’s Ghost

By |2013-08-01T11:30:13-04:00August 1st, 2013|Markets|

I’m sure there is a textbook definition, perhaps even clinical, of recency bias, but to me the term refers to an inability to see past the margins. In short, it is a failure of imagination. We see this most clearly in econometrics and statistical analysis, where “tail risks” happen far more frequently than the numbers predict. Rather than rethink the [...]

Go to Top