Tuesday, October 14, 2014

Read this anyway

I know y'all don't care much for the economics posts, but this one is quite timely and is something we all can, and need to, understand.  

It's from Warren Mosler 

It starts like this:

There is no right time for the Fed to raise rates!
I reject the belief that economy is strong and operating anywhere near full employment. I also reject the belief that a zero-rate policy is inflationary, supports aggregate demand, or weakens the currency, or that higher rates slow the economy and reduce inflation. Additionally, I reject the mainstream view that employment is materially improving, the output gap is closing, and inflation is rising and returning to the Fed’s targets.
What I am asserting is that the Fed and the mainstream have it backwards with regard to how interest rates interact with the economy. They have it backwards with regard to both the current health of the economy and inflation, and, therefore, their discussion of appropriate monetary policy is entirely confused and inapplicable.
You can read the rest at the link.

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