We have heard numerous NRO pundits hammer the FED for not following some sort of price-rule for monetary policy. Their version of a price-rule is often a commodity price-rule as in some sort of weird devotion to the gold standard, which I always thought was driven by the fact that Victor Canto was the only Ph.D. in economics who would lower himself to regularly write for the National Review. Well Dr. Canto just broke ranks and praised the FED:
While it’s true that the Fed has never disclosed its operating procedure, I have pointed out over the years that its policy behavior is consistent with the domestic price rule. What’s more, I have argued that the U.S. inflation rate was consistent with a price rule even prior to the Greenspan years.
In other words, Canto is still a gold bug but then the FED has sort of been following his advice all along. Does this mean that Canto is saying the Lawrence Kudlow is clueless? Or could it be possible that they are both clueless?
A little advice to the new Federal Reserve chairman (like Bernanke even needs my advice). Pay no attention to the suggestions from this crowd.