I cannot help but note strong divergence between the near-consensus views of Fed Chair Janet [Yellen]’s and Fed Vice-Chair Stan [Fischer]’s still-academic colleagues and students that tightening now is grossly premature, financial markets’ agreement with the hippies as evidenced by the ten-year breakeven, commercial-banker and wingnut demands for immediate tightening, the extraordinarily awful performance since 2007 of not all but the average regional Fed president as revealed in the transcripts, and the Federal Reserve’s strong predisposition to an interest-rate liftoff soon.
Prolix but accurate, and with the strong implication that Yellen and Fischer Know Better, but are constrained by their cohort.
Stan Fischer, Saturday morning (via Mark Thoma, whose presentation is more accurate and informative):
[B]ecause monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2 percent to begin tightening.
As I said before—to the apparent dissatisfaction of those who want to be polite losers or believe that “well, they’re saying the right things now” is redemptive and not damning— who of the Sensible Technocrats is worth the trouble of paying attention to when they have a chance to do something in government and make a point of forgetting everything they have learned?