The Real Targets Should Be Nominal Targets
James Alexander | At first glance the abstract of this brand new research piece, The Macroeconomic Risks of Undesirably Low Inflation, from the Federal Reserve Board sounds rather dry and innocuous.
low inflation
Low Inflation Still Not Affecting Spain’s Growth
It’s straight out of the textbook that low inflation – and above all deflation – has negative effects on economic growth that we all know about. That’s the main reason why ECB President Mario Draghi implemented an ambitious set of monetary expansion measures in March, with the aim of boosting prices to a level more suitable for economic growth, namely 2%.
The Fed Must Be Happy. The Employment Numbers “Confirm Their View”!
They are right. That´s the way the Fed thinks. But it is dangerous and wrong! Insisting on the mistake will likely lead to another recession. Larry Kudlow (HT Lars Christensen) also rants on the Fed´s mistaken view.
IN DEPTH: Is low inflation the greatest problem for the European economy?
MADRID | By J. L. Martínez Campuzano (Citi) | I beg your pardon, I meant to say “persistently low” inflation. If it is not (and here we are in agreement), then why is the ECB repeating the same argument over and over to justify its decisions? Non-existent official rates, negative deposit rates, unlimited liquidity provision for banks, and the latest invention: the purchase of securitised corporate paper for credit operations.