Summary:
John Cochrane gave a preview of a WSJ oped he wrote in response to something from James Grant. Permit me to be brief about the utter nonsense from Grant before noting the more worthwhile discussion from Cochrane: Jim Grant: The Big Flaw in Ph.D-conomics: The Ph.D. standard of monetary management was the topic on the agenda at the July 15 panel at the American Enterprise Institute in Washington. Discretionary central-bank policy conducted by former tenured economics faculty, or by people imbued with the doctrines of those learned people, is the system in place today. We discussants pulled at our chins: Is the system any good at all? It’s a timely, down-to-earth question. Federal Reserve Chairman Jerome Powell, though a lawyer by trade, does business in a building infused with Sorry but I
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John Cochrane gave a preview of a WSJ oped he wrote in response to something from James Grant. Permit me to be brief about the utter nonsense from Grant before noting the more worthwhile discussion from Cochrane:
John Cochrane gave a preview of a WSJ oped he wrote in response to something from James Grant. Permit me to be brief about the utter nonsense from Grant before noting the more worthwhile discussion from Cochrane: Jim Grant: The Big Flaw in Ph.D-conomics: The Ph.D. standard of monetary management was the topic on the agenda at the July 15 panel at the American Enterprise Institute in Washington. Discretionary central-bank policy conducted by former tenured economics faculty, or by people imbued with the doctrines of those learned people, is the system in place today. We discussants pulled at our chins: Is the system any good at all? It’s a timely, down-to-earth question. Federal Reserve Chairman Jerome Powell, though a lawyer by trade, does business in a building infused with Sorry but I
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Jim Grant: The Big Flaw in Ph.D-conomics: The Ph.D. standard of monetary management was the topic on the agenda at the July 15 panel at the American Enterprise Institute in Washington. Discretionary central-bank policy conducted by former tenured economics faculty, or by people imbued with the doctrines of those learned people, is the system in place today. We discussants pulled at our chins: Is the system any good at all? It’s a timely, down-to-earth question. Federal Reserve Chairman Jerome Powell, though a lawyer by trade, does business in a building infused withSorry but I refuse to go on with this rant as to how people trained in economics do not have perfect forecasting record especially since it is written by someone who co-authored a 1999 prediction that the DOW would soon hit 36000. The entire purpose of Grant’s rant was to advocate a gold standard. Cochrane was kind enough to provide a link to something from Grep IP entitled:
Judy Shelton, a Goldbug Who Bends to Fit TrumpThis WSJ oped is worth the read. Now to what Cochrane contributed:
Pegging the dollar to gold won't stop inflation or deflation. Inflation was already quite volatile in the 19th century, and it would be worse today...In particular, if the value of gold goes up, you have deflation, which many people are worried about today. The gold standard did nothing to stop the sharp deflation of the 1930s.Quite right and he notes that broader commodity standards face similar problems – which is something Stephen Moore apparently does not get. Cochrane instead advocates that we adopt a CPI target, which means that the Federal Reserve should target a zero percent inflation rate and not the current 2 percent target. Of course, those of us who lived through the Great Recession and also worry that the Wicksellian real interest rate might drop below negative 2 percent are advocating a higher inflation target – not a lower inflation target.