Friday, January 14, 2022

‘The Lords of Easy Money’ Review: An Inflated Sense of Ability - WSJ

The Fed and most mainstream academic economists believe that a deft manipulation of monetary levers can increase employment or control inflation. But this implies a direct connection between the Fed and Main Street. The truth is that any monetary-policy intervention must be mediated through the financial system, a complex organism made up of millions of individual bankers, pension savers, fund managers, private-equity investors, day traders and others, all with their own incentives. The Fed understands startlingly little about how this financial system transmits its policies to Main Street.


For better or worse, that's why I follow the "popular" voices on the macro-economy -- this is the "global macro" mob on twitter and youtube -- rather than the academic economists. For one thing, it's time consuming and mental energy consuming to follow anybody, but also the academicians just seem, for my money, to be working on refinements of Keynesianism, which might well be wrong, and I think probably is, though TBH I hope for the sake of my portfolio, is not. There's still plenty of diversity on the non-academic side. You have people like Joe Brown arguing for the straight End-the-Fed hard money view, Jeff Schneider for a much more nuanced inflation is probably transitory view, and Lyn Alden for something in between. And many others. I really do not know what's going to happen. Be prepared, the Boy Scouts say.

Anyway, I'm sampling this book on kindle. I'll let you know. Yes, the author is a lefty, but much good stuff is coming out of the left these days. Some of them tend to be pretty good on the diagnosis, just disastrous on what to do about it.

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