Comments on: Duh. http://alephblog.com/2009/07/22/duh/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Sun, 12 Feb 2012 04:27:21 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Jeffhttp://alephblog.com/2009/07/22/duh/comment-page-1/#comment-22540 Jeff Thu, 23 Jul 2009 04:19:39 +0000 http://alephblog.com/?p=1910#comment-22540 David - Why are you so confident that Bernanke, who has responsibility regarding employment and price stability, is targeting markets? Do you have any evidence for this viewpoint? The record of Fed transcripts has been pretty clear. They are interested in markets only as a vehicle for economic effects. Their focus is on the economy. Put another way, let us suppose that you had been the Fed Chair over the last few years. What do you think would be the current state of the economy, unemployment, credit markets, etc.? It would be an interesting article, and a bit more challenging that what you have written here. Please compare with http://oldprof.typepad.com/a_dash_of_insight/2009/07/politics-ideology-and-investing.html Thanks for the stimulating post! Jeff David – Why are you so confident that Bernanke, who has responsibility regarding employment and price stability, is targeting markets?

Do you have any evidence for this viewpoint? The record of Fed transcripts has been pretty clear. They are interested in markets only as a vehicle for economic effects. Their focus is on the economy.

Put another way, let us suppose that you had been the Fed Chair over the last few years. What do you think would be the current state of the economy, unemployment, credit markets, etc.?

It would be an interesting article, and a bit more challenging that what you have written here.

Please compare with http://oldprof.typepad.com/a_dash_of_insight/2009/07/politics-ideology-and-investing.html

Thanks for the stimulating post!
Jeff

]]> By: But What do I Know?http://alephblog.com/2009/07/22/duh/comment-page-1/#comment-22514 But What do I Know? Wed, 22 Jul 2009 14:29:41 +0000 http://alephblog.com/?p=1910#comment-22514 One more thing--the more the Fed talks about eventually selling those MBS's makes it all the harder for them to keep rates low by buying them up. After all, if you want to unload the MBS, wouldn't you want to sell now, when you have a willing buyer, rather than later, when you'll have competition? One more thing–the more the Fed talks about eventually selling those MBS’s makes it all the harder for them to keep rates low by buying them up. After all, if you want to unload the MBS, wouldn’t you want to sell now, when you have a willing buyer, rather than later, when you’ll have competition?

]]> By: But What do I Know?http://alephblog.com/2009/07/22/duh/comment-page-1/#comment-22508 But What do I Know? Wed, 22 Jul 2009 12:35:39 +0000 http://alephblog.com/?p=1910#comment-22508 Great points, David--one can only hope that Uncle Ben is reading you, though somehow I doubt it. Too much straight talk for his liking, I should imagine. I have yet to grasp why this testimony was meaningful--surely anyone with two brains cells to rub together knew what the Fed could theoretically do, the question is what, and when, and who has the balls to do it. (Then again, he was testifying before Congress, so maybe he did need to outline it.) I didn't see anyone else raise the point about option no.4--just who would the Fed sell to. Maybe Ben hasn't figured out that he's the Last Buyer yet, but everyone else has. He's stuck to that Tar Baby. He can't sell long-term assets when things are going badly (because that would raise rates) and he can't sell them when things are going well because then no one will want them. Your discussion about the fortitude required of central bankers is germane and really is at the root of the problem. We were much better off when people hated the Fed chairman than when they agreed with him. Great points, David–one can only hope that Uncle Ben is reading you, though somehow I doubt it. Too much straight talk for his liking, I should imagine. I have yet to grasp why this testimony was meaningful–surely anyone with two brains cells to rub together knew what the Fed could theoretically do, the question is what, and when, and who has the balls to do it. (Then again, he was testifying before Congress, so maybe he did need to outline it.)

I didn’t see anyone else raise the point about option no.4–just who would the Fed sell to. Maybe Ben hasn’t figured out that he’s the Last Buyer yet, but everyone else has. He’s stuck to that Tar Baby. He can’t sell long-term assets when things are going badly (because that would raise rates) and he can’t sell them when things are going well because then no one will want them.

Your discussion about the fortitude required of central bankers is germane and really is at the root of the problem. We were much better off when people hated the Fed chairman than when they agreed with him.

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