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Describing his decision to again dissent from the FOMC decision, the Richmond Fed's Jeff Lacker...

Describing his decision to again dissent from the FOMC decision, the Richmond Fed's Jeff Lacker paints a picture of a man with views 180 degrees different than his fellow board members. "A single indicator cannot provide a complete picture of labor market conditions," he says, wondering how a group of learned men and women can derive major policy decisions from the headline unemployment rate. Lacker is out as a voter on Jan. 1.
Comments (7)
  • Seth Walters
    , contributor
    Comments (676) | Send Message
     
    "A single indicator cannot provide a complete picture of labor market conditions,"

     

    Well yeah. Plunging labor participation gets us to a lower unemployment rate the same as more jobs. It should be *terrifying* to market participants that he is the only one to acknowledge something this obvious. They clearly all know it well.
    14 Dec 2012, 07:43 AM Reply Like
  • SlingWing9
    , contributor
    Comments (508) | Send Message
     
    I agree and would like to have seen economic policy tied to U6 as well as GDP. And while we're at it, maybe add in CPI.
    14 Dec 2012, 07:51 AM Reply Like
  • Jolly_Rancher
    , contributor
    Comments (566) | Send Message
     
    Why isn't monetary policy tied to velocity of M2. When the economy needs more money, inject. When velocity increases, take out.
    14 Dec 2012, 08:07 AM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    But the velocity of the newly-created money is zero, so any increase in overall M is offset by a corresponding decline in overall V. This isn't the answer.

     

    There are a lot of unconventional things the Fed could do, if it wished, in an attempt to escape the liquidity trap. Undoubtedly most of them would not end up working, or would have some negative side effects. What's very clear though is that zero deposit rates and buying MBS and Treasuries are not going to have any positive impact whatsoever on output. And for that particular piece of data we don't need an academic paper; we need only pull open the drapes and look out the window.
    14 Dec 2012, 09:42 AM Reply Like
  • davidingeorgia
    , contributor
    Comments (2713) | Send Message
     
    >>...wondering how a group of learned men and women can derive major policy decisions from the headline unemployment rate.<<

     

    How? Well, being self-delusional helps. And, being so narrow-minded that you can't even contemplate the possibility that you might be wrong in your policy. Also, the "learned" part doesn't in any way indicate being "learned" about the real world as opposed to the neat, orderly world of academia and economics textbooks.

     

    That's how, Mr. Lacker.
    14 Dec 2012, 08:09 AM Reply Like
  • minecanary
    , contributor
    Comments (641) | Send Message
     
    They are obviously seeing what their bosses (Dimon, Blankfein) want them too. Just like the Congress
    14 Dec 2012, 09:52 AM Reply Like
  • blueice
    , contributor
    Comments (3906) | Send Message
     
    The Fed has been WhiteHoused...They are part and parcel for the problems facing Omerica...

     

    They do not have either the courage or the sense to suggest, that they have done all they could and now time has come to raise rates...

     

    BTW, this FedZero is nothing more that a public scam to purchase the banks bad MBS...They have done this to the tune of over 900 billion...

     

    Why are the banks giving up these "good MBS" paying a decent return, for the Central Bank's 25 BP on excess reserves??

     

    Paging Mr Madeoff, paging Mr Madeoff...
    14 Dec 2012, 12:40 PM Reply Like
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