즉시 즉시 볼걸, 일주일 뒤쯤보네

 

 

Good Luck, Fed,

참 복잡한 계산이고, 복합적 마음의 글이다

go-stop 페이스로 금융정책 할 경우, 인플레 심리를 잡을 수 있겠나?

잘 되겠나? 그래서 잘되기바란다는 그런 끝말을 남기는가?

진작 봤으며 더 좋았을걸, 한주일 정도 뒤에 보니

Good Luck, Fed

A key artifact in any future Museum of the American Coronavirus Experience will be the absolutely bonkers Rube Goldberg machine a YouTuber named Creezy spent two lockdown months creating in his backyard between March and May of 2020. The 70-step basketball shot takes nearly three minutes to complete, with interlocking toys, ropes, garden implements and sportsballs covering what must be an acre of hilly land. There’s even a water feature.

This complexity is only a taste of the Fed’s dilemma as it tries to squelch a raging inflation inferno without destroying the economy in the process. The Fed today raised its key interest rate by 75 basis points, the biggest move since 1994, as markets expected. But Chairman Jay Powell said policy makers might not raise rates by that much in July, which made markets happy. But making markets happy is bad because that makes it harder to fight inflation. But making markets sad makes it likelier we have a financial crisis/depression.

So did the Fed do the right thing or not? Before the decision, Mohamed El-Erian wrote central bankers needed to do much more than just raise 75 basis points in order to restore what he argues is shredded credibility. The necessary steps included making people feel better about the Fed’s predicting skills and sounding tougher on inflation. It’s hard to say just how much today’s efforts succeeded.

After the decision, Mohamed tweeted the Fed had raised and front-loaded its rate expectations while cutting its growth expectations, which sounds pretty hawkish. He called this “Consistent with a stagflationary baseline, a fatter recession left tail, and a thinner right tail.” Which, uh, yay?

A lot of people think the Fed will have to trigger a recession to stop inflation. Powell said that wasn’t his aim, which sounds kind of dovish. At the same time, the Fed is predicting higher unemployment by the time this nightmare is over. Bloomberg’s editorial board writes that being more aggressive now might mean getting inflation under control sooner, meaning it can be less aggressive later. But figuring out the precise volume, frequency and timing of aggression is dicier than a 70-step basketball shot.

Because with so many moving parts, it’s not always clear a rate hike at one end of the Rube Goldberg machine will result in lower prices at the other. For example, Conor Sen points out surging mortgage rates could shut down the housing market so abruptly that it turns off builders and hollows out the real-estate-industrial complex. That will mean housing shortages persist, keeping prices high. In conclusion, it’s complicated.