Alexander W. Salter
April’s Disinflation Delivery
“In the first quarter of 2024, the US economy expanded at a rate of 1.6 percent per year. That’s hardly an impressive growth rate, but it’s significantly faster than money supply growth. Money looks somewhat tight.” ~Alexander W. Salter
A Better Model Won’t Fix The Fed
“The whole point of expectations-responsive monetary policy is to remove the discretionary and technocratic elements from central banking. Disappointingly but unsurprisingly, the Fed is doing the opposite: doubling down on discretion and technocracy.” ~Alexander W. Salter
Why Haven’t We Whipped Inflation Yet?
“The best we can do is recalibrate models when we get new data. But that’s like driving the car while looking out the rearview window…hardly ideal for knowing how to adjust your steering.” ~Alexander W. Salter
The Fed and Political Independence: It’s Complicated
“We should focus less on who’s allowed to run the Fed and more on what the Fed’s allowed to do in the first place.” ~Alexander W. Salter
Inflation Remains Elevated. Is Money Actually Tight?
” Fed watchers expect the Federal Open Market Committee will keep rates steady when they meet on March 19-20. In light of the CPI data, that’s a defensible move.” ~Alexander W. Salter
Faster Growth and Interest Rates: Even Harder than You Think
“Higher rates could be a sign of loose money, not tight, depending on how far from the policy change we’re looking and how fast the market adapts.” ~ Alexander W. Salter
Congress Overspends, but the Fed Inflates
“At most, large deficits impelled the Fed to support the market for government debt by purchasing more debt than it should have. The central bank, not the fiscal authorities, is the residual determiner of aggregate demand.” ~Alexander W. Salter
Two Kinds of Transitory Inflation
“Team Transitory’s narrative just doesn’t cohere. Whether we’re trying to explain the Great Inflation of the 1970s and early 1980s, or the inflation of the past two years, we need to rely on demand-side mechanisms.” ~Alexander W. Salter
An Inflation Resurgence, or Just Relative Price Changes?
“Microeconomic relative-price dynamics increasingly drive inflation measurements. That means the Fed should not be afraid to ease off the brakes.” ~Alexander W. Salter
Time to Tame the “Apolitical” Fed?
“The Fed’s self-conception as an apolitical technocracy blinds it to the degree to which it has weighed in on fundamental political issues, which instead ought to be deliberated in Congress.” ~Alexander W. Salter
