“Interest payments now suck up more of the federal budget, leaving less to spend on important political priorities. Since Republicans and Democrats disagree about what those priorities are, the resulting fiscal strain amplifies partisan divisions.” ~Alexander W. Salter
“Interest rates tell us monetary policy is very tight. The money supply tells us monetary policy is somewhat tight. Will the Fed interpret recent data as a signal it’s time to pivot?” ~Alexander W. Salter
“Why not give the central bank a wider berth, if it helps to stabilize the economy? Because it doesn’t actually help. Interest rates are a distraction.” ~Alexander W. Salter
“M2, the most commonly cited measure of the money supply, is up 0.53 percent from a year ago. Since real income and population are growing faster than this, current M2 growth also suggests money is tight. But this is speculative.” ~Alexander W. Salter
“Oil is produced and sold in a global market. Even true cartels like OPEC don’t have total control over prices. It comes down to supply and demand.” ~Alexander W. Salter
“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
“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
“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
“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
” 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