Ryan AventOvjeren akaunt

Shame on Congressional Republicans, obviously. But look, shame on all of us. What did we do, other than tweet? You can count the people who showed real moral courage through this saga on one, maybe two hands. The rest of us performed anxiety, but mostly went about our lives.

Chiefs by 6.

And the answer is, yeesh, I don't know, it is truly a difficult day for America. In any case, thanks for reading and enjoy your weekend.

But it's worth asking: does any of this matter, given the state of our democracy?

Because YCC is a piece of the financial repression toolkit. That's how the US used it back in the 1940s. Bond vigilantes are way, way down the list of fears that I have about US macro policy, but with YCC in place, they fall a few rungs more.

It would be advantageous to use YCC at that point, though. Partly because it might give monetary policy a little more traction. But mostly because it is a valuable tool to have in place in a world in which fiscal does much more of the demand-boosting heavy lifting.

That's a problem, because policy at the ZLB would be much more effective if markets believed that the Fed was actually cool with make-up inflation. But they won't. I wouldn't, given the Fed's record.

So I suspect, though I'm not super confident, that we're more likely to get back to the ZLB before the Fed has the opportunity to demonstrate that it's ok with inflation sustained above 2% for a while.

But the baby steps are too babyish. More importantly, they may have missed the chance to embrace "opportunistic inflation" by simply not tightening very fast as the economy gained momentum. They were too eager to hike, and now the economy is decelerating rather than accelerating.

Which is why the baby steps the Fed seems to be taking toward systematically overshooting (which for now = allowing enough inflation to persuade markets that when they say they care about misses on both sides they mean it) are far more important than mooting things like YCC.

I'll say more about the latter, since the newsletter says (much) more about the former. Yield-curve control seems to me like a decent refinement of balance-sheet policy, but there's so much less mileage to be had from tweaking tools than there is to changing frameworks.

Gnu knew sledder

I'm not tweeting much anymore, because Twitter is unpleasant. I do have a newsletter, though. In the latest I argue that Elizabeth Warren's platform deserves a look, even though (because?) it makes economists uncomfortable.https://twitter.com/ryanavent/status/1219723599130562565 …

This is just...not how the world works.https://twitter.com/farmerrf/status/1218078979023872000 …