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Ron Paul drilling Bernanke a new one..
- Thread starter Oz435
- Start date
http://journalofinterest.wordpress.com/2007/08/22/the-feds-real-reaction-function/
James K. Galbraith: The Fedâs Real Reaction Function
the Federal Reserve does not target inflation but "too low" unemployment
____________
Galbraithâs take on the Fed:
Using a VAR model of the American economy from 1984 to 2003, we find that, contrary to official claims, the Federal Reserve does not target inflation or react to âinflation signals.â Rather, the Fed reacts to the very ârealâ signal sent by unemployment, in a way that suggests that a baseless fear of full employment is a principal force behind monetary policy. Tests of variations in the workings of a Taylor Rule, using dummy variable regressions, on data going back to 1969 suggest that after 1983 the Federal Reserve largely ceased reacting to inflation or high unemployment, but continued to react when unemployment fell âtoo low.â Further, we find that monetary policy (measured by the yield curve) has significant causal impact on pay inequalityâa domain where the Fed refuses responsibility. Finally, we test whether Federal Reserve policy has exhibited a pattern of partisan bias in presidential election years, with results that suggest the presence of such bias, after controlling for the effects of inflation and unemployment.
And the bias is:
Specifically, we find that in the year before presidential elections, the term structure deviates sharply from otherwise-normal values. When a Republican administration is in office, the term structure in the preelection year tends to be steeper, by values estimated at up to 150 basis points, and monetary policy is accordingly more permissive. When a Democratic administration is in office, the term structure tends to be flatter, by values
James K. Galbraith: The Fedâs Real Reaction Function
the Federal Reserve does not target inflation but "too low" unemployment
____________
Galbraithâs take on the Fed:
Using a VAR model of the American economy from 1984 to 2003, we find that, contrary to official claims, the Federal Reserve does not target inflation or react to âinflation signals.â Rather, the Fed reacts to the very ârealâ signal sent by unemployment, in a way that suggests that a baseless fear of full employment is a principal force behind monetary policy. Tests of variations in the workings of a Taylor Rule, using dummy variable regressions, on data going back to 1969 suggest that after 1983 the Federal Reserve largely ceased reacting to inflation or high unemployment, but continued to react when unemployment fell âtoo low.â Further, we find that monetary policy (measured by the yield curve) has significant causal impact on pay inequalityâa domain where the Fed refuses responsibility. Finally, we test whether Federal Reserve policy has exhibited a pattern of partisan bias in presidential election years, with results that suggest the presence of such bias, after controlling for the effects of inflation and unemployment.
And the bias is:
Specifically, we find that in the year before presidential elections, the term structure deviates sharply from otherwise-normal values. When a Republican administration is in office, the term structure in the preelection year tends to be steeper, by values estimated at up to 150 basis points, and monetary policy is accordingly more permissive. When a Democratic administration is in office, the term structure tends to be flatter, by values
What are the odds that even one other presidential candidate has any idea what he's talking about?
http://www.youtube.com/watch?v=138LMjiBQ4g
http://www.youtube.com/watch?v=138LMjiBQ4g
Quote from arbprofit2:
What are the odds that even one other presidential candidate has any idea what he's talking about?
http://www.youtube.com/watch?v=138LMjiBQ4g
I'm quite confident that Romney is familiar with these topics. The man has a joint JD-MBA from Harvard and ran Bain Capital.
Ah yes, good point.
Quote from Oz435:
...at the House Financial Services Commitee meeting today. The more I hear this guy the more impressed I am.
Bernie responded with the usual "we're always concerned about inflation blah blah"... Not convincing at all.
Too bad Paul hasn't got a shot in hell to win.
It's that mentality that keeps echoing in peoples heads that he can't win. Your vote isn't a bet or gamble on who you think will win. It's voting for who you want to be in office. A wasted vote is only one in which you don't believe in what you voted for.
Ron Paul doesn't have a chance because of the success of propaganda. He is the jarring dissonance.
The truth usually is....
The truth usually is....
Quote from Oz435:
...at the House Financial Services Commitee meeting today. The more I hear this guy the more impressed I am.
Bernie responded with the usual "we're always concerned about inflation blah blah"... Not convincing at all.
Too bad Paul hasn't got a shot in hell to win.
I'm not impressed with how Ron Paul let him go though... He didn't further inquire (ie HOW we will get a control over inflation). Just another politician selling himself - not someone who has balls to ruffle feathers.