Monday, August 2, 2010

Woe the 14 month wait...

Compare: Charles Plosser, president of the Philadelphia Fed, said in an interview this week that “I don’t think deflation, or sustained deflation, is a real problem at this point. It is hard to imagine how you can get that when you have got a trillion dollars in excess reserves sitting in the banking system or as long as expectations of inflation are well anchored.”

To: Peter Diamond, nominated to be a Fed governor, said this month in a written response to questions from Senator Richard Shelby, that deflation is a “greater risk” than inflation.

Would have been nice to have had Diamond on the Fed 14 months ago...

UPDATE: So, from what I've read of Diamond, and his interviews, I like him, but still I think it is very much wait-and-see. The downside is that he is 70, so he's not in any position to be ensconced at the Fed for the next 35 years helping to elect Democratic Presidents and prevent stupid monetary policy like we're seeing currently (Supreme Court rules apply here...). Secondly, it's an open question whether his older mind is nimble enough to grasp that we need non-standard monetary policy now!.

In his testimony the other day, I saw this:
Diamond favors “maintenance of the current level of ease” in monetary policy, “with vigilance to circumstances that might call for a change in either direction,” according to his responses to written follow-up questions from Shelby.
Hard to interpret that, though, since I would also state support for the current policy in front of congress and then pull a 180 the second the next round of economic data come out...

1 comment:

  1. Charles Plosser - RBC models
    Peter Diamond - National Debt in a Neoclassical Growth Model

    i think that nothing more needs to be said, unless you feel that the crisis is the result of a technological shock...