mtswJan 27, 2023

One really bad thing about the Fed's rapid rate hikes is that the message every firm has now gotten is "in periods of high demand, do dividends and buybacks - if you invest in new capacity, the Fed will have eliminated the demand by the time it comes online"

This will make future cycles of inflation worse and more persistent.

Show threadData Sadist
@mtsw Nominal GDP targeting Now!
Jan 27, 2023 at 8:11pmWeb
Show threadMattLeidholmJan 28, 2023
@SelectStarMan @mtsw I’m pro-nominal-income-targeting, but a naïve NGDP target would have suggested faster cuts, and likely severe ones, early in the recovery. And NGDP now suggests it’s time to slow down, but not necessarily stop, the tightening. Designing good targeting guidelines is paramount to prevent de-facto permanent hawkishness.