toxtethogradyI haven't often relied on the position papers of the Cato Institute for much of anything, since I know where they are and what they're about. But this one is a very stern critique of Jerome Powell's reliance on the Phillips Curve of the relationship of employment to inflation to inform Fed policy on interest rates. My own impression is the Curve offers misleading guidance for two reasons:
- Correlation is not causation, as high employment does not inherently boost inflation;
- The Curve says nothing about the inflationary nature of excessive profits.
https://www.cato.org/cato-journal/winter-2020/phillips-curve-poor-guide-monetary-policy