Hey, I spent Sunday morning thinking about macroeconomic theory.🤓 MacroMania: A Journey in Macroeconomic Thinking andolfatto.blogspot.com/2021…

G’morning! 🙂

This is mind-blowing.

This is - I think - both correct and important. The econ framework is important for understanding tradeoffs, and speaking to the magnitudes of those tradeoffs. And it is fine for academics to have and argue for normative views. But our normative views aren't special.

Best wishes to Mr. Bostic!

LOL

Congratulations to the Danish negotiating team: this is basically a repeat of key clauses of the 1951 agreement, plus some bells and whistles saying that Denmark would the things Denmark would do/have done anyway. Really worth blowing up the entire Western alliance for.

This is somewhat brutal

After four months of talking tough about inflation, Kevin Warsh finally followed through. The question after Wednesday's hike is how many more to expect The consensus is for 2 more 25bp moves through early 2027, but there is a lot of uncertainty around that. First, Warsh described what the Fed did as removing a "dose of accommodation," a framing that conveyed a much more hawkish stance than expected. His unwillingness to connect his views of the policy rate to an estimate neutral added further confusion about how much tightening is required to achieve his goals Second, there is "very clear tension" between officials about how to think about a single data point, says Seth Carpenter at MS. Warsh denounced data point dependency, but it's clear that other officials/markets ascribe significant value to monthly data in shaping the pace of adjustment Third, the backdrop the Fed is navigating (multiple compounding supply shocks plus rate insensitive drivers of growth like AI) could require much more substantive hikes to have a material impact on inflation, warns Daleep Singh at PGIM

To sum up Greenland: A) The US had somewhat reasonable concerns about an independent Greenland potentially seeking closer ties with China. This pre-dates Trump, but Trump decides to fix this tail risk. B) Trump and MAGA somehow ends up lobbying for Greenland cutting ties with Denmark - the very event that would trigger the worst case. C) At some point since January, the US realized that they are MUCH better off with Greenland in Danish hands (as has always been the US position) and strikes an improved military deal. If you jump straight from A to C, I get why this looks like a win. But for us European, it’s very hard to forget B) and how we had to save Trump from shooting himself in the foot.

This may be the dumbest and most unpatriotic administration in American history. Worse, it may have inaugurated a dangerous new cycle in which successive administrations brand disfavored media organizations as “fake news” and seek to ostracize them.

He's proud of this. 🙄

😅

Marco Rubio: "For years to come, there are many people on the right...that are going to be having to explain and justify how they fell into this trap of supporting Donald Trump because this is not going to end well.” (2016)

We’re doomed.

It’s interesting that the FOMC sees the longer term Fed funds or neutral rate as a median of 3.2%. That means rates are and have been restrictive, contrary to Warsh’s view that raising rates is removing accommodation.

Shallow Watters.

We are hiring a monetary economist this year. This will be our 9th tenure-track hire since I took over as chair 5 years ago. While others are lamenting the challenges of higher ed, we are building and growing. Be a builder. Come to the Sip. olemiss.wd12.myworkdayjobs.c…

I’m ready to say that by any reasonable definition, the best publicly available AI models are “intelligent”. Working with them is like being the older, wiser partner in a team with an unbelievably smart junior person who can take your hunches & gut feelings & do beautiful things