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It is a little scary to me that Ben is basically saying the "Wicksellian interest rate" is the best way to steer our economy, so we strive to use that.... To r
by mox1 12y ago
It is a little scary to me that Ben is basically saying the "Wicksellian interest rate" is the best way to steer our economy, so we strive to use that....
To rely so heavily on theory to guide actual policy is at minimum reckless in my opinion.
I hope there are / were other voices in the room with alternative opinions, not just PhDs giving him hourly ideal Wicksellian rate updates....
- rgross 12y agoHuh? It's reckless to guide economic policy by economic theory? How else do you propose the Fed sets interest rates, a Ouija board?
- mox1 12y agoI meant by a single economic theory / equation...
- rgross 12y agoYou needn't worry that Fed policy is too simplistic. Bernanke is a distinguished economist (as is Yellen) and this blog post doesn't even scratch the surface of the depth of his economic knowledge and background. That's not to say that the Fed is perfect, of course, but the people in charge have serious expertise; this isn't Ted Cruz heading up an environmental committee.