Scott Sumner on Alternative Approaches to Monetary Policy
Macro Musings with David Beckworth
00:00
The Fed Should Look at Asset Prices and Rule Base Predictable
In late two thousand eight, all the asset markets were signalling a contractionary mistake. Inflation expectations and the tip spread were falling dramatically. The dollar was appreciating strongly in the foreign exchange market. Commercial real estate was going down. I mean, virtually any signal that you looked at was signalling that we were going into a deep procession. They are supposed to look past that. But i would also emphasize that they had a regime in place which was growth righte targeting, rather than level targeting, which made it harder to avoid mistakes.
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