Forward Guidance The Stock Market Melt Up Is About To Accelerate | George Robertson
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Nov 12, 2024 George Robertson, an expert in monetary policy and macroeconomics known for his contrarian views, dives into the absence of effective monetary policy. He critiques the Fed's shifting strategies, asserting that traditional models no longer suffice. The conversation examines fiscal policies driving nominal GDP growth, the implications of recent economic surprises, and potential stock market mania on asset values. Robertson warns of the risks associated with these market dynamics, emphasizing the need for nuanced financial discourse.
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Ineffective Monetary Policy
- The Federal Reserve's monetary policy has become ineffective over the past decade.
- It no longer impacts employment or Nominal GDP growth.
Neo-Wicksellian Shift
- In 2014, under Ben Bernanke, the Fed shifted to a Neo-Wicksellian approach.
- This approach assumes a stable natural interest rate, unlike traditional dynamic models.
New Monetary Tools
- The Fed adopted forward guidance and quantitative easing (QE) due to the zero lower bound constraint.
- These tools aimed to influence market expectations and provide further easing.