tag:blogger.com,1999:blog-5713178645208582139.post215548021073266468..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: Martin Wolf, Niall Ferguson, James Kwak, and Fat Tail EventsDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5713178645208582139.post-80195453227357150792010-02-20T10:50:24.327-06:002010-02-20T10:50:24.327-06:00David,
I look at equities (broad indexes) as a pr...David,<br /><br />I look at equities (broad indexes) as a proxy for RGDP growth at this stage. The reason is long-term (5yr+) TIPS inflation expectations have returned to pre-crisis levels, so the improvement in equity prices from here must be driven primarily by a recovery in long-term RGDP expectations. <br /><br />I also look at the 5-yr real TIPS yield (currently 24bp) which is less David Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-83738531526334090702010-02-18T15:07:40.039-06:002010-02-18T15:07:40.039-06:00David Pearson:
I hope we don't see this negat...David Pearson:<br /><br />I hope we don't see this negative bond yield-growth expectation relationship you describe take off. Is there a preferred metric you like for observing growth expectations in this context?David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-81710756746951632052010-02-18T15:03:51.072-06:002010-02-18T15:03:51.072-06:00ECB:
I am guessing they have moved on to their ne...ECB:<br /><br />I am guessing they have moved on to their next blog ambush, Nick Rowe. Some interesting points have been made there about them not having a theory for the price level.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-28431916418313426512010-02-18T12:12:28.417-06:002010-02-18T12:12:28.417-06:00David,
The relationship between bond yields and g...David,<br /><br />The relationship between bond yields and growth expectations is one I watch closely because of the concerns you bring up in your post. The warning sign of a sovereign debt crisis is that Treasury bond yields climb when growth expectations decline -- the opposite of the "normal" direct correlation. This is occurs because the market expects existing deficits to becomeDavid Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-58371120358383134352010-02-18T07:39:52.526-06:002010-02-18T07:39:52.526-06:00Hey what happened to the chartalists who were over...Hey what happened to the chartalists who were over here like flies around carrion at the weekend ? They have been iterating constantly on this issue. Their argument is that it is nonsense to compare Greece and the US. Greece faces a financing constraint that the US does not since it is a sovereign issuer of its own currency, the world's reserve to boot. While technically correct, they seem ECBnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-87223183037580979472010-02-17T15:23:04.612-06:002010-02-17T15:23:04.612-06:00Bill:
I meant to say something about Wolf asserta...Bill:<br /><br />I meant to say something about Wolf assertation that fiscal policy was necessary since monetary policy had been exhausted. Obviously I don't buy that. And to hear Wolf make that statement surprised me--he usually is spot on in his analysis.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-43916369396227200122010-02-17T15:08:33.908-06:002010-02-17T15:08:33.908-06:00Wolf assets that the U.S. is in a liquidity trap. ...Wolf assets that the U.S. is in a liquidity trap. Monetary policy cannot deliver expansion, according to the authority, Blanchard. So, we must have short run fiscal expansion.<br /><br />The problem is that the claim is wrong. The U.S. might be in a modern macro influenced central bank trap, where they think of monetary policy in terms of overnight lending rates and promises about their futureBill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.com