Sunday, October 29, 2006

Which Economist is Smart, and Which is Naive?

I'm amazed to read this kind of contradictory statements from what appear to be equally intelligent businessmen and/or economists:

"Drew Matus, an economist at Lehman Brothers, agreed that the Fed should be pleased. Yet he predicts that the central bank will still feel the need to raise rates sometime before the middle of next year."

And then you have this:

"Joseph LaVorgna, chief US economist at Deutsche Bank said the solid consumer spending numbers won't last as a slowing manufacturing sector will soon eat into personal income growth. 'The fed will cut rates next quarter,' he said."

And this:

" 'The Fed has to be pleased with the results,' said [Ken] Mayland [president of ClearView Economics]. 'There is evidence in the inflation numbers that those price pressures are reversing. This is another textbook example of how monetary policy works.'"

[Thanks to Corbis/The Economist for the picture.]

What's wrong with this picture? If the Fed is pleased to be sending such obscure signals, then they are indeed Machiavellian. (Extracts from Forbes.)

You can find out what I think of Fed policy in some previous posts (for examples, see here and here and here).


Anonymous Anonymous said...

And which is neither?

1:29 PM  

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