Given that the Fed's own reckless monetary policy is the source of today's inflation, will they finally show some responsibility and fight the rising prices or cave to an inflationary end-state?
Ram, Thanks! Well to be totally truthful, I don't know much about the Taylor rule but I can say that in my experience, macro models should not just be followed blindly. Back in 2006/07 there were many models indicating that the United States could never experience a nationwide housing decline but that's exactly what happened and it was as obvious as can be, sol long as you weren't blinded by traditional macro models. I take more of a narrative economics approach because I tend to think that most large aggregate economic functions are rooted (in one way or another) in the human thirst for storytelling and self-aggrandizement. People have a normal human urge to succeed and "to be loved and be lovely" as Adam Smith put it. This tends to make people overshoot... like hypo-maniacal behavior, people see themselves as they want to be seen and project themselves into their own personal stratosphere. This wouldn't be so interesting if it weren't for the addition of epic levels of "easy money" allowing individuals to put real bubbly power behind their delusions. But eventually, it all has to revert to the mean... every boom has its bust. When I talk about sound money I would include a system held to account by some means that is more fundamental than fiat... like Bitcoin or gold or whatever commodity... Basically, the power that the monetary authorities have over fiat is just too great for human beings to be trusted with. We need to be tethered (held to account) to some system that is unequivocally real and unable to be tampered with as a result of political or social whims.
The para questioning why people pump their money blindly into things, automatically expecting them to appreciate was brilliant. Great piece! There’s something very wrong when everybody expects everything to perpetually go up for practically 14 years straight.
Question: When you talk about sound money, are you referring to going back to the books and following the Taylor rule, etc.?