Even if what the Fed is doing is not inflationary, the arbitrary fashion in which our central bank responds to markets betrays a lack of concern about inflation. And that behavior by monetary authorities is enough to make markets expect inflation in future.These two sentences convinced more than ever that no one should ever take Amity Shlaes seriously, but why we are at it, here is what I wrote over at Mark Thoma’s blog:
I'm not sure why anyone wastes time with her or this Cliff Asness person. Neither know anything about economics. My proof? The utter stupidity of their writing as noted in this quote. Hey Amity - we are far below full employment. With nominal interest rates at rock bottom and with the fiscal austerity that your idiot Republican masters have imposed on us - what is left? Oh yea - higher expected inflation might lower real interest rates in spite of the zero interest rate bound. And you think this is a bad thing? Stupid!