What we’re reading (8/27)
“It’s Time For The Fed To Rethink Quantitative Easing” (Larry Summers, Washington Post). “The Fed is running quantitative easing at current levels not because anyone has analyzed that as appropriate given current conditions. Rather, there is a felt need to maintain credibility given previous commitments and a reluctance to accept the immediate pain and dislocation associated with changing course, coupled with faith in the ability to manage the situation down the road.”
“At The Jackson Hole Meeting, The Fed Ponders An Uneven Recovery” (The Economist). “Business cycles are never perfectly symmetric across time and space. Yet they have rarely been as uneven as the rebound from covid-19. Some parts of the global economy are straining to meet roaring demand even as others are limping along, battered by the spread of the virus. It is enough to take the fun out of monetary policy. Indeed, the Delta variant kept attendees of an annual symposium for central bankers from meeting in Jackson Hole, Wyoming, in the shadow of the majestic Teton mountains. Instead, they peered at their computer screens as they discussed how to shepherd an unbalanced economy through uncertain times.”
“Powell’s Benign View On Inflation Is Getting Pushback At The Fed, And Elsewhere” (CNBC). “The Fed chief devoted a long passage in the remarks [at Jackson Hole] to rebut the notion that inflation posed a longer-term structural problem to the economy. He attributed most of the current price rise to a surge in longer-lasting ‘durable’ goods that in pre-pandemic times actually had a long-running negative inflation rate. Moreover, he said there is evidence that one key area of inflation, used car prices, has stabilized and is likely to bring the overall rate much closer to the longer trend. Earlier Friday morning, the Commerce Department reported that the Fed’s preferred inflation gauge, the personal consumption expenditures price index, had expanded by 3.6% from a year ago, the fastest pace in about 30 years.”
“SEC Launches Review Of Online Strategies Used By Brokers, Advisers” (Wall Street Journal). “The Securities and Exchange Commission launched a wide-ranging review Friday of the online strategies that brokers such as Robinhood Markets Inc. and investment advisers use to interact with customers, aiming to determine whether tools like smartphone notifications are in the best interests of investors. The SEC solicited public comments Friday on ‘digital engagement practices’ in the financial industry. These include social-networking tools, investing games and contests with prizes, digital badges, and leaderboards, notifications, celebrations for trading and chatbots. Requests for public comment often represent a first step in the process of developing new rules to guide behavior in the industry.”
“America’s Big Oil Problem” (Project Syndicate). “For decades, the oil industry has produced manipulative studies and funded major marketing campaigns to convince the public that oil and “natural” gas were essential for economic growth and not harmful to the planet. It has also spent liberally to influence lawmakers at the national and state levels, including in California, a climate leader, thereby blocking climate-related legislation and policies. US lawmakers must start listening to voters, escape the grip of oil and gas lobbyists, and enact policies that recognize the scale of the climate crisis.”
