Comments on: When monetary policy needs to incorporate fiscal policy

By: TFF

TFF — Sat, 14 Apr 2012 00:02:10 +0000

@StillJaded, I agree that inflation of house prices is bad. However deflation of house prices is worse! Some support to soften the degree of deflation is appropriate.

That said, house prices are driven by mortgage rates as much as by any other single factor except incomes. By keeping mortgage rates artificially low, the Fed is already supporting house prices — with presumably less effect on oil and other cash-traded commodities. Very few things are leveraged to the degree that housing is.

@Twundit, I get the impression that most economists don’t think it matters whether we spend money building roads, improving our secondary education, or digging holes and filling them in again.

By: Twundit

Twundit — Fri, 13 Apr 2012 09:31:02 +0000

It is interesting to read economists saying that monitary policy isnt enough, and that fiscal policy is also important. But it would help if you gave an example of what you mean by the ‘right’ fiscal policy. Do you mean more austerity, or investment in education, infrastucture, or a balance of both, or do you mean structural changes like helping to change the way we generate and use energy, and sustainability in general? None of this was clear in this article.

By: MrRFox

MrRFox — Fri, 13 Apr 2012 08:22:07 +0000

@StillJaded – “good inflation” is the kind that policy-makers rely on to paper-over their prior mistakes. The futile, dogmatic attempt to create it just might be the financial death of us all.

By: StillJaded

StillJaded — Fri, 13 Apr 2012 07:51:27 +0000

‘“good inflation”, in things like house prices’

Ummm….not sure I would agree with that one Felix.