Monday, September 6, 2010

Did Scott Sumner get question 9 wrong?

Brad brings is up:
TheMoneyIllusion » A few of my mistakes: 9. I predicted that aggressive QE would raise long term interest rates, a view which seemed to be refuted by the response on T-bond yields to the March 2009 Fed QE announcement....

I look at the curve rising quite rapidly Mar 2009 to May 2009, raising 20 years yields by about .75.  Within a month or so, producer inflation was climbing quite rapidly, led by an oil rebound.  How did Scott get the question wrong?

EMH, at the time was dealing with a economy in free fall, a lot of finance was out of balance, one has to stand up straight first, then respond second.

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