But as Furman and Summers point out, CBO has consistently projected big rate increases that haven't happened 3/ https://piie.com/system/files/documents/furman-summers2020-12-01paper.pdf
The overestimates the CBO makes on ten year rates are consistent with their mandate of 'all other things equal'.
And over the period that these two boneheads were ignorant of the mandate, the Fed has raised seigniorage remits from 25 billion to 100 billion and now expected to exceed 200 billion, for about ten years. The CBO is not allowed to consider tax hikes from the Fed. In fact, the Fed is not legally allowed by the Constitution to raise taxes by fiat.
These two boneheads get this wrong all the time because they were taught that agents are infinitely long lived and subdividable. And that stupid idea evidently was part of some fraud committed at MIT in the 70s which confused another generation of economists. The science is in bad shape, hopeless, and we are replacing the economitst with runtime calculations..
But let us look at Krugman and his lifetime of saying rates are low. His advice was always to borrow at today's rate for tomorrow's spending, and we always find that tomorrow's rates were cheaper. Krugman being consistently wrong his entire career.
No comments:
Post a Comment