What he's shown is that you can have full employment and low inflation at the same time. The Keynesian school didn't believe that, but Greenspan showed that it could be done.
What has happened is, not only has CEIFA not really worked as far as the formula goes, but it hasn't been funded to the levels that were promised in it. Consequently, the state aid has remained pretty much flat for the last three or four years.
The CPI report was very tame. It sort of reflects the comments by Alan Greenspan that even though monetary policy is way too expansive right now, inflation is sufficiently a non-event, a non-problem, so the Fed obviously can wait at this point,
The CPI report continues to be encouraging. These numbers are stimulating consumer spending by giving consumers more spending power. At the same time, lower inflation will also encourage the central bank to do whatever they need to do.
The CPI report continues to be encouraging, ... These numbers are stimulating consumer spending by giving consumers more spending power. At the same time, lower inflation will also encourage the central bank to do whatever they need to do.
The problem with the Fed's focus on inflation is that it's really a lagging indicator. What you need to do is gauge what demand will be like down the road in order to determine future prices. And the bond market is focused on slowing growth.
The problem with making movies is that you have to devote so much of your life to fawning and flattering the men in suits, whereas that doesn't happen in books. You just go and write, and then the book comes out.
The problem with inflation targeting is that it carries with it a risk of less flexibility at times, and that could be problematical. But it also makes policy less of a black box, so policy is likely to be more transparent.
We believe that the market demand is approximately flat on a year-over-year basis.
We believe that the Fed will require both consistent solid hiring and a rise in inflation before it begins to lift rates.