Tuesday, June 14, 2011

Adventures in Journamalism (Philly Enquirer Edition)

Erin Arvedlund over at the Philadelphia Enquirer writes up a horrifically-timed article about inflation and the problems it's supposedly causing. She seems to think that inflation is a massive problem as she's been listening to Philadelphia Fed Chair Charles Plosser (a noted inflation hawk who thinks monetary policy should have been tightened yesterday).

Neither Arvedlund nor Plosser bother to note anywhere in the article that unemployment is kissing 10% or that unemployment has been at extremely elevated levels for almost three years! I guess neither of them think that's a big deal for the economy. Or, I guess they think inflation is a far bigger issue. But is it really?

Fighting against runaway inflation might be--if not an acceptable stance--at least a reasonable statement that requires a reasoned response if, in fact, inflation were a real problem. But in Plosser's and Arvedlund's cases they're both trying to lie about inflation by using everything but core inflation to make their points. But as has been pointed out many times, by many many many economists (Nobel Prize winners even), there is a reason the Fed doesn't use volatile food and energy costs when making monetary policy decisions. They use core inflation and try to eliminate volatile prices because well, volatile prices are volatile!

What's particularly tone-deaf about Arvedlund's article this month is that energy prices and commodity prices have actually fallen recently. So would Arvedlund and Plosser--who both would have raised interest rates earlier this year--be equally as adamant about lowering rates now that commodity prices are coming in lower than expected?

My guess is no. Absolutely not. Because they're a couple of out-of-touch assholes with no real understanding of macroeconomics, yet both of them have somehow managed to rise to positions of power--Plosser as a person who can affect Fed policy directly, and Arvedlund as a respected journalist shoveling nonsensical crap to the masses through a respected news organization.


No comments: