Hacker News Reader

Comment by puranjay | Hacker News Reader

Isn’t this a self-created problem? They had no real excuse to carry on QE past 2010 when the economy had started recovering.

View on HN

It 100% is. And what’s more crazy is that Alan Greenspan admitted that his biggest career failure was to leave rates too low for too long just prior to the Great Recession. And then… his successors did exactly the same thing.

It is almost like the system should have automated rules in place to prevent this from being possible.

Note that there are probably just as many economists that said rates were too high. After all the target inflation rate was 2-3% yet the inflation was under 2%. That translates into hundreds of people unnecessarily out of work.

Yeah, I think there are a lot of problems with the current system and you’ve nailed it. They set a target using metrics that have radically changed over time and don’t reflect major components of inflation that real people experience (cost of homes) or asset price inflation. Anyone with eyes can look at charts of pretty much everything but a basket of consumer goods and see the massive inflation, and this was fine because it wasn’t in CPI figures… until now. And so that target range based on limited metrics led to exacerbating a massive problem that was evident for at least 5-6 years.

No, I think we completely disagree, you're just misreading my statement.

I say that inflation was too low 1990-2020 not because they mismeasured it, but because the Fed kept the rates too high.

The CPI basket undermeasures volatility, but it's not bad at measuring inflation. Not great, but every alternative basket I've seen proposed has been worse.

Reply on news.ycombinator.com