The Problem With The Fed's Communications Strategy In One Annotated Press Release

A blog about business and economics.
Feb. 24 2012 5:00 PM

The Problem With The Fed's Communications Strategy In One Annotated Press Release

1330120814252

This is from Christina Romer and David Romer "The Zero Lower Bound in Practice" (PDF, via DeLong). 

What the Fed needs to be saying is something like "we'll keep interest rates low even if inflation goes above our long-term target until full employment is restored" or "we'll keep interest rates low through the end of 2014 no matter what happens" or "we have a new catch-up Nominal GDP target" or some other phrase designed to anchor expectations around the idea that in the medium term we'll see either growth or inflation, but definitely not nominal stagnation. If everyone knows that growth or inflation are the options on the table, then everyone will be inclined to shift their portfolios in favor of riskier assets and real goods and services. That ought to produce real growth. The current statement is supposed to provide clarity, but it's actually quite ambiguous.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS

But the next president might. 

IOS 8 Comes Out Today. Do Not Put It on Your iPhone 4S.

Why Greenland’s “Dark Snow” Should Worry You

How Much Should You Loathe NFL Commissioner Roger Goodell?

Here are the facts.

Three Talented Actresses in Three Terrible New Shows

Science

The Human Need to Find Connections in Everything

It’s the source of creativity and delusions. It can harm us more than it helps us.

Foreigners

More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

The Ungodly Horror of Having a Bug Crawl Into Your Ear and Scratch Away at Your Eardrum

We Could Fix Climate Change for Free. What Exactly Is Holding Us Back?

  News & Politics
Weigel
Sept. 17 2014 6:29 PM Here's Who Voted to Fund Syrian Rebels and Get This ISIS Conflict Really Cooking
  Business
Business Insider
Sept. 17 2014 1:36 PM Nate Silver Versus Princeton Professor: Who Has the Right Models?
  Life
Gentleman Scholar
Sept. 17 2014 5:10 PM Should Men Still Open Doors for Women? Or is it ungentlemanly to do so at all?  
  Double X
The XX Factor
Sept. 17 2014 6:14 PM Today in Gender Gaps: Biking
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
  Arts
Brow Beat
Sept. 17 2014 5:56 PM Watch Louis C.K., Dave Chappelle, Bill Hicks, Mitch Hedberg, and More on New YouTube Channel
  Technology
Future Tense
Sept. 17 2014 5:26 PM If Fixing Global Warming Is Free, What’s the Holdup?
  Health & Science
Jurisprudence
Sept. 17 2014 4:49 PM Schooling the Supreme Court on Rap Music Is it art or a true threat of violence?
  Sports
Sports Nut
Sept. 17 2014 3:51 PM NFL Jerk Watch: Roger Goodell How much should you loathe the pro football commissioner?