Articles

Its Only Just Begun. According to history, today’s discounting of the necessary monetary tightening to bring inflation down is inadequate. The terminal nominal Fed Funds rate is priced at about 3.5% by the spring of next year, and this is likely about 50 basis points below the 4% or so rate of core inflation we forecast early next year.

Inflation has broken out of the 1.0% to 3.0% range occupied since the inflation targeting regime was introduced in the early 1990’s and is unlikely to return to that range for some time. Inflation could settle at an average of about 4.0% into 2023-24. With inflation already 1.0% to 2.0% higher than the 2.0% target, lose talk of stagflation […]

So said Milton Friedman, arguably the most influential economist of the twentieth century.   But Friedman also remarked that monetary policy only gets you to inflation’s first base, to hit a home run monetary policy needs to team-up with fiscal policy to pass that money directly to the economy. US inflation has just hit 6.2% y/y […]

The efficient distribution of economic resources depends on the efficiency of the price system, which signals where and how to allocate resources.  Relative price changes have responded to, and continue to respond to the echo of, the Covid-19 shock to both demand and supply. The CPI is a basket of many different prices, and very […]

I have been asked many times in the past month for my views on the unexpected jump in inflation, and whether it is temporary or something that we need to protect ourselves against. There is no easy answer to this question, but the key point to make is that the average rate of inflation is […]

During a recent panel appearance for the Los Angeles chapter of CAIA entitled “Pension Evolution and the Impact on Pension Investment Strategies” my fellow panelists and I discussed the challenges facing US public pension plans, and the importance of good governance soon took centre stage.  Governance issues surfaced as many US public sector plans report […]