Re: (OPE-L) recent references on 'problem' of money commodity?

From: Allin Cottrell (
Date: Tue Nov 23 2004 - 11:04:38 EST

On Mon, 22 Nov 2004, Rakesh Bhandari wrote:

> 1. The data reveal that the Fed's rate hikes often cannot be
> explained by an attempt to stabilize CPI inflation at a small
> positive rate. In fact there are times that rates should have been
> reduced rather than raised if Greenspan were really aiming at the
> price level rising at a small positive rate.

I'm not sure how the data could be said to "reveal" that.

Over the last decade, year-on-year CPI inflation has averaged 2.45
percent, with a maximum of 3.36% and a minimum of 1.55% (and with
half of the observations lying between 2.19% and 2.82%).  This is an
extraordinarily consistent "small positive rate".  You seem to be
saying that a different policy on the part of the Fed would have
resulted in greater stability of the time-path of the CPI.  That
seems very implausible.


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