September 18, 2015
The Washington Post is apparently disappointed that the Fed did not decide to raise interest rates and slow the pace of economic growth. Its editorial told readers:
“But there are risks [from not raising rates], too, such as the formation of asset bubbles and the sheer loss of credibility the Fed suffers every time it flirts with a new interest rate policy and then doesn’t deliver. The latter risk may have been compounded by the Fed’s so openly acknowledging that its decisions are subject to the vagaries of China’s economic “rebalancing,” and the non transparent policy processes in Beijing upon which that depends.”
The second part of this paragraph seems to suggest that the Post is unhappy that Yellen would take into account the impact of the world economy on the United States in her decisions on interest rates. That’s an interesting criticism.
But the first part is the fun part. The Post is worried about bubbles? This is a paper that hosted James K. Glassman, co-author of Dow 36,000, through the stock bubble years. In the housing bubble years its main commentator on the real estate market was David Lereah, the chief economist of the National Association of Realtor and the author of the 2005 classic, Why the Housing Boom Will not Bust and How You Can Profit from It.
It would be interesting if the Post’s editorial board had evidence of a bubble threatening the economy. If they do, they didn’t bother sharing it with their readers. It would be reasonable to expect such evidence before demanding that the Fed raise interest rates to keep workers from getting jobs and pay raises.
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