Things are not terrible. Don’t make them terrible.

Found this blog post by Karl Smith (very suspect spelling of Carl, imo) and couldn’t agree more.

I had considered oil prices to be the primary threat to an accelerating recovery. I do think the fundamentals are ripe for an accelerating job creation rate. 300K+ a month is not fundamentally unrealistic at all.

I now believe, however, a panic-y federal reserve and an over-obsession with keeping inflation expectations moored is the biggest threat.

For now I think it should be the mission of every Journalist to harp on Fed Officials as to why they are willing to tolerate half a decade of unemployment above 5% and the devastation and loss of skills associated with that but they are not willing to tolerate Core-PCE rising above 2%?

The stated mission of the Fed is supposedly threefold: 1) to maximize employment, 2) to minimize inflation, and 3) maintain moderate long-term interest rates. In my opinion, the Fed has completely failed in its responsibilities regarding the first part because of misplaced fear about the second part. (And, yes, I’m quite sure Ben Bernanke is very concerned about the opinion of a middle-aged video game developer in California with no experience in finance. Why do you ask?)

This recovery is already on pretty shaky ground, with the situation in Europe, Israel and Iran screwing around, and gas prices. Add to that the possibility that the Fed will try to “fix” inflation.

Author: Wiesman

Husband, father, video game developer, liberal, and perpetual Underdog.

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