"I suppose there is a valid argument that inflation was not the pressing concern from 2008 to 2011; it was a slowly recovering labor market. But what more was the Fed supposed to do? It seems it did everything in its power, and then some, to boost demand, but the depth of the recession was too much."
Over that time period, NGDP growth varied from 4.8% to (3.3%). What was the Fed supposed to do? Keep NGDP growing at 3%-4% per year.
"gets the Fed refocused on inflation, and away from more political pursuits,"
It looks as if Walsh has been put there specifically in order to keep the Fed from focusing on inflation if tht get in the way of reducing rates. What more policital persuit is possible?
More fundmetally he does not apper to support inflation targeting. He did not in 2010 and by his statements his objectives are reducing the FEd's balace sheet and reducing interest rates. The problme is not just that these objective are incompatible, but either is skew to inflation targeting.
"The people who think he did a bad job take issue with his concerns about QE and inflation—two issues he was eventually proved correct on."
Wrong. The proper criticism of QE was that it started too late and was executed too sparingly. That was not Warsh's criticism. Even more wrong was his contention that QE in 2010 would produce inflation.
Politics is a poor lens to view all problems through. Just too limiting but the commentariat has to talk about something. BTW, why hasn’t someone at Bloomberg compared 2026 to 1966. Expect there is a lot to learn about how not to do things from the first year of the Lindsay administration
One difference for the Boomers; a certain percentage were able to inherit assets from their parents and grandparents early enough to help them out with building wealth. Certainly not all; but enough more than previous previous or subsequent generations.
The Scandinavian funds declaring Treasuries not risk-free feels like positioning for political cover more than prudent analysis. If not Treasuries, what exactly is the alternative that offers both duration matching and liquidity at scale? The irony is pension managers spent years chasing ESG mandates and private equity illusions while ignoring the actual balance sheet risks buidling up. Now they act shocked when yields reflect reality instead of decades of financial repression.
"I suppose there is a valid argument that inflation was not the pressing concern from 2008 to 2011; it was a slowly recovering labor market. But what more was the Fed supposed to do? It seems it did everything in its power, and then some, to boost demand, but the depth of the recession was too much."
Over that time period, NGDP growth varied from 4.8% to (3.3%). What was the Fed supposed to do? Keep NGDP growing at 3%-4% per year.
"gets the Fed refocused on inflation, and away from more political pursuits,"
It looks as if Walsh has been put there specifically in order to keep the Fed from focusing on inflation if tht get in the way of reducing rates. What more policital persuit is possible?
More fundmetally he does not apper to support inflation targeting. He did not in 2010 and by his statements his objectives are reducing the FEd's balace sheet and reducing interest rates. The problme is not just that these objective are incompatible, but either is skew to inflation targeting.
"The people who think he did a bad job take issue with his concerns about QE and inflation—two issues he was eventually proved correct on."
Wrong. The proper criticism of QE was that it started too late and was executed too sparingly. That was not Warsh's criticism. Even more wrong was his contention that QE in 2010 would produce inflation.
Politics is a poor lens to view all problems through. Just too limiting but the commentariat has to talk about something. BTW, why hasn’t someone at Bloomberg compared 2026 to 1966. Expect there is a lot to learn about how not to do things from the first year of the Lindsay administration
One difference for the Boomers; a certain percentage were able to inherit assets from their parents and grandparents early enough to help them out with building wealth. Certainly not all; but enough more than previous previous or subsequent generations.
(Maybe the Alphas will get similar luck.)
The Scandinavian funds declaring Treasuries not risk-free feels like positioning for political cover more than prudent analysis. If not Treasuries, what exactly is the alternative that offers both duration matching and liquidity at scale? The irony is pension managers spent years chasing ESG mandates and private equity illusions while ignoring the actual balance sheet risks buidling up. Now they act shocked when yields reflect reality instead of decades of financial repression.
A very simple model:
US federal debt $38T -- excluding unfunded liabilities up to 5x per Truth in Accounting.
US annual budget Revenues $5T, Spending $7T, for a deficit of $2T.
US annual interest bill $1T for an interest cover of 5x.
An interest rate of 5%, growing interest bill at $100B per year ($2T @ 5%).
Assume tax receipts growing at 2.33%, so Revenues of $10T in 30 years and interest cover of 2x.
Probability of an unrelated "crisis" or three in 30 years leading to jumps in debt? Very high.
No wonder the Dutch, who have been at this game for centuries, are getting nervous.
Buying-to-hold 30-year Treasuries surely involves higher default or inflation risk than ever.