No matter how cynical I get, I can’t keep up

October 10, 2017
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Commenter Ben Cole likes to point out that the Wall Street Journal was dovish when Reagan was President, but then became hawkish under Democratic Presidents.  It looks like they are back to their old tricks:

But Mr. Trump is counting on tax reform and deregulation to boost growth to 3% a year from 2%. If that growth happens, the Yellen-Powell Fed may believe it has to raise rates rapidly, endangering faster growth. Guess whose policies will be blamed? Not the Fed’s.

This is why the old “hawk vs. dove” monetary debate isn’t all that relevant at the current moment. Outsiders like Messrs. Warsh and Taylor, or Columbia’s Glenn Hubbard, believe that tax reform and deregulation can increase the economy’s capacity to grow above 3%. They therefore might raise interest rates more slowly than the Yellen-Powell faction would.

Translation:  Now that we have a Republican President we need easy money to hide the fact that Trump’s “pro-growth” policies are likely to fail.

They are right about one thing, with a 2% inflation target the question of hawks and doves becomes far less important; it’s really about competence vs. incompetence.

PS.  I wonder what John Taylor thinks of the WSJ claim that he’d be more dovish than Yellen.

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