Wednesday, February 13, 2013

Why Doves Are Really Hawks


Machismo is a type of commitment mechanism. 

If you’re a perfectly rational nerd, people will always expect you to do the rational thing.  You won’t be able to make credible threats unless it would be rational to carry out the threat.  And it seldom will be.  After all, how often is it really rational to whoop someone’s ass?

On the other hand, if you’re a tough, macho badass, people will always expect you to do the tough, macho badass thing.  You’ll always be able to make credible threats, because carrying out threats is always the tough, macho badass thing to do.  And since the threats are credible, you mostly won’t have occasion to carry them out.

This principle has a traditional application to monetary policy.  If your central banker is a perfectly rational nerd, he’s going to let the inflation rate get too high, because he won’t be able to make a credible threat to cause a recession.  People won’t expect him to carry out the threat, because in most cases it won’t be rational to carry out the threat.  After all, how often is it really rational to cause a recession?

On the other hand, if your central banker is a tough, macho badass, he’s not going to let the inflation rate get too high, because he will be able to make a credible threat to cause a recession.  People will expect him to carry out the threat, because causing a recession is the tough, macho badass thing to do (for a central banker).  And since the threat is credible, people will keep their prices down, and he won’t have to carry it out.  (OK, the economics is a little more complicated, but that’s the general idea.)

So what kind of central banker do you want if you hope to keep the inflation rate from getting too high?  Obviously you want a tough, macho badass.  You want the kind of central banker that likes to pick up small animals in his talons so that he can crush them to death and serve them for dinner.  You sure as hell don’t want the kind who just likes to fly around looking pretty and making cute cooing noises.

That theory made a lot of sense in the 1980’s, but the world has changed.  The inflation rate hasn’t been too high for 20 years.  We are in the middle of a minor depression, and the way to get out of it is to threaten inflation.  Tell people they had damn well better start doing something useful with their cash or else, as soon as you get a chance, you’re going to make its purchasing power start evaporating.  Of course, when the time comes, it won’t be rational to carry out that threat.  If you’re a perfectly rational nerd, the threat won’t be credible.

So what kind of central banker do you want if you hope to get out of this depression?  Obviously you want a tough, macho badass.  You want the kind of central banker that likes to pick up small animals in his talons so that he can crush them to death and serve them for dinner.  I’m certainly no expert in ornithology, but it just seems to me that “dove” is not the right term for that kind of central banker.



DISCLOSURE: Through my investment and management role in a Treasury directional pooled investment vehicle and through my role as Chief Economist at Atlantic Asset Management, which generally manages fixed income portfolios for its clients, I have direct or indirect interests in various fixed income instruments, which may be impacted by the issues discussed herein. The views expressed herein are entirely my own opinions and may not represent the views of Atlantic Asset Management. This article should not be construed as investment advice, and is not an offer to participate in any investment strategy or product

637 comments:

«Oldest   ‹Older   601 – 637 of 637
عبده العمراوى said...

شركة نقل اثاث بالرياض
شركة تنظيف واجهات حجر وزجاج بالدمام

AVI Homeopathy said...

Your blog posts are more interesting and impressive. I think there are many people like and visit it regularly, including me.I actually appreciate your own position and I will be sure to come back here. homeopathy doctors in pratap nagar

Nikshit Narula said...

Awesome Post!
Check out Reason Behind Diya HD pictures 2017
Also download latest movie COMMANDO 2 (2017) DESI PDVD NTSC AC3 EXHD EXCLUSIVE
Also Read trending Story Shocking Snapchat Screenshots
Also Check out Latest Government Job of Rajasthan Recruitment 2017

valentine day said...

Merry Christmas & Happy New Year Celebrations

Hammer Of Thor Asli said...

Thanks for the information
I wait for more information and I ask for a return visit our new website
http://agenobathammerofthorasli.com/
http://agenobathammerofthorasli.com/jual-hammer-of-thor-di-bogor/
http://agenobathammerofthorasli.com/hammer-of-thor-di-medan/
http://agenobathammerofthorasli.com/hammer-of-thor-di-semarang/
http://agenobathammerofthorasli.com/hammer-of-thor-di-bandung/
http://agenobathammerofthorasli.com/hammer-of-thor-di-bandar-lampung/
http://goodmanid.com/
http://goodmanid.com/
http://obatvimaxsemarang.com/
http://goodmanid.com/pembesar-penis-vimax-pro-extender/

Holly Peppers said...

That’s why we tend to tend to feel http://www.unitedcheckcashing.com you superabundant and twenty four hour check cashing services. it's really easy to finding us as we tend to tend to stand live at your city or nearest places.check cashing Lauderdale Lakes

Holly Peppers said...

we have a tendency to tend to stand live covering most of the cities and still providing you with the only services within http://www.unitedcheckcashing.com really short quantity with high notch satisfaction. we have a tendency to area unit able to trace North American nation 24/7 and you are constantly welcome.check cashing Dayton

check cashing near me said...

Are you wanting to money into a bank account, the whole quantity typically can't be straightaway accessed; there could also be a waiting amount for the check to clear? we tend to square measure the corporate http://www.unitedcheckcashing.com providing you the most effective services regarding http://www.unitedcheckcashing.com among a brief amount. In USA you will realize U.S.A. all over, each town and 24/7. we actually like to serve you the most effective things with 100 percent satisfactions.
check cashing near me

ali newaz said...

Ajrin Construction Inc. is a privately owned firm and has been providing bathroom remodeling services https://www.ajrinconstruction.com/bathroom-remodeling/ to clients all across the boroughs of County NY.bathroom remodeling bronx

Foogle Packers and Movers said...

Foogle shifting services in packers and movers in Ghaziabad All most of the entire with your complete suggests or complete dependable the list of mover and packer shifting services for the providers companies. An assist reallocation program with a Foogle website good and better its professional teams make your shifting complete to do tension because safely manners for you. Look after dependable to do any things are better pack and move door to door shifting services get for best quality awesomely and perfectly with very experts and goods packers and movers in Noida safely manners. They are location for always happens out of the providers exact tighter in addition each of our wings over packers and movers in Faridabad Indian native.

http://www.fooglepackers.com/packersmoversnoida.html

http://www.fooglepackers.com/packersmoversfaridabad.html

http://www.fooglepackers.com/packersmoversghaziabad.html

http://www.fooglepackers.com/

aadhiya gupta said...

They are the all best a servicing overall procedure and ensure with almost tasking a task care of customers ensure throughout every customers are very hard working with every things are better packing and 24hours work process and perfect responsibility assist top packer mover in Hyderabad. packers and movers mumbai, packers and movers hyderabad, packers and movers chennai look at here now we have a few minute of time shifting services at this movements individual portal compile a team someone could according’s to their functions with booming all nearly one of them keep down at this magnetize metropolitan needs usefully then strong desirable traders finders thinking growth being assist you in managing relocation up down indeed actually for you shifting services in city of Hyderabad.

http://www.fooglepackers.com/packersmoverschennai.html

http://www.fooglepackers.com/packersmoversmumbai.html

http://www.fooglepackers.com/packersmovershyderabad.html

sunil said...

If that's right, seems like we need to install Mr. Robert Magabe at the Federal Reserve. Hjalmar Schacht would be my first choice, but he's tainted by his political associations and, even worse, dead. uniraj result

洛噷 said...

2018113 leilei3915
ugg boots clearance
canada goose outlet online
cheap ugg boots
cheap nfl jerseys
ugg outlet
ugg boots clearance
pandora outlet
adidas superstar
air max 2017
coach outlet

Aadi Rane said...

teddy day love text messages
teddy day message for friend
funny quotes for promises day
happy promises day new images

عبدالله السيد said...

Cleaning Company in Riyadh - خصم 50%- ركن كلين للخدمات المنزلية
اذا كانت تبحث عن شركة تنظيف منازل بالرياض مجربه له اسما عريق ولديها الخبره فى التنظيف عليك الاتصال على شركة ركن كلين لخدمات التنظيف بالرياض اذا كانت تبحث عن المعدات والاجهزه والاسعار المناسبه لك على التوصل مع شركتنا لان لديها عروض خاصه واسعار مناسبه لكل عملاء.
شركة مكافحة حشرات شرق الرياض
شركة مكافحة حشرات شمال الرياض
شركة مكافحة حشرات غرب الرياض
شركة مكافحة حشرات جنوب الرياض
فنحن نقدم خدماتنا المتميزة شركة مكافحة النمل الابيض بالرياض الى المنازل والفلل والمحلات التجارية والفنادق المختلفه.
شركة تنظيف مساجد بالرياض
شركة مكافحة الحمام بالرياض
ارخص شركة تنظيف منازل بالرياض ارخص شركة تنظيف منازل بالرياض
افضل شركة تنظيف منازل بالرياض افضل شركة تنظيف منازل بالرياض
مين جربت شركات تنظيف المنازل بالرياض مين جربت شركات تنظيف المنازل بالرياض






Tina said...

Wow! Such a good post.it is very informative article.Many many thanks for your information.To buy a television is very difficult.There are a tools that can help you to buy a television at chief price.To visit our site please click here tv price tracker tool

Emma said...

That's an interesting analysis.

Mckelvey Broomfield said...

Payday credit terms are generally straightforward. Regularly, banks have concealed expenses that show up out of the blue. This doesn't occur for this situation. check cashing near me san diego

Anonymous said...

Nice thanks for watch

Fahrezy agra said...

Thank you for your support who has read our article. I'm very happy if you can share our article below

Toko Obat Herbal
Obat Nyeri Sendi
Cara Merawat Kesehatan Jantung
Obat Penambah HB darah
Obat Untuk Menghilangkan Milia

Yaro Gabriel said...

www0530

supreme uk
pandora charms
ysl outlet
longchamp bags
jordan shoes
merrell shoes
diesel jeans
hermes outlet
supreme clothing
canada goose outlet

Yaro Gabriel said...

www0530

christian louboutin outlet
bottega veneta outlet
salomon shoes
pandora outlet
alexander mcqueen shoes
dior outlet
michael kors outlet
cheap football shirts
true religion jeans
soccer jerseys

Syem Park said...

CHLOROFORM DI JAKARTA
CHLOROPHYLL DI JAKARTA
LIQUID DI JAKARTA
TRIVAM DI JAKARTA
SLEELPING BEAUTY DI JAKARTA
CHLOROFORM DI MALUKU
CHLOROPHYLL DI MALUKU
LIQUID SEX DI MALUKU
TRIVAM DI MALUKU
SLEEPING BEAUTY DI MALUKU

风骚污男 said...

20180604 junda
canada goose outlet
gucci handbags
basketball shoes
swarovski crystal
manchester united jersey
cheap nfl jerseys
coach outlet canada
san francisco 49ers jerseys
chopard jewelry
true religion jeans

chenlili said...

true religion outlet
yeezy shoes
michael kors outlet clearance
kate spade outlet online
true religion jeans
lacoste outlet
true religion jeans
ugg boots clearance
yeezy boost
michael kors outlet
shenyuhang20180622

SSSSSS said...

oakleys sunglasses
nfl jerseys
michael kors outlet
kobe byrant shoes
nike air vapormax
adidas ultra boost
russell westbrook shoes
christian louboutin shoes
yeezy boost 350
nmd r1

SSSSSS said...

jordan 1 off white
chrome hearts outlet
adidas nmd
ysl handbags
basketball shoes
yeezy shoes
nike prestos
kobe 9
nhl jerseys
nike air presto

think green electrical said...

women's health care
Very nice, thanks for sharing this informative data.

dipali sharma said...

Now you can lead the whole facebook by adding hundreds of sort promptly with no difficulty. buy targeted likes

Obat Herbal Denature said...

Menghilangkan Kutil Pada KelaminJadi Apa Pilihan Pengobatan Yang Baik Untuk Kutil Kelamin Pria? Beberapa metode pengobatan yang dapat dicoba untuk menyembuhkan penyakit ini adalah melalui penggunaan krim dan salep. Selain itu bisa juga dengan resep dokter lain yang tujuanya untuk memusnahkan kutil tersebut. untuk cara pemesanana silahkan kunjungblog kami

obat herbal untuk wasir eksternalWasir tidak dapat menyebabkan kanker dubur. Dalam beberapa kasus yang jarang

agen poker said...

Thanks for sharing this article. I will visit your blog regularly for some latest post.
jeniuspoker

mediagroup7867 said...

You produce a great point in your own final paragraph. We couldn’t agree more together with your points. In today’s modern world, your approach to this issue is lacking in today’s kids. We need to ensure that our kids find out more on this topic so we nev
website design in dubai

mediagroup7867 said...

You produce a great point in your own final paragraph. We couldn’t agree more together with your points. In today’s modern world, your approach to this issue is lacking in today’s kids. We need to ensure that our kids find out more on this topic so we nev
website design in dubai

Sophie Grace said...

I was astonished to discover this book after all it isn't another book. The condition was great and it was here before expected it. webstagram

Unknown said...

bad icecream download free for apps new arrivals

armanipoker said...

Pretty! This was a really wonderful post.

dewiqq said...

Your blog is important; the issue is something that not enough people are talking intelligently about.

«Oldest ‹Older   601 – 637 of 637   Newer› Newest»