The She-Devil of Constitution Avenue
Ive spent five years and more watching the inflationphobes, who werent particularly sensible to begin with, descend into shrill unholy madness. They could have reacted to the failure of their predictions the continued absence of the runaway inflation they insisted was just around the corner by stepping back and reconsidering both their model and their recommendations. But no. At best, we see a proliferation of new reasons to raise interest rates in a depressed economy, with nary an acknowledgment that previous predictions were dead wrong. At worst, we see conspiracy theories we actually have double-digit inflation, but the BLS is spiriting the evidence away in its black helicopters and burying it in Area 51.
So at this point I thought Id seen everything. But no: the prospect that Janet Yellen, a monetary dove, might become the next Fed chair has driven the right into a frenzy of well, words fail me.
...
And they have a point. After all, what possible non-gender case is there for Yellen? That is, aside from the fact that shes been a highly successful team player at the Fed, has a distinguished record as a research economist on the very issues she would have to deal with as chair, and, according to a recent assessment, has the best forecasting track record of 14 top Fed policymakers. Whose assessment? Um, the Wall Street Journals.
Ive been saying for a long time that
we arent having a rational argument over economic policy, that the inflationista position is driven by politics and psychology rather than anything the other side would recognize as analysis. But this really proves it beyond a shadow of a doubt; if you really want to understand whats going on here, the Austrian you need to read isnt Friedrich Hayek or Ludwig von Mises, its Sigmund Freud.
http://krugman.blogs.nytimes.com/2013/07/29/the-she-devil-of-constitution-avenue/