The op-ed that got Stephen Moore his Fed nomination is based on two major falsehoods
Source: Washington Post
The op-ed that got Stephen Moore his Fed nomination is based on two major falsehoods
By Catherine Rampell
Columnist
March 26 at 4:08 PM
President Trump reportedly chose Stephen Moore for one of the vacancies at the Federal Reserve Board after reading a Wall Street Journal op-ed Moore wrote attacking the Fed. The piece, co-authored with Louis Woodhill, made two central claims: (1) we’re experiencing deflation, and (2) the way to address it is to follow a rule adopted by Paul Volcker in the 1980s.
Slight problem though: Both of those claims are flat-out false. There is no deflation, and Volcker never created the imaginary “rule” Moore is now attributing to him. I know, because I asked Volcker — as Moore once suggested I do.
Deflation, for those unfamiliar, means prices are falling. There are three major measures of price changes: the consumer price index, the personal consumption expenditures (PCE) price index, and the “core” PCE price index (which excludes energy and food, which can be volatile). All three show modest put positive year-over-year price increases.
Moore and Woodhill explain this away by saying that in fact we shouldn’t be looking at overall price changes — instead we should be looking at just a small subset of prices, specifically commodities. Commodities refer to goods that are interchangeable with one another, such as metals, oil, soybeans, wheat, etc.
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Read more: https://www.washingtonpost.com/opinions/2019/03/26/op-ed-that-got-stephen-moore-his-fed-nomination-is-based-two-major-falsehoods/