
I Trashed the Economy When I Was Head of the Fed - jnordwick
https://www.bloomberg.com/view/articles/2016-09-26/how-i-trashed-the-economy-when-i-was-head-of-the-fed
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jnordwick
The game is based on the horrendous and fatally flawed Phillips Curve that
posits a inverse relationship between employment and inflation (i.e., a tight
labor market means high inflation and high inflation can tighten the labor
market - that is the Fed can inject money into the economy to spur job
growth).

The Curve was dead in the 1970s and through the 1990s:

[https://mises.org/library/phillips-curve](https://mises.org/library/phillips-
curve)

And still dead:

[http://www.economonitor.com/dolanecon/2014/05/12/what-
ever-h...](http://www.economonitor.com/dolanecon/2014/05/12/what-ever-
happened-to-the-phillips-curve-interpreting-a-half-century-of-inflation-and-
unemployment/)

I just wish it would die completely.

~~~
SnailWizard
I was under the impression that Austrian economics was mostly considered
fringe, much like (human-caused) climate change deniers. I have no formal
training in economics other than a "101" class in univ, just wondering what
your background is and if you could fill me in more on it. Thanks!

~~~
jnordwick
Austrian can be considered a branch of classical economics. Calling it
entirely fringe is gross over-generalization. Like I don't agree on their view
on monetary policy, but I would never label the entire branch as fringe. They
have some areas they depart, but they also have some areas where they agree
with literally hundreds of years of political economics, including
contemporaries. The world doesn't revolve around Keynesians.

I went to UC Berkeley and went though almost an entire minor in econ but now
work in financial technology and developing trading systems and strategies,
everything from statistical arbitrage to macro- and micro-economic news events
to options.

I buy the story on the Phillips curve (not only attacks by the Austrials, but
pretty much everybody except Keynsians) because the data against it is just
really good. When I was in school I bought into the theory, but since then
I've been convinced pretty heavily that the correlation only exists because of
policy actions and the causation definitely doesn't exist. I used to have some
correspondence with a former Reagan adviser (a Democrat) that was really quite
persuasive.

