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I studied economics in the 1960’s when these variations were called Leads and Lags. The principle was the same. If monetary policy was too tight it led to deflation and possibly recession. Too loose and it led to inflation and, when corrected, it led to bankruptcy and dispossession of homes. It should be possible to anticipate the consequences of decisions taken by central banks (yes, I am aware of their business models with their countless algorithms) and I hope that one of the benefits of AI will be to enable the MPC in the UK to anticipate more accurately the movement in the market. I ran a small business that was forced to cease trading when the commercial interest rate reached 19.5% in 1980/81 and the then government were claiming that this was good for the health of the economy. The three million unemployed at the time did not think so.

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I am a reformed analysts. This is an excellent discussion. A few short observations. • Powell and Yellen have payed politics with the cost of money and inflation and both have blown up in their face. • Yellen has stated that she is a Keyansian down to her finger tips, so she is of zero help. • The extended bond yield inversion, skyrocketing defaults on all sorts of debt, with persistent inflation in food and housing and insurance this is a klaxon horn for a whopper of a recession that will be labeled the Biden Bust (I dislike both parties) - Thus business and consumers must prepare, this usually aens spend less and cut employees. Until unemployment is over about 4.5% and GDP slows to 2% to 3% growth, inflation will continue throuh the recession.

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I think Wicksell’s idea was that the prevalence of the natural rate of interest would produce not *constant* inflation but *zero* inflation.

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