Jessica Einhorn (resident
senior adviser at The Rock Creek Group and a former Dean at Johns Hopkins
University) gets poetic about monetary policy:
Target Practice: 2%
Fight on, fight on as if the war’s not won
Inflation is the devil we know best
And if instead the rates turn negative
We won’t suppose the dragon has been slain
Our common history will reinforce
Presentiment for any other course
Our memories go back to God-like Paul
The Volcker who to slay that dragon dared
To change our focus from supply of funds
Preferring rates of interest on reserves
If you are of an age to recollect
Sixteen percent was interest on our debt
Much time has passed since nineteen eighty one
The demographic bulge of youth retires
Japan comes first with Europe on its heels
Those high returns of yesteryear no more
The specter of deflation haunts us now
Our friends the central bankers break their vow
They say “fear not” the goal is two percent
Deflation’s mirror image we’ll restore
But when we look behind the veil we see
Two feet of clay on which their hopes depend
The natural rate behaves unnaturally
Inflation expectations seem to flee
A stimulus needs lower rates to grow
But zero lower bound confounds the task
Would you buy more when you earn less or pay
For savings now become a cost to bear?
If debtors thrive and prudence brings despair
Then civic virtue falls in disrepair
Imagination perseveres to guide
Aloft our quest to solve the puzzle
Imagine there a helicopter flies
While dropping money bundles carelessly
It’s helter skelter quantitative easing
Which brings that rise in prices that is pleasing
As last resort we’ll taste forbidden fruit
By allocating credit faithfully
Japan promotes a corporate ETF
Of companies who show they are aligned
By boosting human capital and more
The yield curve shifts before we close the door
The ECB will not be left behind
Rewarding banks who come to borrow now
So long as funds are used to help the real
Economy get on its feet and run
Wits end we’re at, though dare not say aloud
This burden needs some sharing from the crowd
It’s Fiscal Time! all point and pounce
And leave the stage as if not trounced.”
And leave the stage as if not trounced.”