Must-Read: Larry Summers: Disappointed by What Came Out of Jackson Hole

Must-Read: Indeed, I think Summers is right to be disappointed. From my perspective, the most interesting things about the Fed and monetary policy to come out in the past week were written by people who were not at the Federal Reserve’s Jackson Hole Conference…

Larry Summers: Disappointed by What Came Out of Jackson Hole:

I had high hopes… billed as a forum that would look at new approaches to the conduct of monetary policy…

…On balance though, I am disappointed by what came out of Jackson Hole…. First, the near term policy signals were on the tightening side which I think will end up hurting both the Fed’s credibility and the economy. Second, the longer term discussion revealed what I regard as dangerous complacency about the efficacy of the existing tool box. Third, there was failure to seriously consider major changes in the current monetary policy framework. I shall argue each of these points in a blog series this week. At the outset however, it is important to recognize that the Fed has not earned the right to be intellectually complacent or to expect that others will have faith in its current policy framework