Monday, March 14, 2016

Let's check up on Liz Ann Sonders

I haven't been following her recently, but this morning I came across an article in BI putting words into her mouth and making her look like an idiot, so I thought I'd check out her recent commentary.

Liz Ann Sonders - quit piddling yourselves you sissies, and yes I hate BI too. Here's one very important point:
Remember the basic rule of economics—the cure for low prices is low prices, as it eventually cuts supply and increases demand. And don’t forget that historically a reduction in the price of oil has been a boost to the economy with about a year lag. We believe we will see that boost to a greater extent as we go through the year.
Now, two points:

1) That means we'll be seeing a boost to the US economy now-ish, since the real pooping began in December 2014. Which is quite a hell of a contrast from the recession doomery you've been reading all winter, no?

2) If it's true that a drop in the oil price boosts the economy with about a year lag, then do you think that the Federal Reserve Board knows this? E.g., is Janet Yellen not as intelligent as Liz Ann Sonders? Because I think Yellen is at least as intelligent as Liz Ann Sonders, and thus Yellen knows it's probably a bad idea to put off rate hikes, given she feels output is near capacity (else she wouldn't be considering tightening) and thus she would feel any economic boost from low oil would be inflationary.

(Parenthetically, this means that the idiots at Morgan Stanley who are calling for no hikes before December are significantly less intelligent than a hamster, and you should take all your money out of MS because they're going to be hilariously wrong again, and hopefully they haven't bet their own money on this stupid call.)

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