Economic Text Tribalism

Not to pick on James Glassman (the JP Morgan-based Glassman), but an OpEd in today’s WSJ is an example of what’s turgidly wrong with most Fed-following. Here is a sample:

“Obviously, equity investors are nervous about the prospect of higher Fed interest rates. However, vigorous noninflationary growth creates a more positive environment for corporate earnings than the slower growth that originally motivated the Fed to lower interest rates to emergency levels. Naturally, long-term interest rates would be expected to rise as the economy improves, but long-term rates have climbed significantly in anticipation of Fed tightening. In this context, the Fed’s resolve to maintain price stability is the best way to keep bond yields relatively low.”

Today’s exercise: Create the “Shorter Glassman” ™. In other words, paraphrase Glassman and alienate fewer readers. My swing:

“Equity investors are nervous about higher interest rates, but it need not be so bad. Assuming prices don’t rise too much as the economy accelerates, faster growth should compensate for any braking effect from inflation-driven higher rates. It won’t be easy, but the Federal Reserve can keep prices under control without blowing up the bond market.”


  1. Geoff Ho says:

    Just imagine what would happen if Greenspan or Green-speak were suddenly associated with the “blowing up” of the bond market.
    All the commentary is necessarily nebulus so no one can infer a direction at first glance and make any snap judgements. Or they are paid by the word.