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Deflationist Gary Shilling: Fed Has “Perennially Over Forecast Inflation”

You’ve probably heard of Gary Shilling. He is the President of A. Gary Shilling & Co., a firm he founded in 1978 which analyzes economic and financial developments in the U.S. and abroad. Shilling is also a featured deflationist on deflation.com.

He has been quoted many times in the financial media over the years, plus his writings have been featured in prominent publications including Forbes.

Recently, Shilling expressed his view about the Fed’s forecasting.

Read this excerpt from a Nov. 2 Business Inside article:

Financial analyst Gary Shilling says the Fed has to get out of the forecasting business. Transparency is a thing since the financial crisis but transparency does not suit them. Following is a transcript of the video.

Gary Shilling: First thing I would do at the Fed is to get them out of the forecasting business. They’re lousy at it. The Fed did not forecast up until the early 90s. They didn’t even tell you what their federal funds target is. Their interest rates.

Guys would get this data every Wednesday night and they would massage the data the wee hours of the morning trying to figure out what is the target that the Fed has? Because they didn’t announce it.

More recently they’ve gotten bitten by the transparency bug and I think that was a product of the financial crisis. A lot of things were not transparent and these guys running the Fed are mere mortals and they saw ok transparency is the in thing to do so we’re going to be transparent. We’re going to tell the world what our plans are.

Well, the problem is that all their targets are data driven. And they admit this, but they’re very, very poor forecasters of the data. I mean they have perennially forecast more inflation than we’ve had. Perennially forecast sooner and more interest rate increases than they’ve put in. Perennially over forecast inflation. Economic growth.

I would just say, “You don’t have to forecast.”

You can read the entire article by following the link below:

http://www.businessinsider.com/gary-shilling-fed-chair-stop-forecasting-transparency-data-rate-2017-10

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