This might be useful to some of you:
It’s obvious in the above that the Fed action has raised very short term rates while bringing down longer rates. (To explain some of the movements earlier, remember that markets thought the Fed was first going to raise the fed funds target in September, and then it backed off when things went nuts in the financial markets in August after the China currency move.)
Fortunately Scott clarified in the comments of the last post that it was only a subset of Austrians who had simplistic views about short- and long-term interest rates. As you may recall, recently I invoked the common (but not perfect) pattern of a textbook Fed tightening leading to (a) rising short rates and (b) stable or even falling long rates to explain why an inverted yield curve “predicts” recessions, and how that flows naturally from textbook Austrian business cycle theory.
P.S. The Internet is awful at communicating body language, tone of voice, etc. Let me once again state that the reason I go after both Krugman and Sumner is that they are very intelligent and glib cheerleaders of policy proposals that I think are terrible. As David Beckworth has gained more traction I put him in the crosshairs too. If I try to blow you up on my blog, it’s because I respect your power.