The article argues that the Federal Reserve's recent rate hike decision, while justifiable on inflation grounds, highlights a critical lack of an underlying, transparent policy framework. The core problem is that the Fed's decisions appear discretionary, leading to market uncertainty because the committee's judgment, rather than clear data, dictates policy shifts. The author proposes that the Fed adopt a formal monetary policy rule—an algebraic formula linking the target rate to indicators like inflation and unemployment—to replace subjective guidance. Implementing such a rule would provide market predictability, enhance transparency, and shield the Fed from political attacks by making deviations from the standard easily quantifiable.
Low and Falling Fertility Means Social Security’s Funding Problems Are Worse Than Expected
English Summary
The article argues that Social Security's long-term funding shortfall is significantly underestimated because the Trustees rely on overly optimistic fertility assumptions. The analysis points out that the Trustees' projections for future birth rates are far more optimistic than current demographic trends or peer forecasts suggest, leading to a substantial underestimation of the program's true deficit. Using more realistic fertility rates increases the estimated 75-year shortfall from $27 trillion to $30-$31 trillion in present value terms. Policymakers must therefore exercise caution and not base Social Security reform decisions on these highly optimistic demographic assumptions, as doing so risks miscalculating the true scale of the long-term financial gap.
中文摘要
本文論述，社會保障系統的長期資金缺口被嚴重低估，主要原因在於信託委員會（Trustees）過度依賴樂觀的生育率假設。分析指出，信託委員會對未來出生率的預測，遠超過當前的人口結構趨勢或同儕的預測，導致對該計畫真實赤字的大幅低估。若採用更為現實的生育率，估計的75年資金缺口將從27兆美元增加至30至31兆美元（按現值計算）。因此，政策制定者必須謹慎，不可將社會保障改革的決策建立在這些過度樂觀的人口假設之上，否則有誤判長期財政缺口真實規模的風險。
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