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.
Japan Rearms + Guns vs. Butter + Global Defense Spending Boom
English Summary
Global defense spending is entering a new boom phase, driven by geopolitical tensions and the perceived decline of U.S. security guarantees. This rearmament trend is forcing nations, such as Japan, to abandon long-held pacifist doctrines and significantly raise military budgets. However, this massive spending is largely financed through increased borrowing, leading to soaring national debt, inflation, and higher interest rates across rich democracies. Consequently, governments face severe political and economic strain, struggling to balance public demands for affordable goods with the escalating costs of national security, creating major policy spillovers.
中文摘要
全球國防開支正進入新一輪的擴張期，其驅動因素包括地緣政治緊張局勢以及對美國安全保障機制衰退的擔憂。這股再軍備化趨勢迫使日本等國家放棄長期秉持的和平主義學說，並大幅提高軍事預算。然而，如此龐大的開支主要依賴增加借貸來籌資，導致富裕民主國家面臨國家債務飆升、通貨膨脹和利率上漲等多重困境。因此，各國政府面臨嚴重的政治和經濟壓力，難以在滿足民眾對可負擔商品的需求與應對日益升高的國家安全成本之間取得平衡，從而產生了重大的政策溢出效應。
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