Hoover Institution fellow Kevin Warsh discusses the dangers of breaking down Fed policy into an exact science as well as the global need for an established plan from the Fed. 

In a recent Wall Street Journal piece, “Think You Know the Natural Rate of Interest? Think Again,” James Mackintosh warns about the high level of uncertainty in recent estimates of the equilibrium interest rate—commonly called r* or the natural rate—that are being factored into monetary policy decisions by the Fed.

First, let's recognize that when people use the term "trade deficit," they mean "current account deficit." When there's a current account deficit of magnitude x, there's a capital account surplus of magnitude x. This is a mathematical necessity. Second, let's recognize that there is likely to be, for the next few years, a large U.S. government federal budget deficit.

But there's another solution that doesn't require any of this: allow foreign airlines to fly from one U.S. point to another. In other words, imitate Europe and get rid of the restrictions on cabotage that European governments abolished in 1997. Their results were great. Competition increased and airfares fell. Think Ryanair and easyJet.