PIMCO’s McCulley Call Wall Street Prices ‘Rationally Overvalued’

PIMCO chief economist Paul McCulley has been arguing that the Federal Reserve will keep the Fed funds rate low until labor finally gets a share of the recovery in the form of real wage growth, and in this month’s wide ranging Macro Perspectives he gives a more detailed explanation of the mechanism that he sees at play.

Dornbusch explains exchange rate movements

Going back to the mid-70s when Bretton Woods was still a recent memory and economists were making sense of floating exchange rates, McCulley says that the work of Rudi Dornbusch to explain why exchange rates weren’t behaving as expected can shed light on our current predicament.

After Nixon ended...