by Calculated Risk on 8/09/2013 08:29:00 PM

A new song from Merle Hazard called the "The Great Unwind".  This was debuted on PBS this week and several economists have commented on the song:

Yesterday from PBS: Art Laffer, John Taylor, Simon Johnson Respond to the Fed's 'Great Unwind' Problem

From John Taylor:

I've been writing about the costs of unwinding unconventional monetary policy since the Fed started its massive bond buying four years ago. Now, just in time for the actual unwinding, we have the online debut of Merle Hazard's funny and informative "The Great Unwind," a country and western song about the Fed's current predicament. Like Merle's earlier numbers -- such as "Inflation or Deflation" and "Bailout" -- his new song tells you a lot about monetary policy. Full disclosure: I'm a real fan of Merle Hazard as I said in this promotional video Merle Hazard Meets John Taylor for "Inflation or Deflation."

And today: Is the Fed's 'Great Unwind' a Nonevent or the Chickens Finally Coming Home to Roost? (with comments from Ken Rogoff, Justin Wolfers, James Galbraith, and Greg Mankiw) From Rogoff:

Another great performance from Merle Hazard. However, I would worry more about the long-term effects of lingering unemployment and growing income inequality than the risks of quantitative easing (QE). ... the real risk is that there will be a sharp rise in interest rates making it very expensive to roll over growing issuance of short-term debt. As long as that doesn't happen, the "great unwind" will be a non-event.

From Wolfers:

Country music star Merle's Hazard's latest turns to a far more important theme than the usual fare of unrequited love, dead dogs, old trucks and 'merica, worrying instead about how the Fed will unwind it's balance sheet. Is Ben Bernanke a monetary outlaw or the trusted sheriff who'll restore order? I'm betting on the latter, but either way, I tip my (ten-gallon) hat to the strumming balladeer and dismal scientist.

From CR: Rogoff argues that the concern is "a sharp rise in interest rates" - I'd say the concern is an eventual sharp increase in inflation that forces the Fed to unwind quicker than planned. I'm not that worried though - I'm more in the "non-event" / "restore order" group - but it does require a Fed Chairman with good judgment and an understanding of what is happening. Enjoy!