Overcorrecting the overcorrected
Jeremy Siegel almost loses it here for good reason. The Federal Reserve Board called it transitory inflation when prices were skyrocketing last Fall. When the same Fed (except a couple members) now argues that inflation is not yet slowing at a reasonable pace despite the price contractions recent data shows, questions arise. Fed gives the impression that it is now overcorrecting what it overcorrected earlier by loosening the monetary policy too much and for too long.
In case after case, our data modeling and inference practices are tested against lags in data. Lack of a high predictive power, we resort to overcorrections. Overcorrecting is doing more than enough (vs. not doing enough) and sounds better than coming short. But then, the pendulum swings back a little harder.
What do we learn from such swings? Well, one rather obvious takeaway is to put more emphasis on correctly understanding and modeling lags in time series. Another one is to be content with coming short occasionally, especially when the cost of overcorrecting is much higher than the cost of coming short.