The Fed has no idea what the "Correct" federal funds rate is to achieve the goals that the Fed has set for itself.
Gone are the days when the Fed repeatedly suggested that it had a long-term plan or any sort of clear strategy for manipulating economic conditions.
It all turns out that the Fed has nothing in its tool box other than tinkering each month with a few knobs and levers, and hoping price inflation goes down.
Some reporters tried to nail the Fed down on some sort of criteria for how the Fed determines policy.
In mid 2021, Minneapolis Fed president Neel Kashkari claimed there was no price inflation in store and the Fed would keep the target rate near zero until 2023.
Contrary to the longstanding myth of Fed independence and political neutrality, the Fed is a deeply political organization committed to kicking the can down the road to get the regime through just one more election without a fiscal or monetary disaster.
The Fed's concern is keeping up appearances, and this requires constant open-ended tinkering with policy rates and hoping for the best.
No comments:
Post a Comment