The FF target rate is just a placebo, but it can be toxic if too much is ingested at a low level of stamina

From Yellen´s most recent speech, it is clear that these “doctors” are not worth their pay. They are only concerned with prescribing a placebo (FFT)! Maybe it´s harder to provide nominal stability at an appropriate level (“dose”). And we know that “prescription” is good because it has done wonders for the patient in the past!

Yellen:

But Yellen expressed confidence that the recovery remains intact — even if it is not as robust as Fed officials themselves once thought. And that would be enough for the Fed to begin reversing nearly a decade of easy money.

Because of the substantial lags in the effects of monetary policy on the economy, we must make policy in a forward-looking manner,” Yellen said in prepared remarks. “Delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy.

From the charts below, it appears that if they want to play around varying the “dosage” of placebo as they were used to, they first have to get the “patient level of stamina UP”!

Placebo

One thought on “The FF target rate is just a placebo, but it can be toxic if too much is ingested at a low level of stamina

  1. The economy will “overheat”? Is there a single industry in the US rationing demand by raising prices?
    Is the Fed’s definition of “overheating” what used to be called “robust growth with mild inflation”?
    Would you like to run a business in an economy that was overheating?

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