We’re back to policy rhetoric and watching inflation – Oh, yes, and Fed-bashing by Barbara Rockefellar inflation fed
went up and the dollar went down, so obviously the market is right. Market prices are always right in the sense that they are evidence of action, not words. It doesn’t mean the analysis behind the action is right, but it may mean “confidence and trust in institutions” is not as strong as it could and should be in a crisis. Especially when the other big independent institution, the Supreme Court, is losing the public trust by gobs with every passing minute.
Criticism is also upon the plan of letting maturing assets run off the balance sheet instead of actually selling any. For longer-tenor assets, this will take forever—well, a long time. The Fed has $1.92 trillion in assets of 5-10 years. It looks like the market was out to get Powell no matter what he said, but to be fair, the Fed appears somewhat clueless about the depth and width of criticism of its policies. This is not to say theis wrong, just out of touch with a seemingly fairly fat tail. This is often the case, as we have observed over the years, with the phrase “behind the curve” having entered the general lexicon.
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