Echo Chamber

Bullard: "Market volatility won't change our outlook."

Loretta Mester: "We are at full employment."

Kocherlakota: "We are well below our inflation target."

Kramer: "Lets see what's in Jerry's fridge."

The Fed is holding its annual August economics confab. Jackson Hole is covered by financial media like a great source of inside information but the historic reality is quite weak. Greenspan took the opportunity to confirm a policy move, once. The real Jack Hole stunner turned out to be a credit super cycle criticism by the IMF that took two more years to pan out.

https://www.imf.org/external/np/speeches/2005/082705.htm

So, the quote-fest in the mountains fills the available bandwidth with an avalanche of bon mots on the obvious. Our criticism remains aimed at the Fed mission of "openness". We believe there is a direct link between Openness and Reduced Efficacy when implementing monetary policy. A difficult to find St Louis Fed white paper confirmed our inclination with a simple rule: "Surprise and do more than expected."

We have suggested a new direction for Fed policy: ZIP it don't ZIRP it. Yesterday, Twitter began a campaign to trend #Justgoforit on raising the funds rate. I'd suggest #STFU. Janet can keep her press conferences after meetings and that's it. The Vice-chair, since madame Chair didn't even make the journey, should climb the highest peak and shout, "We're going back in our cave."

Imagine Stan Fischer announcing the Funds corridor moving up in an hour. How would things be different? What if he confirmed that no change would take place, yet? I guess things would jump around and fall and rise and hey wait a minute...that's already happening. The Fed doesn't know what to do. Thus, peeps that tell you what the Fed is going to do are making shit up.

The important decision for policy makers is not the level of wholesale funding but the calibration of accommodation or restriction. These are mutually exclusive events, no matter how many psuedo-wonks quote you the Fed Funds Futures Strip. Blurring the line between a quantitative and a rates targeting regime is the primary reason for all the jawboning. Can it. Remember "Fed Time"? #GIK The Fed can let you know what they are doing by the actions they take between 11:30 and 11:45 ET.

 

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