David Stockman, 80's economist famous for an incorrect tag line, has a fun blog if you like reading angry white man " Hey kid get off my lawn" diatribes. Here's a link to a teenage boy spat on Stan Fischer today.
Yesterday, Mr. Voodoo Economics dropped some bombs on the Fed - while praising the minutes? . Stockman intoned that as long as there was a huge Fed balance sheet, it would be impossible to raise rates because excess funds would seep into the funding market. He completely tossed off the efficacy of the Death Star. Today's vitriol shows a narrow focus and deep seeded disdain for ZIRP. The former Supply Sider no likey da debt!
The truth is the FAFRRRF - Death Star - is a monetary tool with so much potential sucking power that Fed officials are wary to rely on it and Street clearing houses are brownstaining at the thought of its firing. No practitioner with even modest system understanding worries about the corridor floor. Flash crashes, Taper Tantrums and recent global face melters all support a respect for markets gone wild. When a move starts, it takes on a life of its own. The corridor ceiling, more like heavy cloud cover, is what will matter.
Even if market participants play nice and re-establish a band slightly higher and a rate neatly in the middle, there is no throttle to regulate the rest of the yield structure. That rates might remain a tad squishier, is a cute little problem easily fixed. That rates may break free of CB tethering and go on a violent walkabout is far more troublesome and far more likely, based on post financial crisis market reaction history.
I could out - get off my lawn the likes of Stockman without breaking an intellectual sweat. David, you're a modern Malthus, famous for a fabulously incorrect statement.