The Trump-flation

date money rate FF Equil Var
Jan-15 0.63 0.12 0.03 0.09
Jan-16 1.169 0.34 0.57 -0.17
16-Feb 1.14 0.38 0.54 -0.16
16-Mar 1.179 0.36 0.58 -0.22
16-Apr 1.213 0.36 0.58 -0.22
16-May 1.232 0.37 0.63 -0.26
16-Jun 1.328 0.38 0.72 -0.245
16-Jul 1.225 0.39 0.625 -0.235
16-Aug 1.433 0.4 0.833 -0.433
16-Sep 1.565 0.4 0.96 -0.56
16-Oct 1.559 0.4 0.96 -0.56
16-Nov 1.575 0.41 0.975 -0.565
16-Dec 1.643 0.41 1.043 -0.633

Most of the policies that the new administration is advancing are also inflationary pressures. The Fed's policy calibration has moved to its most accommodative stance as you look back 9 months. The data above show the estimated equilibrium FF rate (the rate at which Mon. Policy is neither tight or loose) and the actual calibration. The more negative the last number, the more policy ease impact (positive numbers would mean Fed is too tight)

The media is up in arms about the PEOTUS having conflicts of interest as to his holdings. The easiest and most effective way to increase his wealth while in office would be to advance the inflation rate. We believe it will happen. The release of Rogue One right after the Fed meeting is perfectly timed. We can all sit back and see if either Death Star works.

Leave a Reply

Your email address will not be published. Required fields are marked *