40 Years A Fed Watcher
“Never has the fate of mankind been so dependent on a single adjective.” – Dave Javu
The Fed certainly can use the strength of the Greenback as a reason not to raise rates by using crafty Fedsprecht to hammer a square thought into a round policy. Lacking any wage inflation they also can easily ignore employment trends. I’m personally staying out of the betting pool of when and by how much they will move rates.
It occurs to me, though, that the Fed really wants to test the market’s reaction to taking off the “patient” training wheels. Stan Fischer has been on the record for some time that too much forward guidance hamstrings policy options.
Assume, for now, that in the next FOMC meeting they finally get around to performing an elective “patientectomy”. What’s the worse that could happen? Not much, in my opinion, that couldn’t be quickly corrected with some post meeting Olympic class Fed double-speak.
If there’s one thing they’re good at…
Some smart people confirm my bias.
#1 – Remove Patience from statement March 18 #2 – Fed decides how scared markets are at April 29 meeting #3 – Massive 1/4 point hike June 17
— Bob Byrne (@ByrneRWS) March 14, 2015
But maybe the best policy tool they have right now is a thesaurus – the thought of which is but a simple reflection of my faith in central banking writ large.
Yes, I know some really smart people who have declared victory for the Fed’s actions since the Global Financial Crisis. I like to think of it more in terms of the (misinterpreted) response of premier Zhou Enlai when asked, during Richard Nixon’s visit to China in 1968, what he thought of the French Revolution. He replied “it’s too early to say.”
Economic Crimes Against Humanity
Here’s a link to what the performers at Woodstock got paid.
I think Santana should ask for reparations in the form of a claw back from Joan Baez.
Is Trading the Same as Gambling?
I’ve been told my whole life by non-believers that it is. Well, it’s not. (Whatever helps me sleep at night?) First, gambling has a binary outcome. You either win something or lose all of your bet. Secondly, trade outcomes are afforded the ability to cancel the bet at some cost below the principal amount before expiration. It must be recognized that, because any trade can be hedged, traders often act more like bookies. But we still have to pay the vigorish to Duke & Duke.
I find proposing bets really useful. George Mason University econ professor, Bryan Caplan, makes a lot of bets with other economists who offer what he considers implausible predictions. In his circle they often joke that those types of bets are “a tax on bullsh*t.” It’s fair to say if I ever propose a bet to you I’m offering an opinion on your relevant tax avoidance skills.
Just FYI, I’ve only had one of these bets taken of the 100s I’ve proposed (a bet on the price of oil a year out – which I won.)Â People make a lot of predictions with cocksure certitude – but usually only in the Twitter trader sense until you meet them where Mouth St. crosses Money Ave.
The Most Practical Economics Book I Own.
It seems to me that so many people on Twitter Finance fancy themselves as foodies. I have a very high bar for assigning people that handle and most people I’ve met can’t clear it. On the other hand, I find the bar on my personal ability to act like a snob very low. So there’s that.
Anyhow, foodie or not, if you’re looking to maximize the marginal utility of your dining dollars and you don’t own Tyler Cowen’s An Economist Gets Lunch: New Rules for Everyday Foodies
That’s it for now. My oldest daughter just turned 35 and, as Bob Lang reminded me, she’s now old enough to run for president. I’m thinking of filing papers to set up a PAC and put myself on the payroll. There’s something to gathering assets that you don’t have to return to clients.
-db
   Follow Dave on Twitter:  @davebudge
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
