Mises Institute Associated Scholar Ryan McMaken asserts Fed has no good idea what to do next, so leaves rates unchanged - Galt's Gulch

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Mises Institute Associated Scholar Ryan McMaken asserts Fed has no good idea what to do next, so leaves rates unchanged

Posted by bubah1mau 1 year, 2 months ago to Economics

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McMaken claims at the first sign of systemic problems, despite Fed jawboning, their knee-jerk reaction will be to lower rates—probably rapidly, as Fed bankers are politically sensitive, and crises aren’t good politics. Easier to kick cans down the road, let inflation run largely unabated than risk a meltdown

SOURCE URL: https://mises.org/wire/fed-holds-fed-funds-rate-steady-because-it-doesnt-know-what-else-do

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Posted by mshupe 1 year, 2 months ago

For what it's worth, the Fed has no good idea what to do ever. Any decision they make is arbitrary. Sure, they have reams of historical data and analysis to pretend being objective, but none of it is sufficient in a complex system where the greatest variable is non-measurable - human action. Even worse, because they know their models are woefully inadequate, they compensate for that with subjective input assumptions, which only increase the potential errors.

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