Like an ox31st January 2019
Six years ago, I wrote a post that reflected my view of the proper relationship between the Fed and the markets:
That’s not Bullard’s job. He hasn’t been hired to outguess the markets. If he wants to do that he should go run a hedge fund. His job is to be led around by the markets like a stupid ox with a steel nose ring being dragged along by a farmer.
Here’s a Bloomberg headline, reacting to today’s Fed decision:
Congratulations, Market. The Fed Is Officially at Your Mercy.
So am I ready to declare victory for market monetarism? Not quite. We still need a NGDP market. TIPS spreads and stock market indices are better than nothing, but there’s no substitute for a NGDP futures market.
But we are making real progress. The Fed is not using macro “models” to set interest rates.
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