Zeev's Turnips Patch-No Politics (ZEEV)

[langostino]

zeev - Fed targets

I had a meeting with the former chief economist for the NY Federal Reserve last month and he made it clear the Fed really believes it can keep the real rate in a band between 1% and 2% indefinitely, forever and ever. I could not believe the hubris, but it's clear the top-level Fed officials really believe "this time it's different". They believe we now "understand" how to perfectly control the system and that the major moves of the 70s and 80s are extinct dinosaurs, never to be seen again. It was pretty stunning. But that, FWIW, is clearly what they believe.