Powell likened monetary policy to "sailing at the stars."

Powell likened monetary policy to "sailing at the stars."

You move the ship by looking at three stars: u* (natural unemployment), r* (real neutral interest rate), and pi* (inflation target).

But while the stars shining in the night sky can be seen with the naked eye, the three stars of monetary policy are invisible, 'scholars' only presume they are there.

Hundreds of doctors process data and turn models to locate stars. But because the economy moves in real time, the Fed is often wrong, and sometimes it is ruinously wrong.

In particular, in the second half of the 20th year, the Fed misjudged inflationary pressures and implemented an average inflation targeting policy (AIT). The hurried policy to prevent deflation rather stimulated the inflation surge. Not my opinion, but former Fed Vice Chairman Duncan himself wrote the paper and criticized it.

In September, CoffeePods contributed where the Fed's journey to find the stars got lost. It outlined past Jackson Hole speeches, explaining where the Fed could be wrong.

More than 40 days have passed since the publication of the article, and there is a lot of excitement within the Fed about the location of stars. The content and timing of the article were very appropriate.

It's my writing, but it's well worth the time to read. I haven't found any research reports or blog posts on the market that explain the process of Fed policy deviations so well. I couldn't find it, so I wrote...

And in our offline meeting next Wednesday evening, we're going to go into detail about the gradual decline in long-term interest rates over the last 40 years (1982 to 2020). And we're going to talk about whether the gravitational pull that has brought down interest rates over the last 40 years is really changing, and how it's reflected in prices on the investment side... and we're going to talk about things like that.