Home » Hot off the Press » No, James, I’m Not
I am NOT assuming that the Fed can do this perfectly. And I am NOT suggesting that it make a regular habit of this kind of thing. I am suggesting that, at certain times, different groups look for different signals from the Fed, and that psychology matters, and that what they “think …might be the actual consquences of the Fed’s actions” can become self-fulfilling prophecies. THEREFORE, if there really is a need for some relief for homeowners and home-buyers, the Fed could, just once, provide just a tiny bit of that relief while assuring everybody through its accompanying statement — a statement ALWAYS widely read — that it is a one-time deal, rather than a start of another 17 moves in the same direction.
Better than all of that, though, would be a change in the overall approach of the Fed, away from interest rate targeting and towards a dollar-price targeting system that would really provide stability. On that, I assume most of us here could agree, at least in theory, n’est-ce pas?
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