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Tail Chasing

Posted on June 19, 2008

Deluded by low inflation expectations, the Federal Reserve and thus, world monetary policy, have been drifting farther and farther away from a neutral monetary policy stance in recent years. World monetary policy is not just behind the curve , it has actually lost sight of the curve altogether. How did we get to this stage?The first main actor in the unfolding drama is the Fed. The Fed is convinced of the silly notion that inflation expectations are a harbinger, if not the primary cause, of actual inflation.Consequently, the Fed is following the strategy to fight inflation only when infl...

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fed , federal reserve , inflation , the fed