Tuesday, November 23, 2010

Recursive Fed reaction functions...

...in the latest Fed Minutes, the Fed mentions that it has revised its forecast of economic growth in ligth of "asset market developments...reflecting heightened expectations".

This is curious considering the Fed has willfully altered the asset mix with QE2 (which, once again, has no net effect and even if it did had an effect, this would be deflationary and diametrically opposed to the Fed's desired outcomes.). Put another way, moved the target to the place they shot the arrow, and now claim success

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