As we have hammered away at for years, "the math doesn't work", and it appears The Fed just admitted it.
In a stunning admission that i) US economic potential is lower than consensus assumes and ii) that the Fed is finally considering the gargantuan US debt load in its interest rate calculations, moments ago the Fed's Kaplan said something very surprising:
Authored by Mike Shedlock via MishTalk.com,
The amount of sheer nonsense written about inflation expectations is staggering.
Let’s take a look at some recent articles before making a mockery of them with a single picture.
Expectations Problem
On July 17, 2017, Rich Miller writing for Bloomberg proclaimed The Fed Has an Inflation Expectations Problem.
With crude production rebounding back to pre-Harvey levels, and refinery demand coming back on-line, WTI has trod water around $50 all week. The US oil rig count dropped for the 6th straight week (down 5 to 744), back at its lowest level since early June.
Authored by Steven Vannelli via Knowledge Leaders Capital blog,
Earlier this week, the Federal Reserve officially signaled the beginning of its balance sheet run-off. At this point, that’s old news. But, yesterday, the Fed released the Z.1 Flow of Funds, which adds to the intrigue of the balance sheet run-off. Why?
The tech scare, which hit earlier this summer, is long forgotten and clearly over because according to the latest EPFR data compiled by Bank of America, the past week saw the second largest week of inflows to tech on record ($1.0bn) and the largest week of inflows was late Jan'17.