Simulation & Stimulation

(1) Takeaways from Yellen’s Jackson Hole speech. (2) Yellen joins the chorus of hikers. (3) Will “fan chart” replace “dot plot?” (4) In Yellen’s ideal world, federal funds rate would rise to 3%. (5) Basic rate math: 1+2=3. (6) Fed starting to think about tools that will be needed during next recession. (7) The neutral real federal funds rate is unreal. (8) “We don’t know” is Fischer’s forward guidance. (9) Other explanations for secular stagnation and low real rates. (10) Fed simulates economy with econometric model and concludes that all will be well when stimulus is needed during next recession. (11) No mention of negative rates or helicopter money, yet. (12) “Hell or High Water” (+ +).