I have been humbled in years past by my inability to predict the Fed's interest rate moves. As a fan of sound monetary policy, I have heretofore failed to appreciate the pro-inflationary bias that Helicopter Ben has adopted as a result of his reading of the Fed's historical response to the Great Depression. The Fed's rate-cutting in 2007 was the exact opposite of what I had anticipated from the standpoint of fulfilling the Fed's inflation-fighting mandate.
My mistake was in thinking that the Fed thinks the way I do as a Myers-Briggs INTJ "Duty Fulfiller." I've learned my lesson. Instead of imagining what I would do if I were Fed BOG Chairman, I will imagine the exact opposite of what I would do.
Today the Fed released minutes from its last meeting in August.
The Fed doesn't see its unbelievably low target rate as "particularly accomodative" to higher inflation, so they're in no hurry to raise rates even though they admit that a tightening at some future date is justified. That's the thing I don't get. Why isn't a tightening justified right now, given that the latest CPI clocked in a 5.6% year-over-year (yoy) increase?
Like I said up top, to be a better Fed predictor I now must imagine the opposite of what my sound-money prudent instinct dictates. The Fed will allow inflation to run its course for the forseeable future. Therefore, my heavy allocation to gold makes more sense than ever.
Nota bene: Anthony J. Alfidi is long IAU and GDX in anticipation of higher inflation.
My mistake was in thinking that the Fed thinks the way I do as a Myers-Briggs INTJ "Duty Fulfiller." I've learned my lesson. Instead of imagining what I would do if I were Fed BOG Chairman, I will imagine the exact opposite of what I would do.
Today the Fed released minutes from its last meeting in August.
While the members agreed the next policy move would likely be an increase in rates, most of them did not see the Fed's current monetary stance as "particularly accommodative," because households and businesses were facing tighter credit and higher borrowing costs.
The Fed doesn't see its unbelievably low target rate as "particularly accomodative" to higher inflation, so they're in no hurry to raise rates even though they admit that a tightening at some future date is justified. That's the thing I don't get. Why isn't a tightening justified right now, given that the latest CPI clocked in a 5.6% year-over-year (yoy) increase?
Like I said up top, to be a better Fed predictor I now must imagine the opposite of what my sound-money prudent instinct dictates. The Fed will allow inflation to run its course for the forseeable future. Therefore, my heavy allocation to gold makes more sense than ever.
Nota bene: Anthony J. Alfidi is long IAU and GDX in anticipation of higher inflation.
