6 ms·

The Fed can increase its overnight rate to 20% or 200% in one meeting. There is no situation ever where inflation of the sort you're talking about can't be inst

• ethbr0 6y ago
  That's trusting an inherently conservative body to take unprecedented steps. Ultimately, it's trust. As long as the market and economic suppliers believe the Fed might do that, it wouldn't be a problem. Hence why the Fed does most of its important work through telegraphing rather than policy changes
  • bobthepanda 6y ago
    It's not totally unprecedented, it's the Volcker playbook. Granted he never hiked above 20% but that was still extremely high.
    • ethbr0 6y ago
      By the time he was confirmed as chairman in 1979, inflation was already high. https://data.bls.gov/timeseries/CUUR0000SA0?output_view=pct_12mths https://data.bls.gov/timeseries/CUUR0000SA0?output_view=pct_... (see: 1969 - 1985) The Fed had twiddled it's thumbs with half measures to let it get that way. So while not hyperinflation, I'd say it supports the Fed usually being cautious.
      • bobthepanda 6y ago
        I mean, they were cautious before the first time they ever hiked rates that high, which would make sense; very few people are going to put their neck on the line for novel policy. Now that we have pretty much direct cause and effect of what such a rate hike in the US would do, we probably wouldn't spend a decade and a half waffling on it.