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> If there is a subtext intended, it seems to be that the Fed didn't adhere to its previous assertions about how fast interest rates would rise This is extreme

by fwlr 4y ago

> If there is a subtext intended, it seems to be that the Fed didn't adhere to its previous assertions about how fast interest rates would rise This is extremely perceptive! I do feel that way, and you know what? I didn’t fully realize that I did until you pointed it out. Yeah, two major activities of the Federal Reserve are “saying what it will do with interest rates in the next few years” and “changing interest rates”, it’s really bizarre that they can’t get these two to even remotely line up. I know they have to respond to fluctuating macroeconomic situations, but is that really enough to almost completely disconnect “their predictions of their actions” from “their actions”? It feels like a bit like a fig leaf, it kinda doesn’t pass a smell check.

rstuart4133 4y ago
Thanks for your contributions. I've been pondering the same thing. You've saved me a lot of effort. > Yeah, two major activities of the Federal Reserve are “saying what it will do with interest rates in the next few years” and “changing interest rates”, it’s really bizarre that they can’t get these two to even remotely line up. True, but it wasn't just the Federal Reserve. I live in Australia. It was exactly the same story here: https://www.afr.com/markets/equity-markets/why-the-rba-and-everyone-else-got-inflation-so-wrong-20220908-p5bgf2 https://www.afr.com/markets/equity-markets/why-the-rba-and-e... What I didn't realise is the Reserve Banks also operate in "hard mode" when it comes to economic predictions, just as the VC's did in this bank run: https://www.abc.net.au/news/2023-03-12/imf-how-we-missed-the-inflation-surge/102075588 https://www.abc.net.au/news/2023-03-12/imf-how-we-missed-the... So you can put this down to SVB operated on the best available advice, butt the best available advice was wrong. Well that, and their customer base was a bunch of lemmings.

by fwlr 4y ago

rstuart4133 4y ago

Thanks for your contributions. I've been pondering the same thing. You've saved me a lot of effort. > Yeah, two major activities of the Federal Reserve are “saying what it will do with interest rates in the next few years” and “changing interest rates”, it’s really bizarre that they can’t get these two to even remotely line up. True, but it wasn't just the Federal Reserve. I live in Australia. It was exactly the same story here: https://www.afr.com/markets/equity-markets/why-the-rba-and-everyone-else-got-inflation-so-wrong-20220908-p5bgf2 https://www.afr.com/markets/equity-markets/why-the-rba-and-e... What I didn't realise is the Reserve Banks also operate in "hard mode" when it comes to economic predictions, just as the VC's did in this bank run: https://www.abc.net.au/news/2023-03-12/imf-how-we-missed-the-inflation-surge/102075588 https://www.abc.net.au/news/2023-03-12/imf-how-we-missed-the... So you can put this down to SVB operated on the best available advice, butt the best available advice was wrong. Well that, and their customer base was a bunch of lemmings.