Tuesday, August 13, 2013

A Serious Plan to Generate 0.2% Annual Inflation

Click to enlarge.

Set the Fed Funds rate at 0% and then patiently wait for the next recession! Oh, and don't forget to mention the word "taper" often!


I'm either half-joking or half-serious. Even I don't know!

Seriously, I don't know. I don't think the Japanese knew. Come to think of it, I doubt Bernanke does either. Does anyone know? What happened the last time the Fed Funds rate was set at 0% for more than 4 years? Surely someone must know.

The plan to get to 0.2% inflation might work, right? That's what the formula in the chart says. Not saying it will work. Not saying it won't. Just saying it might.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart


Stagflationary Mark said...

If you were to go back in time 5 years and ask what would happen if the Fed Funds rate was cranked down to 0% and kept there until today, what do you think the responses would have been?

This? I'm using a quarterly average to smooth it out a bit.

I'm starting to lean more deflationary again, and I think I might be there by Christmas. Hard to say. It might depend on how much retailers panic in the back to school season.

July retail sales a 'mixed bag,' up slightly on back-to-school buying

Nothing says back-to-school buying like food and gasoline. Yum, yum, yum!


dearieme said...

The plan is to put off the evil day and hope that something turns up. As people like to say "delay and pray".

Stagflationary Mark said...


The "delay and pray" strategy also worked when playing chess, but then some fool invented one of these. ;)

mab said...

Set the Fed Funds rate at 0% and then patiently wait

Say what! Patiently wait rather than endlessly manipulate? Where's the fun in that?

Besides, what would the pundits, experts and prognosticators have to talk about if they couldn't keep guessing about the Fed's next guesses?

Totally unrelated......

Ronco makes a good product, but imo, there's nothing quite like George Foreman's "set and forget" oven:


Stagflationary Mark said...


As seen in today's stock market action, even though our monetary policy is only half-baked, it can still burn "sure thing" investors! ;)