4Q 2021 Market Insights – The Dark Side of Fed Policy

 4Q 2021 Market Insights – The Dark Side of Fed Policy

By Michael Paciotti, CFA

Last thing I remember, I was running for the door. I had to find the passage back, to the place I was before. “Relax, ” said the night man, “We are programmed to receive. You can check-out any time you like, but you can never leave! ” – Eagles, Hotel California,1976

In normal times, if there ever were such a thing, we could discuss traditional methods for central banks to achieve their dual mandate of unemployment and inflation, and then proceed into unconventional methods. At this point, who knows what is normal, conventional or unconventional. After a decade of dealing with imbalances in the financial system, what was unconventional during the great financial crisis seems normal today. It doesn’t mean it is. I’m sure somewhere we can concoct a definition of what is a normal policy approach vs. what is extreme. Everything has costs and benefits.

In the traditional world that seems like eons ago,…

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