Broken Fed

Thanks to the Fed not raising interest rates this week, we can keep this party going for a few more weeks/months. We keep hearing in some small corners of the media that the Fed’s model is broken. But what does that really mean? I came across this video recently and thought it was a gem and addresses this point. Its a long video, and for the most part, its a very dry subject and theoretical (I skipped most of it myself). But one section from Dr. Jason Cummins, who is an ex-Fed member, really stood out and was very refreshing to hear. He turns it into more of a rant, but makes some very good points of how the Fed is working with a broken model and needs to be addressed. I invite you to watch this video (about 25 minutes long) that we can all understand and relate to .

Bio: Jason Cummins joined Brevan Howard in 2004 and is the Head of Research and Chief US Economist. Jason is also a member of the US Treasury Borrowing Advisory Committee, a government appointed panel of external experts that has served the country for almost half a century. Formerly, Jason was a Senior Economist at the Federal Reserve Board, where he ran the Macro Forecasting team. Jason began his career in 1995 as an Assistant Professor of Economics at New York University and also taught at Harvard University. Jason earned a Ph.D. in Economics from Columbia University and graduated with high honours from Swarthmore College.


4 thoughts on “Broken Fed

  1. The fed talks a big game but their hands are tied. Also who knows, despite what Yellen says there may be some political aspects of decision not to raise rates. Kick the potato down the road for the next president to handle…

    • Thats right, DivTen. The Fed has painted itself in a corner and damned if they did something and damned if they didnt. They are kidding themselves if they think they can architect an outcome the way they want it to be….the more time passes, the more it comes down picking which side you want to make an enemy out of. Complete madness!


  2. The Fed of the USA has turned into the Central Bank of the world, who can’t take a step in any direction without potentially bad consequences. No-one wants to be the one that potentially sets off another global crash – yet every quarter the situation is a little worse and unsustainable. Something has to change, and other than the Fed I can’t see what will cause it.


    • The Fed lost a lot of cred when they attributed to lack of action due to global headwinds a few months ago — they dont seem to understand their own mandate. Trying to prop up global markets is not the Fed’s job!


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