Tuesday, October 13, 2009

Can Fed Funds Rate Ever Rise from Zero?

If you look at the chart, it doesn't seem possible. You be the judge.

(The chart is from St. Louis Fed's FRED.)

Note how smooth the line has been since the dot-com bust. Unnaturally smooth.

(Now, if you do TA on this chart, you could say "Head and shoulders pattern, with neckline around 2.5. It's below the neckline but at the support at zero. The target would be the height of the head inverted, that would take it to around -20%. Hello high inflation.)


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