When Readers Speak

“The Fed Is Trapped and Everyone Knows It”
Fundamentally Unknowable
An Upstairs/Downstairs Reality
Home Again, DC, and Opportunities

Today, we have a different kind of letter. I’ve been in California for some rather innovative and hopefully life/health span-extending medical treatment. I’m fine, but it has been a bit tiring. So this week, I’m handing the keyboard to you, my intrepid and smart readers.

This is easier than it used to be, thanks to our new online community platform, where you can follow all our Mauldin Economics publications, leave comments, and interact directly with our team as well as other readers. It’s been quite a hit, and I think that’s because it’s so simple. You can access it through your computer or as a mobile device app. Learn more here.

I’ve always said our readers are the smartest group of investors I know. Your talent is just amazing, and I’m thrilled we have this new way to unleash it. Below, I’m sharing just a few of the many dozens of replies to these letters and adding some comments. You can read the rest and even reply to the authors on our app. Check it out.

“The Fed Is Trapped and Everyone Knows It”

We’ll start with comments on my February 10 letter, Desperately Seeking Neutral. I talked about the Federal Reserve’s endless pursuit of the undefinable “neutral” interest rate, often using models with questionable assumptions.

John’s explanation about a neutral interest rate as a sensible abstract concept, and the fact that there is no way to produce a scientifically based value for it is enlightening. In addition to the Fed’s consideration of attempting to move interest rates above or below the fictional neutral rate for business activity, there needs to be explicit consideration of any administration’s level of inflation of the money supply by legislating “expensive” programs, such as those supporting adoption of green energy.