Last year when the Fed raised short term interest rates from a range between 0 and 25 basis points to a range between 25 and 50 basis points, I predicted (based on the information equilibrium [IE] model) that the monetary base (the path labeled C in the graph below) would start to fall (I had no idea how fast) relative to no change (the path labeled
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The effect of a December 2016 Fed interest…
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Last year when the Fed raised short term interest rates from a range between 0 and 25 basis points to a range between 25 and 50 basis points, I predicted (based on the information equilibrium [IE] model) that the monetary base (the path labeled C in the graph below) would start to fall (I had no idea how fast) relative to no change (the path labeled