Money
Fed's Neutral Rate Model Broken for 15 Years Creating Systematic Policy Errors
Forward Guidance
Passive Easing Is Fueling The Next Inflation Wave | Danny Dayan
What was said
"That model, if you look at it from their own website, this is not my chart, this is their chart, has broken for 15, 16 years at this point. You know, it broke in 2010."
Danny Dee argues the Federal Reserve's primary neutral rate model has been disconnected from economic reality since 2010, leading to systematic policy mistakes. He claims the Fed estimates neutral at 3% when it's actually around 4.5%, causing them to consistently overestimate unemployment and underestimate inflation and growth.
Verification status
Attributed speaker claim
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Source and context
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- Programme
- Forward Guidance
- Episode
- Passive Easing Is Fueling The Next Inflation Wave | Danny Dayan
- Clip time
- 37:21
- Original source
- Watch the source segment →
From this episode
Forward Guidance