Do Central Banks Really Control Interest Rates?

Everyone believes that the modern central bank is an omnipotent economic force. What if it isn’t? What if it can’t even do the most basic of things that it says it can – control interest rates?

Central Banks CAN’T Forecast Better, So Why Trust Them?

You cannot solve current problems with current thinking. Current problems are the result of current thinking- Albert Einstein (paraphrased)

A quick and easy way to see if central banks really have more insight into the future is by looking at their forecasting record.

Since inflation tends to be their mandate and main focus, let’s take a look at how their forecasts panned out.

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The Fed Is NOT Omnipotent. The Dollar Proves It

You cannot solve current problems with current thinking. Current problems are the result of current thinking- Albert Einstein (paraphrased)

What are the implications of central banks not being able to control interest rates, like almost everyone thinks they do?

Seeing central banks as just another participant in the financial system, albeit an influential one, leads to some interesting insights, especially with regards to the USD.

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QE Is Harmful. Would Doing Nothing Be Better For Markets?

QE is destabilizing the financial system by removing precious repo collateral

QE doesn’t work, at least not in the sense of fulfilling its objectives as a policy choice.

These would be, broadly, higher economic growth, higher employment, and higher inflation (the good kind).

In short, QE is supposed to be a monetary bazooka that does magical things. Instead, it’s been more magical thinking, not doing much good, while creating serious unintended consequences and second order effects.

Would it be better for central banks to just not do anything?

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