Eric the rose garden promises the inevitable FED malpractice

Because firms expect a bungled landing 

They react and that pull back fulfills it's own mass prophecy 

Here's Eric 

"So you don’t see instances where we go from
 4.2 percent to 4.7 or 5 percent 
and level off. "

"What you actually see ?"

"when we start tightening 
we end up with a recession." ,!!

The cycle then repeats and repeats 

Here's the story line 

"During periods when the unemployment rate has gotten to the low 4s, we haven’t stayed there for a real long time. "

" And that’s because we do start seeing wages picking up, and we do see prices start picking up, and we do see asset prices picking up. "

" In that environment we start to tighten and when we tighten we’re not so good at getting it exactly right."

Here's where he gets to be fun 

"The problem is the dynamics of how firms and individuals start thinking about the tightening process."

"  Those dynamics make it very hard to calibrate the monetary policy process."

"People understand tightening. But convincing them of how much you’re going to 
tighten and that you’re going to hit it exactly right "

".....given that you haven’t hit it exactly right in the past, it’s pretty tough to convince people of that. "

"Not surprisingly, they start worrying "

“Well, they’re starting to tighten, they may tighten too much. What do I do? I start pulling in in terms of my own spending.”





Or is it more like

Okay here comes the clobber bop 


" Firms start pulling in"

 “We want to be prepared in case they don’t get this quite right.” 

Those kinds of actions 
— which are very hard to predict, 
and individually everyone behaves a little differently — 

"in aggregate, cause a problem 
where we sometimes slow down the economy more than we intend."