If I ask you to “predict” what your plans are for the afternoon, the probability that you would “get it right” is quite high. After all you are predicting WHAT YOU WILL DO!
Now let us look at the Federal Reserve. These are supposed to be brilliant economists (or if they themselves are not, they employ brilliant economists). We have been awaiting “normalization” and “rate hikes.” The following graph shows their “predictions” and “actuality.”
[Source: Federal Repression System, by John Mauldin]
All the colorful rising lines are what the Federal Reserve predicted rates would be. You need to look along the bottom of the graph to see the ACTUAL effective Fed Funds rate!
[From the Mauldin article] (The graph) reveals an interesting dichotomy. The Fed determines what interest rates will be. So what they are doing is predicting what their own decisions will be. And while Federal Reserve economists have basically gone “0-fer” with all their predictions for the growth of the economy – a predictive task that is orders of magnitude more difficult than predicting what they will decide on interest rates – they have also gone 0 for 11 quarters with their predictions for their own monetary policy!
Seriously! Washington and the Fed need massive reform – and Americas are about to elect the status quo!