Checking out of Hotel ZIRP

Good friend Narayan Ramachandran sent me this ‘Hotel California’ reference to the Federal Reserve:

On a dark desert highway, cool wind in my hair
Warm smell of colitas, rising up through the air
Up ahead in the distance, I saw a shimmering light
My head grew heavy and my sight grew dim
I had to stop for the night
There she stood in the doorway;
I heard the mission bell

And I was thinking to myself,
“This could be Heaven or this could be Hell”
Then she (Janet) lit up a candle and she showed me the way
There were voices down the corridor,
I thought I heard them say…

Welcome to the Hotel California
Such a lovely place (Such a lovely place)
Such a lovely face
Plenty of (accommodative) room at the Hotel California
Any time of year (Any time of year)
You can find it here

Last thing I remember, I was
Running for the door
I had to find the passage back
To the place I was before
“Relax, ” said the night man,
“We are programmed to receive.
You can check-out any time you like,
But you can never leave! ”

Apparently, it is available through this link (behind a paywall).

It just struck me that I had used a different analogy some six months ago. I had likened the zero interest rate policy to extra-marital relationship:

Unconventional monetary policy is a bit like extra-marital relationships. Easy to get into but almost impossible to get out of. [Link]

In the meantime, as a commentator points out, the casual ease with which policy advice such as ‘QE 4’ or ‘negative interest rates’ are rolling off the keyboards of FT journalists is scary. This newspaper does not know what it is doing and is not even acknowledging the uncertainty of the consequences and the ‘wandering into the unknown’ nature of these recommendations. One Mr. Haldane used to talk about these things in 2012. No longer.


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