by Karl Denninger
Market-Ticker.org
Its really not very difficult.
The Fed should be constrained to this by Congress, which is the only entity that can. Of course they won’t want to, which means we as citizens have difficult choices to make. There are lawful and peaceful ways to enforce this, one of which would be an absolute shunning in all respects of anyone who won’t in our personal and professional lives — including family members. But that seems unlikely to be something people will do.
Nonetheless this is the only defensible formula.
Here ‘ya go:
Fed Funds (overnight money) rate = ((Federal deficit percentage of GDP, 12 month trailing) – (12mo productivity change percentage / 2)) + ~50 basis points.