Comment of the Day: : Monday Smackdown: An Excellent Nobel Prize for Angus Deaton--But Was Eugene Fama Always Such a Total [Redacted]?: "Well, the strip is pretty cute...
The remark [from Fama] which really baffled me was 'the Fed claims to control all the interest rates in the economy...' When was that claim ever made? And by whom? Yeah, I know that in the models there are various linkages from the funds rate to all the others, but for all my wincing at using the models to justify policy, nobody, to my not necessarily exhaustive knowledge, with a lick of sense ever makes such an outrageous statement.
The correct statement would be 'the Fed claims that its policy actions have some influence on many other interest rates.' But that would be like saying yanking on the leash attracts Lucy's attention.
