Richard Fisher, the President of the Dallas Federal Reserve Bank, often provides an informative insight about the reasoning process within the Fed. Here is the key segment of a speech he gave today, taken from his conclusion:
Nonetheless, I think we are ending the year in pretty good shape. I do not agree with pundits who argue about whether we can engineer a “soft landing.” “Landing” implies stopping. I prefer to say that the Fed’s job is to provide the monetary conditions necessary to pilot our economy at a comfortable cruising altitude and speed while preventing the engine from overheating with inflation.
Readers of "A Dash" should immediately notice the emphasis of this speech. The media spin emphasized Fisher's stated concern about inflation. This is absolutely standard for any Fed official. It is the job of the Fed to control inflationary expectations and present a vigilant posture. We have repeatedly suggested that those who wish to pontificate about the Fed should take the time to learn a little about the institution from the inside. We even told readers where to start in a fun and easy way.
While Fisher did not actually use our favored term, The Glide Path, his statement and rejection of the "soft landing" language is absolutely correct.
It is definitely a distinction with a difference. Those talking about "Goldilocks" and "soft landing" have a fixation with the direction of the economy, not the objective. It is an overly negative symbol that is causing investors and rookie hedge fund managers to fixate on recession probability rather than the Fed's actual goal.
This is an error that offers an opportunity to astute investors.
