Has The Fed Completely Lost Control?

An interesting thing happened on the way to World Domination, uhh, I mean ‘Stability’ – the data quit cooperating with the Federal Reserve’s carefully devised planned.
Just recently the Federal Reserve quit updating their carefully constructed ‘Labor Market Conditions Index’ which failed to support their ongoing claims of improving employment conditions. The chart below is the last iteration before it was discontinued which showed a clear deterioration in underlying strength.
But to add insult to injury, inflationary pressures have not resurfaced as anticipated despite years of ultra-low interest rates and a flood of liquidity into the financial system. This has now led the Fed to start considering whether their cornerstone inflation model still works. As Bloomberg noted recently:
‘Federal Reserve officials are looking under the hood of their most basic inflation models and starting to ask if something is wrong.
Minutes from the July 25-26 Federal Open Market Committee meeting showed a revealing debate over why the economy isn’t producing more inflation in a time of easy financial conditions, tight labor markets and solid economic growth.

This post was published at Zero Hedge on Aug 24, 2017.