By James Saft
(Reuters) – Like corded telephones, it is looking like our grandchildren will someday need to have the concept of rate hikes explained to them.
Seriously, someone needs to put a Federal Reserve statement with an interest rate hike into a time capsule so future civilizations can know that once upon a time monetary policy could become something known as ‘tighter’.
And as for the taper, which only recently we were expecting, that too may take quite a while.
In fact, now that we have what passes for a budget deal in Washington, we, and the Fed, can get on with the important business of counting the four top reasons not to taper.
REASONS NOT TO (EXPECT A) TAPER
1. There was never economic justification.
There probably wasn’t sufficient justification to tighten conditions back in August, before this mess transpired. Inflation was too low and job growth and labor force participation too anemic. Tightening now would require some new, positive reason, or an over-riding commitment to risk management and bubble prevention.