In particular what concerns me are the following excerpts:
One question, for example, is whether to make crisis-fighting policies a part of the routine toolkit. Another is whether to try to prepare the public to accept higher inflation from time to time.
In doing so, the central bank went beyond fine-tuning its language or adjusting to changing conditions. Interviews with officials as well as analysis of Fed minutes and policymakers' public statements suggest the emergence of a long-elusive consensus that interest rates would likely never return to pre-crisis levels, and that once established relationships, such as inflation rising when unemployment fell, no longer worked.
With half the portfolio's yield beholden to one bank that looks more and more to have its rates politically informed, with a posture of low-interest rates far into the future, how viable is the barbell allocation of STT/LTT? Aren't we running a greater risk of negative real-returns in the coming years? Are markets now structured in such a way that investors are compelled to bear more risk to chase break-even yield?But to veteran Fed watchers, the bar is now higher. The January statement, JP Morgan analyst Michael Feroli wrote recently, showed the Fed "subtly but profoundly evolving" to a new view of the world where a variety of forces have changed the way inflation and interest rates work, and have now changed how the central bank responds.
I read Mises articles saying this will lead to a monetary crisis. Maybe, but I don't know how that works with a fiat currency, assuming what follows is a deflationary spiral. What I also don't know is the history of the Fed's actual reactions to market conditions - did they always look this compromised at one time or another?
Does the HBPP now exist in a world where the fundamental mechanical assumptions which underpin its performance no longer apply? ZIRP/QE was ongoing for 10 years, but I can't find detailed analysis of its effect in regards to HBPP.