Fed's in a loop, says Dudley

https://www.zerohedge.com/news/2019-08-27/bill-dudley-shocker-ex-ny-fed-president-urges-feds-powell-prevent-trump-re-election

The Fed is easing its target rate before it finished sell portfolio. Short path out, long path in makes a loop. The curve is not responding, too sluggish, no liquidity because Fed is not circulating those bonds.

So, it is back out of the loop and try again. The Fed has to sell some bonds. But if the ten year drifts back up to 3% yield, that is no go for government budgets. The Fed needs to keep the ten year yields around 2.3% for a long term deflation. I think the ten year rate has to cover a 1% zero bound variation over the total double entry spectra, and we still get or 1.8% growth. So we are on the down half of a long term zero inflation adjustment.

We are looking at a half point deflation indefinitely. But we cannot expect a half point deflation, don't think we are capable of that. That is the contradiction, and it will fit the shan soon.