Rates & FOMC
A Rule for the Quantity of Money
Inflation is a monetary phenomenon, and a precommitted rule beats meeting-by-meeting discretion. The figures are the feeds. The preference is this paper’s.
A rule would have told a reader, before a meeting, how the bounds on the cost of money would move if the price level did a named thing. A discretionary committee does not owe that sentence. The tradeoff is real. A rule can miss a shock it did not name, and then it binds. Discretion can answer the shock, and then nobody outside the room knew the answer in advance. This paper takes the rule.
The preference is not a Federal Reserve finding. It does not depend on which party holds the presidency or the chair. The figures are the target bounds, the price index as an index, the balance-sheet total in the unit the feed named, and bank credit in the unit the feed named. None of those prints is turned into a rate of change here.
FRED prints a federal-funds target upper limit of 4.00% and a lower limit of 3.75%, as of Oct 5, 2026.
The consumer price index is 334.131 as of Aug 1, 2026. The feed names the unit Index 1982-1984=100. That figure is the index. This paper does not turn it into an inflation rate.
Total assets on the weekly statement are 6,743,031 as of Sep 30, 2026. The feed’s unit is Millions of U.S. Dollars. The number is not rescaled.
Bank credit at commercial banks is 19,862.5105 as of Sep 23, 2026. The feed’s unit is Billions of U.S. Dollars. The number is not rescaled.
A rule would have named, in advance, how those bounds move. A meeting can answer a shock the rule did not name, and then the public learns the answer afterward. This paper takes the rule. It does not pretend the Federal Reserve has adopted that preference.