As the Federal Reserve has, for so long held interest rates far below where a free market would set them, the question this Friday in Jackson Hole, WY for the Fed Chairman should be one of mathematics, perhaps calculus: As the interest rate is already below zero or approaching zero, what is the limit of lowering a positive number?
Will the Central Planner of our Monetary System weave together numbers below zero but not actually a negative real interest rate? We shall see on Friday.
Bernanke has also thrown out the teaser of some new "tools" the Fed has at its disposal. A toolbox which includes inflate, deflate or print bearing something other than monetary debasement will surely be a work of magic by the Fed Chairman.
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