Wanted: A More Humble Fed

The Big Picture08-28 22:51

My professional focus has been identifying and trying to correct the common behavioral errors we all make as investors. One cannot help but notice how similar mistakes are made by these large ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2663097625?lang=en_US&edition=fundamental","thumbnail":"https://ritholtz.com/wp-content/uploads/2023/03/Marriner_S._Eccles_Federal_Reserve_Board_Building.jpg","is_english":true,"pubTime":"2026-08-28 22:51","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2663097625","market":"nz","top_or_hot":-1,"title":"Wanted: A More Humble Fed","media":"The Big Picture","content":"<div>\n<p>My professional focus has been identifying and trying to correct the common behavioral errors we all make as investors.\nOne cannot help but notice how similar mistakes are made by these large ...</p>\n\n<a href=\"https://ritholtz.com/2026/08/wanted-a-more-humble-fed/\">Source Link</a>\n\n</div>\n","source":"ritholtz_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Wanted: A More Humble Fed</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWanted: A More Humble Fed\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-08-28 22:51 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://ritholtz.com/2026/08/wanted-a-more-humble-fed/><strong>The Big Picture</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>My professional focus has been identifying and trying to correct the common behavioral errors we all make as investors.\nOne cannot help but notice how similar mistakes are made by these large ...</p>\n\n<a href=\"https://ritholtz.com/2026/08/wanted-a-more-humble-fed/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"TLTW","symbol_name":"iShares 20+ Year Treasury Bond Buywrite Strategy ETF","start_time":0,"source_url":"https://ritholtz.com/2026/08/wanted-a-more-humble-fed/","article_id":"2663097625","we_media_id":null,"thumbnails":["https://ritholtz.com/wp-content/uploads/2023/03/Marriner_S._Eccles_Federal_Reserve_Board_Building.jpg"],"rights":{"source":"ritholtz_highlight","url":"https://ritholtz.com/2026/08/wanted-a-more-humble-fed/","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2663097625","pubTimestamp":1787928684,"columns":[],"sourceInfo":{"source_id":"ritholtz_highlight","name":"The Big Picture"},"weMediaInfo":null,"summary":"My professional focus has been identifying and trying to correct the common behavioral errors we all make as investors.One cannot help but notice how similar mistakes are made by these large collections of people operating within large organizations. It is a side effect of observing markets and the economy: giant institutions making errors. The Federal Reserve, Treasury, Congress, corporations, and other institutions can – and too often do – engage in the same behavioral mistakes we see individuals make. After all, large institutions are essentially a collection of individuals in a hierarchical structure, acting on behalf of their owners, patrons, and constituents.The difference between individual errors and institutional ones is in magnitude. When Congress screws up, we may get a financial crisis; when the Fed makes a big mistake, unemployment may rise, or inflation may get out of control. The stakes for institutional errors are so much greater than the regular snafus each of us falls","collect":0,"end_time":0,"defaultTopTitle":"ritholtz.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"TLTW":"iShares 20+ Year Treasury Bond Buywrite Strategy ETF","TIP":"通胀债券指数ETF-iShares Barclays","FAZ":"三倍做空金融ETF-Direxion","VGSH":"美国短期国债ETF-Vanguard","MUB":"美国市政债ETF-iShares","BOND":"Pimco Total Return ETF","HYG":"债券指数ETF-iShares iBoxx高收益公司债","MYCN":"SPDR SSGA My2034 Corporate Bond ETF","VGIT":"中期国债ETF-Vanguard","XLRI":"The Real Estate Select Sector SPDR Premium Income Fund","OOQB":"One+One Bitcoin and Ether ETF","VCSH":"美国短期公司债-Vanguard","LQD":"债券指数ETF-iShares iBoxx投资级公司债","NGHT":"Nicholas Bitcoin and Treasuries AfterDark ETF","GOVT":"iShares安硕核心美国国债ETF","TLH":"iShares安硕10-20年国债ETF","DBND":"DoubleLine Opportunistic Bond ETF","GOLY":"Strategy Shares Gold Enhanced Yield ETF","PBDC":"Putnam Bdc Income ETF","ZROZ":"PIMCO 25+ Year Zero Coupon U.S","SCHO":"嘉信短期美国国债ETF","XBIL":"US Treasury 6 Month Bill ETF","VGLT":"美国长期国债ETF-Vanguard","VCIT":"美国中期公司债-Vanguard","WAMA":"WisdomTree U.S. Adaptive Moving Average Fund","USHY":"iShares Broad USD High Yield Corporate Bond ETF","BND":"债券指数ETF-Vanguard美国","GBIL":"Goldman Sachs Access Treasury 0-1 Year ETF","LIAJ":"LifeX 2053 Inflation-Protected Longevity Income ETF","BSV":"短期国债指数ETF-Vanguard","SHV":"美国短期国债ETF-iShares","AGG":"债券指数ETF-iShares Barclays综合国债","TBIL":"US Treasury 3 Month Bill ETF","UBT":"债券20+美国债-ProShares两倍做多","EDV":"美国延期国债ETF-Vanguard","MINT":"PIMCO Enhanced Short Maturity Exchange-Traded Fund","SHY":"债券指数ETF-iShares Barclays 1-3年国债","BIL":"债券指数ETF-SPDR Barclays美国1-3月国债","KBE":"银行指数ETF-SPDR KBW","TMF":"3倍做多20年期以上国债ETF-Direxion","TBT":"债券20+美国债指数ETF-ProShares两倍做空","SKRE":"TUTTLE CAPITAL DAILY 2X INVERSE REGIONAL BANKS ETF","BOXX":"ALPHA ARCHITECT 1-3 MONTH BOX ETF","JPST":"JPMorgan Ultra-Short Income ETF","CIVG":"Corgi 1-5 Year Investment Grade Corporate Bond ETF","TYO":"3倍做空7-10年期国债ETF-Direxion","IEI":"iShares Barclays 3-7 Year Trea","UUP":"美元ETF-PowerShares DB","MUNX":"AMG GW&K Muni Income ETF","UDN":"做空美元指数-PowerShares"},"translate_title":"想要：一个更谦逊的美联储","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"UUP":1.5,"GOLY":1.5,"GOVT":1.5,"GBIL":1.5,"UDN":1.5,"VCSH":1.5,"MINT":1.5,"PBDC":1.5,"BOND":1.5,"MUB":1.5,"VGSH":1.5,"KBE":1.5,"BOXX":1.5,"UBT":1.5,"SKRE":1.5,"BSV":1.5,"ZROZ":1.5,"BND":1.5,"XBIL":1.5,"IEI":1.5,"EDV":1.5,"TLH":1.5,"MUNX":1.5,"VGLT":1.5,"VCIT":1.5,"VGIT":1.5,"HYG":1.5,"TLTW":1.5,"TMF":1.5,"TBT":1.5,"SHY":1.5,"JPST":1.5,"WAMA":1.5,"LIAJ":1.5,"SHV":1.5,"CIVG":1.5,"BIL":1.5,"DBND":1.5,"AGG":1.5,"LQD":1.5,"USHY":1.5,"SCHO":1.5,"TYO":1.5,"XLRI":1.5,"TBIL":1.5,"NGHT":1.5,"TIP":1.5,"MYCN":1.5,"OOQB":1.5,"FAZ":1.5},"content_text":"My professional focus has been identifying and trying to correct the common behavioral errors we all make as investors.\nOne cannot help but notice how similar mistakes are made by these large collections of people operating within large organizations. It is a side effect of observing markets and the economy: giant institutions making errors. The Federal Reserve, Treasury, Congress, corporations, and other institutions can – and too often do – engage in the same behavioral mistakes we see individuals make. After all, large institutions are essentially a collection of individuals in a hierarchical structure, acting on behalf of their owners, patrons, and constituents.\nThe difference between individual errors and institutional ones is in magnitude. When Congress screws up, we may get a financial crisis; when the Fed makes a big mistake, unemployment may rise, or inflation may get out of control. The stakes for institutional errors are so much greater than the regular snafus each of us falls prey to.\nToday was Fed Chair Kevin Warsh’s speech at Jackson Hole. The line that stood out to me was not his discussion of AI, but rather, “The Fed should be humble and never naïve.” And yet, we see little evidence of that humility in the Fed’s 2% inflation target: “The Fed’s price-stability objective of 2 percent, as measured by the personal consumption expenditures (PCE) price index, is a firm, fixed target.”\nI have discussed this before, but rather than repeat those complaints, let’s consider the target from the perspective of institutional error and correction.\n–2% Inflation Target History: As former Fed Vice Chair Roger Ferguson explained, it is an anomaly that traces back to an offhand political remark by Finance Minister Roger Douglas on New Zealand television in March 1988, in which he said he wanted inflation brought down to “around 0 to 1 percent.”\nThus, the 0–2% band was born and codified by the Reserve Bank Act of 1989. It was adopted by Canada in 1991, the UK in 1992, Sweden, Australia, and Finland in 1993, the ECB in 1998, and, finally, by the Fed at the July 1996 FOMC meeting.1 On January 25, 2012, then Fed Chair Bernanke made it official.\n–Evidence for 2% is non-existent: Little in the academic literature suggests the 2% inflation target is anything other than an arbitrary number. 2 I will spare you the tedious exercise of reviewing a spate of papers, and instead point you to a survey of 600 economists: more than half would keep the current 2% target, citing the “credibility cost” of changing the target – not what target number is optimal. 3\nThis is classic institutional behavior: refusing to correct an error for reputational or credibility reasons is simply ego over substance.\n– The Post-Pandemic Regime: The largest U.S. pandemic in over a century was followed by the biggest post-World War II fiscal stimulus. This changed everything: It scrambled supply chains, shifted consumption habits, and upended inflation. In light of massive regime change, one might imagine the Federal Reserve would adapt to the new conditions.\nYet they have failed to do so…\n~~~\nAll good traders know that their cheapest mistake is their first one — and it should be unwound immediately. Doubling down, refusing to fix a bad trade, failing to acknowledge that conditions have changed — these are recipes for expensive failures.\nThe 2% inflation target is an accidental anomaly, a political improvisation from New Zealand circa 1988. Hardening it into monetary policy orthodoxy is a classic form of institutional error. The sooner the mistake is unwound, the better off the global economy will be.\nWe all suffer from cognitive judgment errors. It is an unavoidable aspect of the human condition. If we can better understand how and why these errors occur, we have a fighting chance to correct them. It would be enormously productive for society if our largest, most influential, and most important institutions could do the same.\nPreviously:\n2% Inflation Target is Silly (July 26, 2023)\n3% Is the New 2%… (August 3, 2026)\nWhat’s Upsetting the Bond Market? (August 25, 2026)\nFive Ways the Fed’s Deflation Playbook Could Be Improved (Businessweek, August 18, 2023)\nSource:\nIn Our Time Chairman\nBy Kevin Warsh\nFedewral Reserve, August 28, 2026\n__________\n1. Greenspan insisted the number stay secret: “If the 2 percent inflation figure gets out of this room, it is going to create more problems for us than I think any of you might anticipate.”\n2. Claude tells me the following: “No paper derives 2% as the optimal inflation rate. The number preceded the research, and the literature since points in every direction.”\nThe specific examples include The Boskin Commission, Akerlof, Dickens & Perry (1996), Blanchard, Dell’Ariccia & Mauro (IMF, 2010), Ball (2014).\n3. See “The optimal inflation target: Views from 600 economists,” by Kim Ristolainen, Andrea Ferrero, Esa Jokivuolle, Gene Ambrocio, 21 Jul 2022.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"isLaohu8Offline":false,"tenantId":"TBGLOBAL","deviceId":"web-server-community-laohu8-v3","version":"4.48.0","shortVersion":"4.48.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2663097625","isCrawlerRequest":true}