2min chapter

Forward Guidance cover image

Mike Green: Recession Approaches As Housing & Car Markets Weaken

Forward Guidance

CHAPTER

The Federal Reserve Can't Really Win, Whatever It Does, Right?

As recently as 2013, when we had long, you know, been in an extended period of low and negative real interest rates, we hadn't seen that expansion at all. So the data doesn't really support what people are saying on that, but they're certainly welcome to their interpretation. But ironically, actually, if you want to really think through these dynamics, under a put call parity model, it's not just that you're discounting the future stream of cash flows. You also have to discount the value of the option against that.

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