What is normal?

“I think it is important to get started and to start normalizing policy,” St. Louis Fed President James Bullard said in an interview with The Wall Street Journal. “Even once we start to normalize, interest rates would be extraordinarily low.”

This quote was made yesterday, and I have to wonder if anyone could really read this and not fall out of their chair laughing. Seriously. “Get started and to start…”and, “once we start to normalize, interest rates would be extraordinarily low.” That is a lot of “starts” in one short comment and furthermore, how can you be “normalizing” rates but still keep them “extraordinarily low?” Doesn’t “normalizing” mean that they would raise rates? And after eight years they haven’t even started yet! If the central bank’s policies are working so well why has it taken so long to talk about starting to start to normalize extraordinarily low interest rates? By the way, what is normal? Ever since the Federal Reserve was created we seem to have lost the definition of normal interest rates as evidenced by the interest rate chart to the right. The 30-year treasury rate is setting record lows and appears to dismiss any idea of rates “normalizing,” as they hover around 2.4 percent. The 10-year treasury has moved from slightly less than 16 percent in 1981 to under 2 percent today as a direct result of the Fed’s monetary policy. What I conclude from the Fed’s monetary policy is that they have been increasingly accommodative for the past 35 years. They have stimulated us into increasingly larger economic bubbles and they are doing it right now.

Bullard’s words all by themselves are nonsensical, but a look at history makes them downright comical. So let’s get started to get started to start to normalize extraordinarily low rates! Hahaha haha hahahaha!