"The job of the Federal Reserve, William McChesney Martin famously said, is 'to take away the punch bowl just as the party gets going,'--that is, raise interest rates just when economy reaches peak activity after a recession."
If your job is to take away the punch bowl when the party gets going, what is your job when people are sick of partying?
Promoting a new party of course. And if that doesn't work then you drop the price of admission to zero.
What do you do if free admission fails to get a new party started? Then you offer an open bar.
What if a free party with an open bar fails to get a new party started? Then you add exotic entertainment to the open bar.
What if a free party with an open bar and exotic entertainment fails to get a new party started? Then you...
At what point do you admit that people are sick of partying and no amount of hedonistic freebies is going to change their mind?
And what if the situation is more serious than lack of interest in partying? What if people are having serious financial difficulties or health problems? Do you offer free money and medical care to get the party started?
This is why the Fed is useless. It no longer has any utilitarian value. Its tools only work in an environment that produces feelings of demand for goods and services. At this point in the Republic the only demand I can sense is for a return to a simpler, less expensive and regulated way of life.
There is no point in talking about the Fed right now because their services aren't needed. But it's always fun to look at the Fed Funds Rate because it looks like a the stock of a corporation that has filed for bankruptcy.
So lets look at the Fed Funds Rate and its relation to the party...