woensdag 25 december 2019

Taylor Rule Rate Vs. Gold Price

John Taylor, a Stanford University economist once considered to lead the Federal Reserve, developed a formula to calculate where the Fed funds rate should hypothetically be according to inflation rates, strength of the labor market, and potential output of the economy. Inflation became a problem during all times when the Taylor Rule Rate became higher than the Fed funds rate.

The chart below shows the gold price against the [Taylor Rule Rate - Fed Funds Rate]. Whenever the blue line is positive, gold will do well.


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