Yellen says the Fed will be less predictable

Yahoo Finance ^ | February 25, 2015 | Joanna Campione

[citizen]

...even though the Fed has nothing to do with fiscal policy.

I don't understand your point.
To me, setting interest rates, targeting inflation or the lack of it, projecting growth or the lack of it, the whole discount window operation, buying our bonds, QE anything....all bears on fiscal policy, if not actually "setting it."

But perhaps you were being facetious? :)

[1010RD]

That’s true, but if interest rates were allowed to float then the Leviathan couldn’t play its games. These low interest rates are part of the direct cause of the continuing malaise.

[expat_panama]

setting interest rates, targeting inflation or the lack of it, projecting growth or the lack of it, the whole discount window operation, buying our bonds, QE anything....all bears on fiscal policy

This is the key point, and here's how Investopedia separates the two:

Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply.

Monetary policy is one of the ways that the U.S. government attempts to control the economy. If the money supply grows too fast, the rate of inflation will increase; if the growth of the money supply is slowed too much, then economic growth may also slow.

imho monetary policy for the past half dozen years has been pretty good because there's been hardly any inflation or (worse yet) deflation.  At the other extreme federal tax'n'spending has made a royal mess of things.  mho

[citizen]

Ah, I see the difference. Though one bears on the other.
Thanks!

[expat_panama]

low interest rates are part of the direct cause of the continuing malaise

In the past there've been low interest rates w/ tax hikes and other times low rates with tax cuts.  Same goes for high rates.   Me and the folks I work with get hurt by taxes, not interest rates, although as for the choice between high and low rates we prefer the low ones.

[palmer]

Me and the folks I work with get hurt by taxes, not interest rates, although as for the choice between high and low rates we prefer the low ones.

Depends on your work. The low rate economies are lubricated and there's plenty of trickle down from the big banks and other beneficiaries of the low rates. But in other lines of work, the ability to raise long term capital is crippled. We're not talking about marketing some securities that can be easiy liquidated or preferred by crowds. Rather, it is the long term business that tie up capital that get hurt. Nobody wants to get paid back in far future dollars since the rates that would properly price those dollars have been manipulated downwards.

[expat_panama]

one bears on the other.

If it sounds sloppy then you probably got a good handle on it.  The Fed was supposedly set up long ago just to handle inflation by tweaking interest rates, but officially they're now supposed to worry about employment too becuase in the '70's congress decided that the Fed could do everything.  Funny thing is that the same law that said the Fed was supposed to give everyone a job also said that the Fed would also make sure we'd never have a trade deficit.

Nobody wants to mention that part...

[expat_panama]

between high and low rates we prefer the low ones

low rate economies...   ... the ability to raise long term capital is crippled.

Raising capital's easier when rates are low --not only is there a lower cost of borrowing but investors have additional motivation to buy stocks over bonds.  Lots of people say the Fed made interest rates low so as to get the economy running better but it really ain't so.  They lowered 'em because of the deflation we had and the minute the Fed's sure prices are going up again we'll see rate hikes, with or without econ growth.