Fed Cage Match for 2021: Inflation Target vs. Upside Risks

The video discusses the potential for a stock market rally driven by the Fed's new reaction function and its impact on inflation and economic recovery. It highlights the Fed's strategic shift towards allowing the economy to run hot, addressing inequality, and the risks of hysteresis in the supply side due to COVID-19. The discussion also covers the role of fiscal policy in supporting recovery and the potential for a Q2Q3 economic boom.

What factors are contributing to the potential continuation of the stock market rally?

How does the Federal Reserve's new reaction function differ from its traditional approach?

What are the implications of the Fed's average inflation targeting metrics on economic growth?

How might the economic recovery differ from previous recoveries according to the discussion?

What are the expected outcomes of the economic boom projected for Q2 and Q3 of next year?

Discuss the potential risks of hysteresis in the economy due to business closures.

What role does fiscal policy play in mitigating the effects of the economic downturn?