Step Up To 50 BP Al.....

The Fed is widely expected to raise the Fed Funds Rate
by 25 BP to 3.5% today. I think it would be better if they
stepped up the FFR by 50 BP to 3.75% and then add another
50 BP at the September meeting to bring the FFR up to 4.25%.

I measure the domestic purchasing power of the dollar by
whether dollars left in money market and sweep accounts
provide a positive return after adjusting for inflation
and for taxes. In my view, monetary policy should only
act to depreciate the dollar internally when the economy
is in peril. The economy seems to be doing ok, and I see
no compelling reason to drag out the restoration of
internal dollar integrity. Presently, there is no
incentive for people to save, and this is a bad thing
to allow to drag on.