The Fed put morphs into a Fed call

boomed early in the pandemic, an internet meme captured the madness of the moment. On the left-hand side of the image, a worried man exclaims that simply creating money cannot save the economy; on the right, a man representing the Federal Reserve replies “Haha money printer go brrr” while cranking out dollars. Joseph Politano, author of , an economics newsletter, recently tweaked the meme to better fit the present situation. On the left, the worried man laments that excessive monetary tightening is increasing the risk of a recession; to the right, the Fed representative retorts “Haha money vacuum go brrr”, while hoovering up dollars.In more analytical, if less humorous, terms, another way of framing this shift is to ask whether the Fed put has become a Fed call. The concept of a Fed put dates back to the era of Alan Greenspan, a former chairman of the central bank. Starting with the stockmarket crash in 1987 and continuing for more than three decades, the Fed earned a reputation for easing policy, notably by cutting interest rates, whenever share prices plunged. To traders this looks a bit like a put option, a basic hedging tool that sets a price floor for investments.