Judging from the Wall Street–where the DOW goes green in the past 2 trading days (10/21 and 10/24, at 9:22am) can be seen as the verdict. For whatever reason, it seems that the FED yields, or realizes the less than perfect decision that it has made in the past several weeks was not going too well. That reflects the danger of basically relied on economic mathematical simulation model without further thinking the repercussions of a policy change. The model has been developed under certain past circumstances, but fail to accommodate the dynamics that are happening in the global market, as well as in the domestic market–such as the shrinkage of the water level in the Mississippi river due to climate change. It seems simple–but think what is going to happen if the grains transportation system through the river is disrupted? Surely, it will affect the bread retail prices at the stores, or it affects the feeds used by chicken, beef or hog operators through out the nation in the input market. Hopefully in the FED’s future model, it will add the climate change equation, in addition to oil and other macro economic equations. However, the residual term magnitude will never go to zero–it does not matter how small the epsilon is.

What happens in the (stock) market can be used as a proxy of FED’s future policy on interest rate. The market has anticipated that the FED will (or has) push (pushed) the breaks, at least for now. These results can also be used to predict the midterm outcomes, days before the polls closed.