Does Social Mood Limit the Fed's Ability to Inflate?

That is basically Prechter's theory. So, even though the Fed "could" completely devalue the currency, that's not the direction that mood is going.

Here is an outline of Philadelphia Fed president Charles Plosser's talk last week at the Cato Institute’s 31st Annual Monetary Conference, "WAS THE FED A GOOD IDEA?" [!]:

"President Charles Plosser discusses what he believes is the Federal Reserve’s essential role and proposes how this institution might be improved to better fulfill that role.
President Plosser proposes four limits on the central bank that would limit discretion and improve outcomes and accountability.

• First, limit the Fed’s monetary policy goals to a narrow mandate in which price stability is the sole, or at least the primary, objective;
• Second, limit the types of assets that the Fed can hold on its balance sheet to Treasury securities;
• Third, limit the Fed’s discretion in monetary policymaking by requiring a systematic, rule-like approach;
• And fourth, limit the boundaries of its lender-of-last-resort credit extension.

These steps would yield a more limited central bank. In doing so, they would help preserve the central bank’s independence, thereby improving the effectiveness of monetary policy, and they would make it easier for the public to hold the Fed accountable for its policy decisions."

Invert that last point: a less limited central bank threatens its own independence! Plosser says that "monetary policy has very limited ability to influence real variables, such as employment," which is something that we know but central bank flaks have long disputed.

He also says that price stability is the only goal that the central bank can ever truly hope to achieve!

Wow! That's deflationary medicine! The timing of Hugh Hendry's capitulation couldn't be any worse, it looks like.