Four flavors of asymmetric info in policy:
1. Arrogant Trader Fed: "I know where markets AND the economy are headed" — classic overconfidence
2. Policy Insider: "I know our next move, you don't" — maybe true in the moment, probably arrogant to assume markets can't front-run
3. Manipulator Fed: "Our actions are so big you HAVE to follow us" — worked in April 2020, but beyond Day 1 it's arrogant. Markets are massive, policy impact fades fast
4. Panic Fed: "We're defending against something bad you don't see yet" — most plausible, least arrogant… but still assumes markets can't price probabilities
Bottom line: asymmetric info exists, but betting on it as durable edge? That's where arrogance lives. Markets adapt faster than policymakers think.
1. Arrogant Trader Fed: "I know where markets AND the economy are headed" — classic overconfidence
2. Policy Insider: "I know our next move, you don't" — maybe true in the moment, probably arrogant to assume markets can't front-run
3. Manipulator Fed: "Our actions are so big you HAVE to follow us" — worked in April 2020, but beyond Day 1 it's arrogant. Markets are massive, policy impact fades fast
4. Panic Fed: "We're defending against something bad you don't see yet" — most plausible, least arrogant… but still assumes markets can't price probabilities
Bottom line: asymmetric info exists, but betting on it as durable edge? That's where arrogance lives. Markets adapt faster than policymakers think.