Day September 20, 2007
Occam’s Rule: Sometimes the truth is so simple that even as it stares us in the face we are blind to it.
The Federal Reserve cut its Fed Funds benchmark rate by 50 bp to 4.75%, more than most analysts’ expectations. Already there have been trillions of pixels written to explain why, but none that I have seen follow the time-honored Occam or KISS principle (Keep It Simple, Stupid).
Here is a chart that explains the FRB’s move; for the non-professional there is an explanation after it.
Fifty miles north of Frankfurt lies the small German town of Solms. Turn off the main thoroughfare and you find yourself driving down tranquil suburban streets, with detached houses set back from the road, and, on a warm morning in late August, not a soul in sight. Nobody does bourgeois solidity like the Germans: you can imagine coming here for coffee and cakes with your aunt, but that would be the limit of excitement. By the time you reach Oskar-Barnack-Strasse, the town has almost petered out; just before the railway line, however, there is a clutch of industrial buildings, with a red dot on the sign outside. As far as fanfare is concerned, that’s about it. But here is the place to go, if you want to find the most beautiful mechanical objects in the world.