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Bloomberg in-car apps are sponsored by interactive brokers. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene always with Michael McKee.

Daily, we bring you insight from the best in economics, finance, investment and international relations.

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Bloomberg.com and of course on the Bloomberg.

So begin the discussion of this really important concept from Atlanta of

shadow rates. Yeah well the shadow rate that's the hypothetical negative level of

the Fed funds rate. This is where the Fed would have had to go if they

wanted to have the same impact on the yield curve, on yields, as they had from QE and from forward

guidance.

So assume they had, there was no QE there was no forward guidance but the

Fed wanted to depress yields go through the zero bound. So they would have to go through

the year zero bound and on this concept on this model they would have had to go all the

way down to minus 3% to get the same impact that they got from QE and forward guidance.

So that's the shadow rate.

So I'm at minus 3% but we're not there. The actual rate. So that

guidance guidance, right? So I'm at minus 3%, but we're not there. The actual rate is above zero.

Well, it is above zero, but what happened was that shadow rate

...