This is a must-read if you want to understand the context of the recent tightening.

So, does the Fed now have license to tighten until the last dog dies? I think not, even as I also think the Fed would like we the markets to presume such a scenario. Why? What the Fed wants most right now, in my view, is a bear market in intermediate and long-term bond prices, so as to undermine the on-going bull market in property prices. Mr. Greenspan hasn’t put it exactly that way, of course, waxing on and on about his conundrum, the putative "failure" of intermediate and long-dated bond prices to fall, lifting their yields, as the Fed has hiked the Fed funds rate 250 basis points.

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In fact, I submit that Mr. Greenspan’s "technically" upped the ante against himself today, when he officially declared that policy is becoming “increasingly driven by asset price changes.” Let me walk you through the logic of why, using the economic thesis of "time inconsistency," which won the Nobel Price in Economics for Professors Kydland and Prescott.

Their elegant, but simple thesis was that expectations about future policy reversals can undermine the power of current policy. My favorite real world example is that of a parent who says to a teenager: get a job this summer and save some money, or you will be walking rather than me driving you to school in the fall.