There really is nothing to worry about when it comes to the Fed, unless you think things are not any different this time around. History teaches that the Fed breaks stuff, that it must break stuff. That is discussed below. Despite all the discussion that occurs below, keep this in mind. The cost of raw materials is soaring. That can be an end of cycle warning. While not all commodities are soaring, some are, like wood pulp (chart below), and nitrogen.

In watching the Fed, Professor Tim Duy and Dr. Scott Sumner seem to be in agreement regarding monetary policy. No general inflation gives the Fed breathing room according to the two economists.

Duy wrote in Bloomberg:

The minutes of the September Federal Open Market Committee meeting confirmed speculation that Federal Reserve policy makers are leaning toward pushing interest rates above levels considered to be neutral, which neither stimulate nor restrain the economy. That sounds ominous, but it is important not to worry too much yet over the prospect of restrictive policy.

Fed forecasts are a projection, not a promise. If the economy stumbles, odds are the Fed will react appropriately and ease policy. There, however, is an important exception to this rule. If inflation looks to be stirring, the Fed will likely tighten down the clamps. That’s when the real worrying should start, but the Fed does not appear near that point yet.

Sumner shared this crucial insight on his blog, the Money Illusion:

The Fed influences the economy in many ways.  One method is by adjusting the policy interest rate (fed funds or IOR).  A far more important way is by affecting the natural rate of interest.  Thus the Fed sharply reduced the natural rate in 2008, while only gradually reducing the policy rate.  To the average economist (and to Trump) the Fed was “easing” monetary policy.  In fact, because the natural rate was falling even faster than the policy rate, they were tightening policy.

and:

A tight money  policy (such as late 2007 through 2008) will reduce NGDP growth expectations, and this reduces the natural rate of interest. 

We know that the Fed says we are close to the natural rate of interest, but Fed speech-making indicates a push past that natural or neutral rate, into tightening. We are not there, so don't worry, as Professor Duy posits. And Dr. Sumner is also saying the same thing, that raising rates is not yet a tightening.

The Fed historically has pushed rates to exceed the neutral rate in order to bring the neutral rate down. But now others are advocating another path.

Conor Sen wrote a fascinating and likely definitive article at Bloomberg awhile back. This really exposes Fed thinking:

Halting interest rate increases at the Fed’s estimate of neutral would represent a change from how the Fed has conducted policies in the last two cycles, and would shift economic risks from workers to companies.

Say what? The Fed breaks things to help companies? Well, we already know this.

Mr Sen goes on:

Pausing at neutral would be good news for workers but would shift risks elsewhere in the economy. In the past, with the Fed willing to let real interest rates become strongly positive, companies had the luxury of knowing that the Fed would keep inflation contained, and would have been wise to wait for the Fed to create a recession rather than investing too much at the peak of an economic cycle.

The business cycle, and the need to start over, is why the Fed breaks stuff. Companies refuse to invest, believing that the cycle is nearing an end. That makes sense. So the Fed breaks the cycle. As for now, the companies would have to trust that the Fed would keep inflation contained for some time in order to invest without first experiencing a downturn.

Mr. Sen is clear when he says that a company seeing strong economy based inflation increase, could see extra orders and yet fear purchasing raw materials at higher inflated prices. Some companies, like Caterpillar (CAT), are simply waiting, with no plans for additional factories regardless of extra orders.

Therefore, the Fed breaks stuff and pushes the rate hikes past (above) the neutral or natural or R-Star rate, in order to push the natural rate down and NGDP down. And then inflation would decrease as well, eventually. Sometimes, in a credit crisis, they are behind the curve on the way down as Sumner posited above. Sumner would say they are pretty much right on on the way up so far.

Of course, in the new normal, we really don't have that much inflation, although it could show up. How could the Fed convince companies to invest while they really want to wait for a crash? How can the Fed back off as Duy says they will, if there is no inflation, when companies are looking to put off investment?

This scenario of letting inflation run a little would be great for workers, and there is nothing wrong with that. But once tax cuts wear off, there isn't much to push companies to invest. Consumer spending appears to be solid by just looking at dollars spent, bouncing off a spring lull, but the second chart below shows that purchasing power is not good at all:

Perhaps companies are content for now. High plant construction costs are a late cycle deterrent:

How all this could overwhelm manufacturers in the near future is difficult to measure. Capacity utilization is still under 80 percent. There could be room for growth in capacity without new plants, unless the data is flawed. If there was significant plant construction, the chart above would show an even greater rise in the producer index.

On the other hand, Foreign Direct Investment (FDI) in the USA is slowing. So it just isn't plant and equipment costs. It is a direct slowing of investment into that realm. That could be another sign of end of cycle pressures.

Without inflation, it appears that the Fed may not break stuff, but we have many companies overleveraged. We have many companies, called zombie companies. We have large players like Sears failing. Retail bankruptcies are hitting all time highs. We are a consumer driven economy so this can't be a good sign. And retail sales growth was subdued in September, 2018:

...ongoing rate hikes from the Federal Reserve should significantly dampen the momentum over time, given the elevated level of U.S. consumer debt. In addition, the latest round of tariffs imposed by the Trump administration on USD 200 billion of Chinese imports will likely weigh on private spending dynamics in the near- to medium-term—particularly as the tariff rate is set to increase from 10% to 25% on 1 January 2019.

As Marshall Auerback warns:

On the face of it, the successful conclusion of the new and improved NAFTA 2.0 (henceforth rechristened as the United States-Mexico-Canada Agreement, or USMCA for short) appears to have halted the political tide toward protectionism. Yet paradoxically, it might actually do the opposite: USMCA is designed to give greater weight to regional trade relationships at the expense of global ones, especially the colossal supply chain that has emanated from China. As trade becomes increasingly regionalized, as global supply chains are disrupted, that generally raises the cost of everything, for everyone.

What Auerback is saying is that now the supply chains in China are so large, we can't go back. Yes, China incubated these supply chains on the backs of American economic decay, covered over, as he says, by financial bubbles. But we can't isolate ourselves to China's success or we will lose out in prosperity once again! 

And he says that China's growth deflated prices in America, and a reverse of that will cost us dearly. This will cost consumers, and it may indeed play havoc with the new normal, which is derivative based. And this is what Auerback says, inflation will do to the business world in a worst case scenario:

At some point in the future, assuming the Fed raising its rates, real rates will exceed nominal rates and businesses won’t be able to increase prices to offset higher borrowing costs (and will face corresponding consumer resistance to higher prices). At that stage, profit margins will be squeezed, demand will slow, and all bets are off.

This puts the entire stock market at risk, even more so stocks related to China. Consider your positions in Apple, Starbucks and other companies tied to trade with China. 

He warns that consumers, just now deriving the fruits of higher wages late into this recovery, will be financially shocked by a change from disinflation to inflation that surely is coming because of the trade war.