we can observe that once in a while they suddenly decide to raise the rates quickly, each time followed by a recession. As the people who caused the Great Depression said, they "fought to stop the speculations", and succeeded, bringing the whole economy down with them.
But the graph overall looks very reminiscent to what we see in the congestion control protocols. Except that the congestion control protocols act more sensibly: increase the transmission speed slowly, but when a catastrophe is detected, drop it sharply. It would be interesting to build an economic model and use the congestion control protocols to regulate the refinancing rate in it, starting with the classic TCP. I suspect that it might be able to do a lot better than Fed's current tealeaf reading, since the Fed seems to be doing things backwards: raising the rates sharply and dropping slowly. Since the catastrophes happen when the rates get too high, it would make a lot more sense to limit the rate of increases to something like 0.25% (25bpp) per year, to creep up on that catastrophe slowly, detect it early in the making, and then react sharply.