So much for Helicopter Ben swooping in and enacting more quantitative easing. The FOMC statement tells us nothing we don't already know. Nor does the Fed have any more magic bullets. The economy sucks, we have a jobs crisis and about the only thing new is a mid-2013 end date for keeping interest rates extraordinarily low:
The Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
There were three dissenters, out of 10, on the decision to guarantee a low federal funds for a two year time period, preferring no defined time window.
What one can gleam from this is the Federal Reserve now believes this economic malaise will continue for two more years. We've known that but now it's official, the Fed is acknowledging the long, protracted economic disaster which is the new normal of America.
The good news is the Fed at least acknowledges our terrible economy, although their previous GDP, unemployment and growth projections were much happy talk.
The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, downside risks to the economic outlook have increased. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further.
Seems we're all Japanese now, heading into a protracted, long lost decade.
Guess what dysfunctional government, Congress, Obama, it's your ball to do something now. That's quite frightening since many in our government couldn't pass 4th grade math when it comes to practical, effective, stimulative policies.
QE3 Dreamin' to the point it's insane
Supposedly Goldman Sachs to others are "reading in-between the lines" on the FOMC statement and are believing the Fed will do QE3. This is because there were 3 dissents and also the "reserve" for "additional actions".
I don't quite buy it because the Fed clearly says they are watching inflation. If things went deflationary I can see it, but I think Wall Street wants this so badly so they can profit, they are seeing things.
Greenspan loved cryptic guessing but Bernanke, I've felt is much more straight forward.
Traders man, the stuff they think and of course that changes in a nano second, as the indexes move up and down.
more QE3 potential
Seems Calculated Risk agrees with me. The Fed is going to watch inflation and if there is a deflationary implication, then they might do QE3.
Traders are absolutely going nuts trying to guess on if this is going to happen.
From what I've seen on CPI, well, oil has declined and is also yo-yoing around, due to projections of a global slow down, but China as usual came roaring in a couple of days ago, with fairly high CPI, plus the Fed goes off of core inflation.
Core inflation is not in a deflationary cycle, so I just don't think they are going to do this for awhile.
I stick by my reading between the lines that the Fed punted the ball to Congress and said do something and we all know we have absolutely insane people running the government, so of course they will do things to make it all worse, such as cut discretionary spending.
Ah yes, 'core inflation'.
Among working people, including retired working people, nobody believes any government inflation figures! I'm pretty sure that even MSM no longer bothers to quote them. That's probably the most prominent effect of the 'core inflation' thing -- to undermine confidence of the American people in the U.S. government and in all U.S. government statistics.
'Core inflation' is like any net -- the question is which net are we talking about and what use are we going to make of it. Of course, all cores like all nets have their uses .... but when you start reading a 'core' into the statutory purposes of the Fed or into the statutory authority of the Treasury (not to mention the constitutional authority of Congress), it gets more than a little fuzzy.
Thing is, sometimes it looks like the big dogs in Treasury and the Fed actually talk themselves into using these things as valid and sane excuses for doing whatever they consider to be politically expedient (or in the interest of important media interests and campaign contributors) rather than just as indicators among thousands of indicators.
(It's like the way that the Supreme Court can always find something somewhere to justify even their most anti-Constitution over-reaching in defiance of all common sense as well as stare decisis.)
Robert Oak for Secretary of Treasury! (Paul Craig Roberts for President!)
people do watch core inflation
But I have to agree, the measure really has some limitations and there is another one, called "research" plus there is a substitution basket which has been criticized.
That said, it is what it is and a lot of decisions are made from that number.
But in terms of regular people, buying groceries and so forth, boy, I'm not so sure. When you can have 36% yearly increase in gas and claim that core inflation increase is 2%, what's wrong with this picture?
I'm watching CNN and people are absolutely, beyond belief, clearly mathematical deficit and it's so frightening, we just have so few who even know what they are talking about, "leading" the nation.
The ones who are driving the car simply cannot drive and that includes MSM.