Federal Reserve: Mumble Mumble And Say Nothing

August 02, 2012 08:35 AM

(By Karl Denninger) The market is having a temper tantrum like all good junkies who are starting to Jones....

Release Date: August 1, 2012
For immediate release
Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending has been rising at a somewhat slower pace than earlier in the year. Despite some further signs of improvement, the housing sector remains depressed. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.

"Decelerated somewhat?!" Uh, Philly and Richmond Fed indices anyone?

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually.

You mean like your projection bore out for the last few months, right?

Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook.

Yes, being bankrupt will do that.

The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.

Yes, asset deflation will do that. (Yes, that is deflation just like asset inflation is inflation.)

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and 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 late 2014.

Another two years -- at least -- eh?

One question:

You have repeatedly asserted that monetary policy can help the economy. You've made this assertion since the beginning of the crisis in 2007. Exactly how much "help" do you calculate has actually been provided and at what cost? Specifically, please identify the costs to both retirees and the so-called "trust funds" in Social Security and Medicare, both of which are now estimated to run to exhaustion ten full years prior to earlier estimates specifically due to your interest-rate policies!

The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

Yeah, right. All aboard!

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant an exceptionally low level of the federal funds rate.

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Comments (1)


8/2/2012 1:09:27 PM Global Econnomic Meltdown 2012 by PeterPalms The most important issue we can vote on this coming election season is the economy. Naturally, in order to properly cast our votes, we must be properly informed about the issues — primarily dealing with the Federal Reserve. The Federal Reserve is the central bank of the United States. It has many tasks, but essentially, it controls the supply of U.S. currency in the market. One would think an entity of this magnitude would be handled by no one but the government, however, the Federal Reserve is not owned by the government. According to FederalReserve.gov, it is an independent entity operating under the authority of Congress but not subject to it. Sounds pretty good until you dig a little deeper. Federal Reserve stock is owned by private banks, which are not allowed to sell the stock, but which pay dividends of 6 percent a year. When the government needs money, it goes to the Fed. These banks decide whether or not to lend the money to the government at interest, which it will eventually have to pay back to the non-profit Fed. The Fed may not profit, but the banks that hold stock do. Where else would the 6 percent come from? Banks profit from loans, especially when those loans aren’t paid off in time and interest begins to compound. Thus, the deeper the country gets into debt, the more money somebody will eventually make. Unless we go bankrupt or China invades. One would think the task of controlling the money supply would be delegated to the government. The Treasury makes the money, shouldn’t it look after it too? The whole history behind the founding of Fed is screwed up. The Federal Reserve Act was written on the private island of J.P. Morgan by a bunch of rich banking patriarchs. I can’t imagine a more sinister movie scene than scheming bankers with their tuxedos, top hats and monocles writing legislation giving them the power to control the money supply of the whole country. It’s Looney Tunes without the anvil. Tom caught Jerry and ate the crap out of him in the first episode. These bankers then backed Woodrow Wilson in the upcoming election, who won and signed the Federal Reserve Act into law. Bankers are controlling the money supply, lending the money the government prints back to itself and eventually profiting off of returned loans. The Wall Street bailout would have happened regardless of who was president at the time. The banks loaned themselves the money through the medium of the federal government, which is also known as money laundering. Yes, money laundering, like the mafia. The Federal Reserve is nothing more than a cartel, a system controlled entirely by a few very wealthy banks. The only candidate who showed any interest in ending the Fed was Ron Paul, who would likely get a substantial amount of both Republican and Democrat votes if he stood a frozen turd’s chance in Hell of winning. Most Americans are rational — 60 percent of the time, they are rational every time — and rational people realize the current system of controlling the U.S. dollar is in need of a serious face lift. The system as it stands is not designed to alleviate the nation’s massive debt, but rather to perpetuate it for as long as possible. Reply Rating: (0) (0)

8/2/2012 1:09:27 PM

Global Econnomic Meltdown 2012 by PeterPalms

The most important issue we can vote on this coming election season is the economy. Naturally, in order to properly cast our votes, we must be properly informed about the issues — primarily dealing with the Federal Reserve. The Federal Reserve is the central bank of the United States. It has many tasks, but essentially, it controls the supply of U.S. currency in the market. One would think an entity of this magnitude would be handled by no one but the government, however, the Federal Reserve is not owned by the government. According to FederalReserve.gov, it is an independent entity operating under the authority of Congress but not subject to it. Sounds pretty good until you dig a little deeper. Federal Reserve stock is owned by private banks, which are not allowed to sell the stock, but which pay dividends of 6 percent a year. When the government needs money, it goes to the Fed. These banks decide whether or not to lend the money to the government at interest, which it will eventually have to pay back to the non-profit Fed. The Fed may not profit, but the banks that hold stock do. Where else would the 6 percent come from? Banks profit from loans, especially when those loans aren’t paid off in time and interest begins to compound. Thus, the deeper the country gets into debt, the more money somebody will eventually make. Unless we go bankrupt or China invades. One would think the task of controlling the money supply would be delegated to the government. The Treasury makes the money, shouldn’t it look after it too? The whole history behind the founding of Fed is screwed up. The Federal Reserve Act was written on the private island of J.P. Morgan by a bunch of rich banking patriarchs. I can’t imagine a more sinister movie scene than scheming bankers with their tuxedos, top hats and monocles writing legislation giving them the power to control the money supply of the whole country. It’s Looney Tunes without the anvil. Tom caught Jerry and ate the crap out of him in the first episode. These bankers then backed Woodrow Wilson in the upcoming election, who won and signed the Federal Reserve Act into law. Bankers are controlling the money supply, lending the money the government prints back to itself and eventually profiting off of returned loans. The Wall Street bailout would have happened regardless of who was president at the time. The banks loaned themselves the money through the medium of the federal government, which is also known as money laundering. Yes, money laundering, like the mafia. The Federal Reserve is nothing more than a cartel, a system controlled entirely by a few very wealthy banks. The only candidate who showed any interest in ending the Fed was Ron Paul, who would likely get a substantial amount of both Republican and Democrat votes if he stood a frozen turd’s chance in Hell of winning. Most Americans are rational — 60 percent of the time, they are rational every time — and rational people realize the current system of controlling the U.S. dollar is in need of a serious face lift. The system as it stands is not designed to alleviate the nation’s massive debt, but rather to perpetuate it for as long as possible.

Rating: (0) (0)