Aspiring journalists are often advised to become multilingual so they can cover more stories. That's why I'm prepared to offer the first summer program in Federal Reserve as a Second Language ... once anybody turns up who can really understand it. Any attempt to translate the Fed's latest announcement could wind up sounding like the Hungarian/English phrasebook in that old Monty Python sketch, the one where the customer tells the shopkeeper, "My hovercraft is full of eels."
The gist of the Fed's statement today was this: "We're surprised that things are this bad and we realize we were wrong, but we have no immediate plans to change anything. (Although we might - someday)." The Fed then added: "We're failing at the jobs part of our dual mission ... and we expect to keep failing for a long time to come."
Markets rebounded at the news.
The Fed's done a lot of unusual things in the last couple of years. It has used public communication to manipulate markets in unprecedented ways. It has bought up extraordinary assets, dropped its rates to zero, flooded banks with rescue money, and even allowed companies that weren't banks to become banks so they could be rescued. (Goldman Sachs to The American Taxpayer: Hey, thanks, folks! I owe ya one!)
That's why it's surprising and disappointing that none of the Fed's innovations have been directed at the ongoing crises of unemployment, wage stagnation, and consumer spending. They're the root causes of the problems that seem to keep the Fed perpetually perplexed and disappointed.
Simultaneous Translation
We've got our phrasebook in hand. Let's get to work.
When the Fed says growth is "considerably weaker" than expected, rather than "somewhat weaker." it means: Things have really gone to hell. When it says there's "deteroriation" in the labor market where once it was merely "weaker than expected," they mean: Holy crap! And when it says the housing sector "remains depressed" the Committee means: You don't need a realtor, Mr. and Ms. Homeowner, you need an arsonist.
What about jobs?
"Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability."
Translation: A lot of times we forget to even mention this part of our job. See? We mentioned it!
"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."
Translation: We got it wrong, and things are worse than we thought. But we're not going to do anything about it, so we'll be failing at this part of our job for a long, long time.
And the monetary outlook?
"... 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 ... are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."
Translation: These zero and zero-ish rates were supposed to be an emergency measure to rescue the banking system in 2008. But we've decided to keep it on life support for a long time to come. That hasn't created any jobs, and we're sorry about that, but it should inflate the market a bit."
"The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability."
Translation: We talked about a lot of things we could do ... and aren't doing right now.
"It will continue to assess the economic outlook in light of incoming information and is prepared to employ these tools as appropriate."
Translation: The greatest jobs crisis in a generation doesn't call for pulling out every tool in the tool box.
But if this isn't the time to do everything you can, when will it be the right time? If that's your thinking, then what does "as appropriate" really mean? That's easy to translate. For the millions of people who can't find work or are struggling to pay their bills, it means Your hovercraft is full of eels.
What could the Fed do?
We're constantly being told that the Federal Reserve is limited in its ability to respond to the ongoing crisis. But we didn't hear that kind of talk in 2008, and there's nothing in the Fed's charter that precludes it from taking more aggressive and innovative action. What could the Fed do?
Joseph Gagnon at the Peterson Institute of International Economics has some smart suggestions.for action the Administration - and the Fed - can take the need to ask permission from the obstructionists in Congress. Gagnon proposes an aggressive third round of quantitative easing, accompanied by "a clear statement that more is forthcoming if the economy continues to underperform." A a small additional step, the Fed could stop paying interest on the reserves it holds. While this wouldn't have a dramatic effect, it would remove an incentive for not lending money.
Gagnon also proposes that the Administration use its control over Fannie and Freddie to aggressively provide debt relief to homeowners. (The Administration's own program, which is limited to distressed mortgages, continues to be a disaster.)
There's more that the Fed could do if it really wanted to fulfill its dual mandate. It could link those zero-interest rates to consumer debt relief, especially for underwater loans. It could build the framework for an infrastructure development lending program.
Once the translating's done, the Fed sounds like nothing so much as a world-weary cop trying to keep the frightened citizenry away from the scene of a disaster. The Committee's members are trying to reassure everybody that things will be fine. They'e saying everything's under control., when they really don't know that for sure. They're saying Move along, folks. There's nothing to see here.
But like any crowd that's witnessed a disaster, we all know that's not true.
Follow Richard (RJ) Eskow on Twitter: www.twitter.com/rjeskow
We are stll in the process of printing more worthless money in the hopes of destabilizing the U.S. dollar and crashing the U.S economy. Initial attempts have failed but we will continue the fight........
Bernanke tried to go an impossible position 2008, rewarding big banks and (unbelieveable) an investment casino named Goldman Sachs for bad behavior.
Gotta see this video clip, Bernanke telling CNBC 2005 that there is no housing bubble while the price of gold $642 oz. flashes beside him.
http://dailybail.com/home/a-movement-by-the-people-to-prevent-the-reappointment-of-the.html?source=patrick.net
However, they can do a very aggressive QE3. The previous QE's haven't been nearly big enough to compensate for the $15 Trillion drop in asset values. Their best choice is to buy all maturing T-Bills for the foreseeable future. This forces the money locked in T-Bills back into the world economy somewhere and papers over the principal of all existing U. S. debt. Since T-Bills have maturities ranging up to 30 years, $9 Trillion spread over 30 years shouldn't be particularly inflationary.
Be prepared for a depression that is going to last until 2015. This is not meant to cause fear or panic, just be prepared and spread the word. The ones that will survive this and not be totally devastated are the ones that know it is coming. Be diligent and do your homework on where to protect your money and assets.
My bet is the dollar is going to collapse due to the mass printing going on by the fed. Thats why gold and silver are going through the roof.
Expect the value of your homes to decrease another 30%...maybe more...before it's all over.
I told you to invest in the metals but no one wanted to listen.
I think that there was one more Fed message stuck in between the lines -- you employed folks looking tentatively forward to a secure retirement better not give up your jobs, no matter how intensely a younger person might hunger for it -- something to the effect of the once safe harbors being full of mines and the mine sweepers being scrapped -- and the retirees might as well be swept out to sea for all the Fed cares (not their mandate).
I think that QE2 was a bust - lending to WALL ST BANKS just fed cheap money to speculators that then drove up the national and international stock markets, gold, commodity prices, and REAL inflation (including food and energy, not the bull$hit "inflation" the FED measures), and drove down the dollar. If QE3 like QE2, will it be any different?
I think the only justification for QE3 would be to lend to LOCAL banks, who might actually lend to LOCAL businesses and actually hire Americans. Or perhaps lend to local govenrments who are about to default on their bonds. But DO NOT lend any more to WALL ST BANKS. But since the FED is LITERALLY OWNED by the WALL ST BANKS, I see little reason to expect this will happen.
Fanned.
Admitting error is the first step in fixing it. The Fed admitted error today - maybe not explicitly, but certainly intuitively it was clear. You know how the market reacted.
The S&P downgrade came from a team of about 12 people. This group demonstrated to the world that it has more credibility than our administration.
This event is a watershed event in our society.Here are a few predictions.
1) We will see the media change dramatically as our conventional media must go down naturally with Obama.
2 )Big Washington "Think Tanks" will go away.
3) The tea party will reveal itself for what it is not what Obama/McCain or other delusionals believe.
4) Progressivism will become synonymous with greed. Greed for control over people.
Just like a liberal to generalize in your fashion.
Just remember that the S&P was also the group that taught banks how to bundle toxic loans and mortgages into a AAA rated funds. They might not be as "credible" and you believe.
2) The world markets are very smart. We depend on them to fund our social programs. I would never underestimate the power of such a market statement that we are seeing. Credibility of S&P is baked into all of the effects.
But here is the problem they are not talking about.. jobs will not come back.
We have advanced our technology, we have automation, and the technology is increasing exponentially every day. Coupled with the population increase worldwide we will most likely see unemployment at the 50% level or higher in the next few decades.
I believe we are on the cusp of a societal shift akin to the industrial revolution in it's scope and effect. The coming revolution will see dramatic improvments in technology that decreases the need for human labor. If we do not address this now we are in for some hard times ahead. To start, we must explore some sort of a Basic Income Model, eliminating, or phasing out social security.. A Basic Income Model will provide a basic income for everyone.. we need to explore at what rates.. simply because we will have very high systemic unemployment that will never go away. If we want to keep our society intact this is imperative.
No one is talking about this.
Unemployment now is at an official 9% .. most agree it is really pushing 19% .. What happens when it reaches 30%
We can look to London for the answer.
Excellent comment
F & F
And it didn't work. The ideal was supposed to be, "from each according to his abilities, to each according to his needs," and in Russia, for example, it lasted barely one generation. The Germans said, "what the hell do we have this Wall here for?"
You can't operate a country like the United States that way. You can't operate any country on Earth that way.
We're all staring at "borrowing" (whatever that euphemism is actually supposed to mean ...) and wringing our hands in despair ... and all I can say to Americans is, "LOOK AROUND YOU." If you can't see genuine opportunity here, and if you can't do what it takes to CAUSE that opportunity to appear, then you are a sorry great-grandchild indeed.
Success does not happen; it is made. It is made by determination to do work, but also by the determination to prevent high crime among those who would steal, rape and pillage within the highest halls of power in the land.