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FED-Watching Media Are Still Totally Blind

Written by Gary North on August 1, 2013

Yesterday, the Federal Open Market Committee issued its boilerplate announcement that it issues every six weeks: no change. The FOMC will continue to counterfeit $85 billion a month for the foreseeable future. I posted its press release here under the title, “Federal Reserve: Same Old, Same Old.”

Today, an unknown newspaper reporter for the Los Angeles Times says that the FOMC will taper off next month. It will slow its purchase of federal debt. Why should we believe this? Here is the proof.

WASHINGTON — Improving economic data is making the prospects more likely that the Federal Reserve will start tapering its massive bond buying next month, a move that suggests the recovery is on solid ground but that would be likely to roil Wall Street.

Economic growth unexpectedly picked up in the second quarter, though it still remained relatively weak. Corporate earnings are largely stronger. Consumer confidence is back to pre-recession levels.

The FOMC said the opposite. It has said the opposite every six weeks all year. This does not persuade media reporters no one has ever heard of from running taper-caper stories.

With the unemployment rate forecast to tick down to 7.5%, enough positive data is piling up to allow Fed officials to decide next month to begin reducing the central bank’s monthly purchases of $85 billion in bonds.

“Everything now strongly signals the Fed will begin its tapering at the September meeting,” said Mark Zandi, chief economist of Moody’s Analytics. Zandi assists ADP with its monthly report.

But the Fed didn’t tip its hand Wednesday because signs of economic difficulties remained, including a still-high unemployment rate of 7.6%.

In short, the FOMC is lying. It is going to cut back in September. It is going to do this, despite the fact that if it does, it will call its credibility into question. “You people lie!” “Why of course we do. Everyone knows that. Pay no attention to our boilerplate.”

Yet we read this: “Wrapping up a two-day meeting, Fed policymakers voted to hold steady on their stimulus efforts and offered no additional guidance on when they would start scaling back.” In short, no change. Well, not quite. There was one change.

The Fed said economic activity had expanded at a “modest pace,” interpreted by some economists as a slight downgrade from the “moderate pace” it cited in its June policy statement. But Fed officials offset that by slightly upgrading their general outlook, saying they expected the pace of growth to “pick up from its recent pace.”

I see. From “moderate” to “modest.” On this, FED experts make their deep interpretations. This is tea-leaf reading. This is staring into the entrails of a sacrificial goat.

The official counterfeiter announced that will continue to counterfeit. This is no news. But it must be made into news. News is what sells, or at least used to, before the Internet.

There was no new language in the FOMC’s press release. There rarely is. It’s boilerplate stored in its computer. This lack of new language is crucial, we are assured by the unknown reporter.

The lack of significant new language probably meant that Fed policymakers are still on track to begin reducing those purchases later this year, as Fed Chairman Ben S. Bernanke said in his quarterly news conference in June.

Consumer spending is falling. This typically is interpreted as a slowdown in the economy, which the FED is trying to avoid. But this time it’s proof that the FED will soon reverse course and tighten money growth.

Those changes helped offset a drop-off in consumer spending, the main driver in the nation’s economy. Spending rose 1.8% in the second quarter, which was lower than the 2.3% increase in the first quarter, the Commerce Department said.

The drop in government spending from the automatic cuts under the so-called sequester continued to be a drag on growth, though less so than in the first quarter when federal agencies were preparing for them.

Ignore this, he says. Ignore everything the FOMC says. “Believe me, you should believe me.” But why? Because no one has ever heard of him, that’s why. Also, because Bernard Baumohl says so. No one has heard of him, either.

The latest economic data might be enough for the Fed to begin a slow reduction in its bond purchases, said Bernard Baumohl, chief global economist at the Economic Outlook Group. But he said the lack of any hint of that pullback in the Fed statement means it might not come until later in the fall.

This is what passes for economic analysis today.

My view: if the nation’s official counterfeiter says it is going to inflate, assume that it will inflate.

Continue Reading on www.latimes.com

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8 thoughts on “FED-Watching Media Are Still Totally Blind

  1. Rabelrouser says:

    The Fed continues its manipulative system of false currency and economic policy; it will not do anything but depress the economy.
    The populace is generally unaware of this false system, and refuse to become educated to the damage it incessently does; so the economic problems of this nation will never be solved or corrected.
    Its the peoples fault for not wanting to seek the root cause of the nation's and the economy's problems.
    Its not politically sexy enough to get involved with.
    It take's real study and contemplation to know the truth.
    It will take a greater amount of citizens calling out the politicians on this perpetual FRAUD to fix it.
    So the problem will NEVER BE FIXED; but will only continue to destroy this nation.
    Read more: http://teapartyeconomist.com/2013/07/31/federal-r

  2. Rabelrouser says:
  3. long gold stock says:

    the only reason to pay attention to bernanke is for short term trading purposes, otherwise, its the most annoying noise.

  4. Periodically, the Fed dangles a little bait that changes are coming, just to see the response thinking it might be different than last time. I believe that is one of the definitions of insanity. As always the stock market flinches. There will be no change until after the next election. The only real cover that President Obama has on the economy is that the Dow is up. The Fed will continue to provide that cover. After the election, Obama considers it Hillary's game. He wont care. The Fed will move. The Bernanke Bubble will burst. See my blog at http://cranky-conservative.blogspot.com

  5. The Feds policies and this administrations are going to continue to wipe out the middle class.

  6. The "Watching Media", if you talk about CBS, NBC, ABC, are all owned by liberal/progressive people. I don't know for sure although I have heard a few rumors that the reports are TOLD what to and not what to report. Or how to report it. We use to have a media that loved this country. Now it seems they are all for government and all against free enterprise. If they win, then there goes our middle class, all the innovative ideas, and all the investments in new companies. People think that government can do so much better, but NOT… please tell me ONE government program that works without maximum fraud.

  7. Bernanke thinks it's OK to pay savers 1/4 or 1/2 % interest while banks are charging 4 – 10% on mortgages/loans. Also this administration has blown 7 trillion dollars more than it has taken in within the last 4 1/2 years. Rates are manipulated low and there are no consequences for the insane spending. He also is concerned that inflation is too low. The absolute audacity against the middle class. Companies and people go out of business/bankrupt unless they cut costs/expenses. These fools keep spending like there is no tomorrow.

    Bernanke wants to keep the stock market artificially going higher, so everyone feels "rich" and spends. He is also well aware that government pension funds are loaded up with securities/equities too. Could you imagine if they had to settle for 1/4 or 1/2 % returns like your average person/saver? A huge portion of these invested pension fund assume a big return of 6,7,8 % in their funding calculations.

    Unfortunately there are not too many in Washington DC who are trying to help the average/little guy. Just sickening!!!!

  8. Rabelrouser says:

    There is a reason that this root cause of ALL the economic problems exist in this nation today: Its the Peoples fault for not knowing.