Tomorrow, the Federal Open Market Committee will meet. It will decide: leave things alone, and then publish a press release, or tinker at the margin, and then publish a press release.
We read this on Yahoo Finance.
Since the June 19 FOMC meeting, all eyes have been looking down the calendar to September, when market participants determined it was most likely the Federal Reserve would slow down its QE3 easing program. After three tense months, the September FOMC policy meeting finally arrives this Wednesday.
Why have all eyes been looking to September? Why not December?
Why have all eyes been looking at all? The FOMC publishes its press release every six weeks. Ever since December 12 2012, the statement on policy has not varied as much as a comma. It is pure boilerplate.
Yet the financial media has been filled with verbal speculation about the September taper. It is almost universally assumed that the FOMC will announce a change, although minor. The fever pitch has been building. But for what? For an expected reduction from $85 billion a month to $75 billion, i.e., from $1 trillion a year to $900 billion. In short, nothing relevant.
It is one more example of the financial media swallowing camels — the legitimacy of massive counterfeiting — and choking on gnats.
If the FOMC changes anything, it will be saying in no uncertain terms, “ignore our boilerplate press releases. They convey a misleading sense of predictability. Transparency? You must be joking.”
If the FOMC changes nothing, the financial news media will appear as a collective group of dolts, who live on rumors of meaningless changes, which then do not come true.
I don’t think the FOMC will change anything. If it changes anything, it will have to offer an explanation. The main one would have to be this: an improving economy since its most recent meeting on July 31. Where is the evidence of an improving economy?
The crucial fact for the FOMC is this: the pathetic economic recovery — the worst in the post-War era — has been accompanied by a quadrupling of the FED’s monetary base. What happens after the next recession? What will be the FED’s stimulus then?
The mainstream financial media do not ask this question. The question points to the magnitude of the monetary trap which the Federal Reserve is in, and which the world’s economy is in. It would raise this question: “What will happen to prices if the commercial bankers ever start lending again?” But if they refuse to lend, this question is appropriate: “When will the recovery ever gain traction, without the need for $1 trillion of counterfeit money a year?”
As for this question — “What is the FED’s exit strategy?” — Bernanke successfully evaded it, as we see in the video. It will be Yellen’s turn, beginning on February 1.