Get 'em While They're Young

To no one's surprise, the Federal Reserve raised interest rates yesterday another quarter point, taking the overnight Fed Funds rate up another baby step to 4.75 percent. The wording of the policy statement led many to believe that continued robust growth will require additional rate hikes and the stock and bond markets reacted accordingly.

The January and March FOMC policy statements are shown below, the notable difference being the expanded second paragraph regarding the state of the economy, where the disappointing fourth quarter GDP figure is dismissed as being a temporary anomaly.
For about the tenth meeting in a row, rising energy prices have not affected core inflation in a material way, wages still aren't rising much, and the long bond, while no longer effective in predicting economic slowdowns, is still doing a fine job of predicting low inflation in the years ahead.

Someday, something interesting will happen at one of these meetings - that day wasn't yesterday.

A trip to the Federal Reserve website did however turn up something of note. It seems there's a new link on the main page - the one circled in red in the image below.
A Kid's Page? At the Federal Reserve? Where, for nearly two decades, Alan Greenspan wandered the halls muttering things like, "The more flexible an economy, the greater its ability to self-correct in response to inevitable, often unanticipated, disturbances and thus to contain the size and consequences of cyclical imbalances"?

How big of a loser does your eleven year old have to be to be spending his free time there?

Hey junior, will you come down to dinner and leave your review of Donald Kohn's last speech for after you finish your homework? And, you know, they don't publish another Z.1 report for three months - you don't have to go through the entire report tonight.
The real FRB logo with a real eagle next to the zany red, white, and blue type and the cartoon eagle must be one of the first bold inintiatives instituted by new Fed Chairman Ben Bernanke, who, as seen at the head of the big table in the photo below, has surprisingly broad shoulders with his jacket off.
While most adults would likely have trouble understanding this description of what it is that the Federal Reserve does, it's not clear how any of this would have any meaning at all to a pre-adolescent:

Conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates

Supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers

Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets

Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

Daddy, what do they mean by "influencing the monetary and credit conditions"? Are they talking about repurchase agreements? And what about all those recent coupon passes?

Daddy, what's "systemic risk"?

The part about inflation is not nearly as good as the ECB's Inflation Monster cartoon , but it's kind of fun if you do the math.
That's a 15 percent rise in the price of movie tickets and a full 25 percent increase in the price of popcorn. How many years has this babysitter been at the job? With inflation of only two or three percent, this example appears to span five or ten years, well beyond a typical babysitting career.

Or perhaps, once again, real-world inflation is being confused with government reported inflation.

Also in the example above, note that instead of saying that the movie, popcorn, and drink, all of which used to cost a total of $14, now costs $16.50, they instead drop the soda and stick with the $14 total.

That must have been an interesting little review meeting before this was published.

It's not hard to imagine a staffer commenting, "No, we can't put $14 and then $16.50 - that just doesn't look good. The math is too easy. Let's say $14 for the before and after, but we'll drop the soda, kind of like the substitution that they do over at the Bureau of Labor Statistics. You know, as a result of rising prices, consumers substitute a movie and popcorn for a movie, popcorn, and a drink. Yeah, that sounds good".