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The Fed says, "Steady as she goes"
Wednesday, August 12, 2009
While no one seriously thought that the Federal Reserve was going to offer the slightest hint of any increase to short-term interest rates at the conclusion of today's policy meeting - after all, given where we are in this cycle as compared to the last one, it seems reasonable to think there is a long, long way yet to go - there was a little intrigue.
As an aside, not having posted the chart above in quite some time - since shortly after the Fed funds rate was pegged to zero in January and the central bank's focus shifted to "quantitative easing" - that area around the 12-month mark is now particularly interesting.
Recall that short-term rates had been at two percent for a few months going into last September, when some economists may have thought that they'd seen the worst of the financial market problems.
Obviously, that wasn't the case, and that marked the only time during the past two rate cutting cycles where current Fed chief Ben Bernanke fell behind the record pace established by his predecessor, former Fed chairman Alan Greenspan.
Anyway, about the only thing of interest in today's policy meeting was that the Fed's purchases of some $300 billion in Treasury debt have been extended through October in order to bring the program to a halt gradually.
Markets don't seem to be taking this news particularly well but, so far, it's been mostly a non-reaction to today's news.
The last two policy statements are shown side-by-side below:
Obviously, they just take the previous statement, load it into a text editor and make changes as necessary, a task that probably didn't take more than a few minutes this time.
1 comments:
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Bernanke was the only cause, I proved, of the Great Recession and probably acted on purpose. He had the knowledge (Bernanke is a renown specialist of The Great Depression he even wrote a book on the subject: Essays on the Great Depression.), the means, motive (The vast increase of personal powers he earned thanks to The Great Recession.), and opportunity.
Worse, in light of the exercise of the central bank extraordinary power by Bernanke, I argue that he poses a real immediate threat to democracy, peace, privacy and individual freedom.
Given the immediate dangers that are evoked in these lines I strongly suggest that you revoke Bernanke.
"I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan.
Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively.
However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed."
Prof. Ben Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For Presentation at the ASSA Meetings,
Boston MA,
January 9th, 2000.
"The slowdown in economic activity, together with high interest rates, was in all likelihood the most important source of the stock market crash that followed in October.
In other words, the market crash, rather than being the cause of the Depression, as popular legend has it, was in fact largely the result of an economic slowdown and the inappropriate monetary policies that preceded it.
Of course, the stock market crash only worsened the economic situation, hurting consumer and business confidence and contributing to a still deeper downturn in 1930."
Governor Ben S. Bernanke
Money, Gold, and the Great Depression.
At the H. Parker Willis Lecture in Economic Policy, Washington and Lee University,
Lexington, Virginia.
March 2nd, 2004
Revoke Bernanke: Sign the Petition to Request from President Barack Obama That Ben 'Systemic Risk' Bernanke be Removed From Office.
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