Marcus Nunes has a new post up showing reality vs. the FOMC statement released today. It is well worth the read as it shows where most of the economic indicators, including inflation and GDP are headed compared to what the Committee has said.
Here’s a sample of the statement, a sample I find completely ridiculous:
The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.
If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings.
Translated dajeeps style:
“The Committee acknowledges that inflation persistently below target poses risks to economic performance, but it is not of concern at this time. The Committee’s target is based on a nebulous combination of the size of its balance sheet, risk-taking in the economy, and whatever other scary thing Committee members can dream up and the Committee shall wait and hope that inflation heads in the appropriate direction over the coming decades. The Committee will continue to withdraw less than appropriate accommodation in the absence of evidence of inflationary pressure, and will continue to do so until amply satisfied and comfortable”
And if you’re still unemployed – too darned bad – they will see to it that you have plenty of fresh company in your misery.
If inflation is always and everywhere a monetary phenomenon, then this statement makes no sense. Even worse, they say they know persistent, below target inflation is a risky thing. But they decide to play the gambler anyway, even though it has been below target for years and is trending down. Really, why the heck not? They still get a paycheck. The unemployment line is for real working stiffs, not entitled, elitist bureaucrats.
It’s beyond ridiculous, nearly over the edge into absurdity.