The Federal Reserve Board of Governors opted again to do nothing after their two-day meeting, remaining pat despite clear evidence of a slowing in the economy and a miss on their two mandates, on maintaining full employment and price stability.
This post is going to read like a re-run, because we’ve seen this several times before. The Fed indicates in their statement that the economy has “decelerated somewhat” since their last meeting in June, with slow employment growth, an elevated unemployment rate, slower growth in household spending, a housing sector that “remains depressed,” and a lower inflation rate.
This is a description of an economy in chaos. If you were air-dropped into America from a planet that had sound economic understanding, you would know that this is a catastrophic situation requiring major intervention from policymakers.
And while the standard techniques of monetary policy, including the blunt instrument of the federal funds rate, are currently restrained by the zero lower bound, there are actions the Fed could take, including entering the municipal bond market and reducing borrowing costs for local government to reduce the bleeding in budget cutbacks, or purchasing mortgages directly and clearing the middlemen to get those low interest rates directly into the hands of homeowners who need them. That’s not even getting to the idea of communicating a higher inflation target or other options.
But the Fed did nothing. Even though their outlook showed only slow growth in coming years, and only modest improvement in employment, even though they acknowledged downside risks from Europe and other market turmoil, even though they admitted that “inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate,” they only maintained the status quo monetary policy that has brought us to this point. The FOMC plans to keep its federal funds rate at virtually zero through the end of 2014, and continue “operation twist” through the end of the year, as it announced in June. As for anything else, you can chew on this and see if it will give you nutrition:
The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.
That’s all you get. Best of luck, courtesy your friendly neighborhood failed policy institution.





23 Comments


Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
No need for The Fed to act. The rich are doing fine, just fine…
And the banks, the banks are making more money than ever, and the corporations, tons of money, big bonuses to the executives, offshoring going well especially with the new trade agreements soon to go into effect for ther Pacific rim countries to siphon off even more American manufacturig jobs.
It’s champage and caviar all around…unless you are in the 99%.
P.S. I had to lookup how to spell caviar.
Tell-tale sign of a lifelong 99%er.
Agree with prior comments. The Fed is doing what they’re supposed to. All is well if you’re in the 1%. Never been better, frankly.
No QE3? Ah, too bad the Fed didn’t do what’s failed twice already.
Fed’s pushing on a string, caught in a liquidity trap of its own making. Greenspan sucked the monetary stimulus well dry with his giveaway interest rates and housing bubble nonsense.
Only Wall Street and their whores in DC get anything out of money printing.
The problem can’t be solved with a change in monetary policy when the U.S. government has an active, ongoing program, funded by U.S. taxpayers, to help corporations invest overseas and outsource production there also.
Why shouldn’t the government help corporations make higher profits by helping them in other countries, using the efforts of ambassadors and commercial attaches? Why shouldn’t the elected and appointed servants of the corporations help the people that helped them? And why shouldn’t they use U.S. taxpayer funds disbursed by USAID to train foreign workers to take U.S. jobs? To expect people not to help the people that helped them is unrealistic.
Monetary policy can fix that? No way, Jose. er, David.
PS: Well, if David won’t come to me, I’m going to David. That’s David, Panama, this winter. Got tickets, will travel.
When are the people going to take action and start eating the rich?
I would suggest people start letting these elites know that they are not going to force austerity on us while they continue to live large.
The Fed is a moral monster. Ben Bernanke should be removed from office.
Of all the idiot things Obama did in his first term, re-appointing this guy is the stupidest.
Can the PTB be anymore incompetent as far as the bottom 99% are concerned?
I fear that the French Revolution and the Queen of Hearts are in the remaking.
The ultimate ability of any central bank is to print infinite amounts of currency. But the problem for the central bank is that as soon as it uses that ability it destroys itself and the currency.
David Dayen seems to be of the opinion that the USD is invincible; that it can never be destroyed, so printing with abandon is perfectly ok. I strongly suspect that the rest of the world is bullied into taking USDs at the point of a gun in exchange for oil and products would strongly disagree.
According to Harry Reid, Mitt didn’t pay any taxes for the last 10 years despite earning millions of dollars in a year. Will the American people vote for a candidate that’s tryin’ or for the candidate that’s lyin? As H.L. Mencken noted, “no one ever went broke underestimating the intelligence of the American public.”
Time for the Third National Bank.
Get rid of these Oligarchical Banking Bloodsuckers. “Federal” Reserve Bank. “Federal” my foot. Oligarchical Blood Suckers with their tentacles attached to the nation’s life blood.
Third National Bank to f*ck these snakes and and the Hell Wagon they rode in on.
The Board is stacked with reactionaries, most of whom came in under Bush. There are a few exceptions, but the Republican filibuster of Peter Diamond’s appointment is the tell. The majority on the Board are hard right economists. Bernanke is I suppose soft right, which in this environment is a distinction without a difference. This is another example of the Democrats failure since 2006 to fight for what they say they believe in.
Whose interests does “The Fed” serve?
I hate to break this to you, but you omitted the “n” between the “g” and “e’ in champagne.
There are still Bush appointees in all levels of government who drag their feet implementing Obama’s policies or just disregard his orders. My own biggest disappointment in him is that he’s left most of them in place, especially the ones who are lower level bureaucrats who require no Congressional action to be fired/hired . Whether he is weak or complicit is really moot.
How considerate of you to appoint yourself spell checker.
“Bernanke is I suppose soft right, which in this environment is a distinction without a difference. This is another example of the Democrats failure since 2006 to fight for what they say they believe in.”
It could very well be an on purpose on their part – afterall, it was Obama who re-upped Bernanke despite all the Bush-era calls from Democrats to get rid of him.
Can’t find the right version of Sun Ra’s “Nothing” (“Nothing from nothing leaves —nothing-g-g-g!,” not the Billy Preston one), so here’s a couple minutes of
The meeting must have sounded about like this.
The only mandate Bernanke knows is to keep those near 0% loans going to the big banks. That’s all that matters in our system.
Knut@14 ,you still believe in solutions from the two-party systems ,and something not reactionary within the system ?
Hey pros@20 ,I love Sun Ra ,are you into Threadgill and other artists working on the perimeter?
ncg and I rib each other on occasion and it’s really none of your business. In his comment he stated that he had to research the correct spelling of caviar and then misspelled champagne. Is there any special reason you feel the need to insert yourself in situations that don’t apply to you directly?
If you have a problem with my comments either ignore them or report me, otherwise don’t address me in the future. I really can do without your provocation.