Apparently Bill Clinton, the man who helped us ponder what the meaning of “is” is, now writes statements for the Federal Reserve. With the economic statistics apparently painting a rosy economic picture (In my opinion: ignoring the more numerous data points evidencing the opposite), I feel the majority of observers believed that the Fed would finally remove its promise to hold rates at zero for “a considerable time.” Instead, Janet Yellen (and those dwindling numbers of FOMC who did not dissent) decided to change it by not changing it. Essentially they signaled their intention to turn the monetary page in these terms, “although we are not saying now that we intend to hold rates at zero for a considerable time, we agree with our prior statements that we will do just that.” They also said that they will be “patient” in implementing this new policy, which really isn’t new at all.
If this makes sense to you, you must work for Bloomberg News, which immediately concluded the following: “Fed Vows Patience on Rates While Dropping Considerable Time.” How exactly do you drop words by not dropping them? I guess that’s what you learn in journalism school.
In reality, the statement is muddled and confusing because the Fed wants it that way. Despite their lip service towards “transparency” the Fed knows that the economy can’t handle the truth. While Wall Street clamors for a rate hike to confirm their dominant narrative that the recovery is real and sustainable, the Fed knows that the economy will be devastated even by the narrowest increase in rates. Given this disconnect, look for Fed statements to remain completely non-sensical. Maybe Janet Yellen will soon have to resort to finger wagging.
Those interested delving deeper into these issues should contact Andrew Schiff at email@example.com or call 800-727-7922 ext. 135.