August 2009 FOMC Minutes: Or, Alternatively, How the Fed will Never Pull Out in Time

This concerns me only slightly and I will tell you why in a moment. Reuters is going to have to sum up the August minutes for me since, well, I have a damn day job and can't spend all afternoon chasing around the Fed now can I? Full text may be found via the Fed Board of Governors here, just don't let your boss catch you reading them when you're not on break. I know, I know, it's more addictive than Facebook.


Federal Reserve policymakers last month believed risks to the U.S. economy had eased "considerably" and discussed stretching out a program that has held down home loan rates.

The Fed expressed confidence the deepest U.S. downturn since the 1930s was ending but also worried about weak growth ahead, according to minutes of its August 11-12 policy session released on Wednesday.

The U.S. central bank decided neither to expand nor contract its economy-supporting purchases of assets.

"Meeting participants agreed that the incoming data and anecdotal evidence had strengthened their confidence that the downturn in economic activity was ending and that growth was likely to resume in the second half of the year," the minutes said.

Still, with the economy poised for a modest recovery at best, officials determined that low interest rates would be needed for an extended period.

"The (Fed) is in no hurry to alter its current policy stance," Paul Dales, an economist for Capital Economics in Toronto, said in a note to clients. "The Fed will complete its asset-purchasing program and remains reluctant to withdraw its policy support soon."

When it concluded its August meeting, the Fed had said the economy was showing signs of leveling out two years after the onset of the most virulent financial crisis in decades.
So, good news, right?

No. As I touched on earlier today, the Fed needs to get out quickly. Like now. Like yesterday now. Like two months ago now.

I saw a clip of Richmond Fed President Jeffrey Lacker recently discussing the economic outlook in August of 2008 (remember the tranquility of a world pre-TARP?) in which he said that the Fed had already intervened too much and needed to figure out how to back out and fast. Now look where we're at! Even then he insisted that they would need to pull out before feeling entirely confident that markets were fully recovered or even somewhat recovered, now here we are a year later, $14 trillion squatting on the liability side of the Fed balance sheet still with no plan and no real timeframe for recovery. Well WTF! Pull out already!

You know what this means, right?

If I have to explain it to you, please STFU and return to Facebook instead of wasting your time here on JDA. I really don't need the hits that badly.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.