Former Dirty Fed Operative Thinks the Fed is Behind the Curve
I'm shocked! An out of touch Federal Reserve? Say it ain't so!
At its last meeting June 22-23, the Fed’s policy-setting body trimmed its GDP prediction to around 3.3% this year and to some 3.8% in 2011. Fed Chairman Ben Bernanke stuck to that scenario in testimony before Congress last week, probably more out respect for the Federal Open Market Committee than because he’s convinced they are still right.
Second quarter GDP growth, at 2.4%, was well below the forecast. Many private analysts see the economy continuing to languish at a slow pace. Economic predictions by private-sector economists may be closer to the mark. In the latest Wall Street Journal survey published July 15, they forecast, on average, that growth will come in just below 3% both this year and next, also below the Fed’s forecast.
“If I look at the Fed’s forecasts, I think they’re behind the curve,” said Laurence Meyer, a former Fed board governor now with economic consulting firm Macroeconomic Advisers LLC. He added the Fed will almost certainly downgrade its economic outlook again when central bank officials next meet Aug. 10.
All JDA's pennies are on a downgrade from "totally awesome and very nearly fixed" to "a little less awesome than previously thought but still awesome now go BUY, BUY, BUY consumer or else we are really screwed!"
Though not frequently advertised, the Fed actually has a singular mandate (forget all that stuff about maximum employment and price stability): keep the perpetual debt machine in motion. In order to accomplish that - though they may end up imploding the dollar along the way - they've got to assure that prices stay high and the debt yoke stays tight. Too bad America just isn't into it anymore.