Frontrunning QE 2.1: What is the Fed Going to Do?



I have an answer to the "what the hell is the FOMC going to do this time?" question and you aren't going to like it: nothing. That's right, nothing. They don't have enough of a consensus to start buying up more crap paper and perhaps they've actually got enough sense not to try even if they did. Former St Louis Fed President Bill Poole thinks they'd be stupid to try (ha! Vindication from one of their very own) and insists that the regulatory environment needs to be penciled in before the Fed starts thinking it needs to buy more shit. Gee, I'm pretty sure we heard that suggestion before and that time it came from a current Dirty Fed operative, not a rogue refugee throwing darts from over in the corner. I mean that with the utmost respect for Poole, who I'm sure is not an asshat.

Either way, monetary balls or no monetary balls, I'm not holding my breath for anything exciting this week because I'm just not fazed by QE anymore. I don't care if they announce they are buying $500 billion in securitized ice cream trucks, it's all doomed to me. I've seen their door (above) and can tell you with about 85% certainty (using the same science the FOMC does to determine monetary policy: a proprietary blend of magic, unicorn farts and hoping like a motherfucker) that there's no way out. The other 15% says they can get out but it's going to be ugly. Like four horsemen of the apocalypse ugly. Congress shrieking down from the rafters to reign in the central bank it has used as an ATM all this time ugly. It'll be awesome.

When exactly did we stop discussing the Fed exit strategy that still - to my knowledge - does not exist and start focusing on the bitchfight over which flation you are getting worked up over? I have yet to hear a reasonable explanation of the plan to get out of this and now they're talking about getting deeper in. This is insane and I'm not quite sure how long we can keep it up but it appears to be indefinitely. I have been counting on this thing to crash since exactly March of 2009 and it is still fucking going. Or maybe it did stop going at that point and that's where the revised outlooks and dart-throwing come from now.

Anyway, the Guardian on this holding our breath thing:

Financial markets around the world were eagerly awaiting the outcome of today's Federal Reserve meeting amid widespread speculation that policymakers could be preparing to announce further stimulus measures.

Markets were yesterday pricing in a high chance of looser monetary policy emerging from the central bank's Federal open market committee (FOMC) meeting tonight as concern mounts about the jobless recovery in the US.

Stock markets around the world rose on hopes of a boost to the world's largest economy, with the FTSE 100 index in London ending the day 78 points higher at 5410, a gain of 1.47%.

Some economists, however, believe the Fed will hold fire for now. But they will scour its statement for any hints of a shift in policy. A sharp rise in unemployment in July is likely to prompt debate over whether to pump more money into the system through a smaller scale version of quantitative easing – dubbed "QE lite".

Please, I'm bored already and they haven't even started.

I was there and I saw what you did, I saw it with my own two eyes.


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.

5 comments:

Anonymous said...

Watch the bankruptcy numbers and trends, dear. That is what foretells the start of the recovery - for a variety of different reasons. Bankruptcy is the ultimate "creative destruction device" and the wave is already in motion. Batten down the hatches. Even with all the creditor friendly revisions done earlier in the decade, the wave isn't going to be contained and the Fed is going to stand there with its collective thumb up its collective ass and watch. Popcorn, popcorn.

Benjamin said...

You are a talented commentator. But now is the time for inflation targets and QE2. Some say nominal GDP targets.
I say blow the doors open and print money until th eplates melt.

Benjamin,

Guess we will have to agree to disagree on that one :)

Waiting To Implode said...

I share your feeling of boredom:

The Fed, Bush, Obama, Congress, Banksters, and the Corps have already killed the economy.

Inflation, Deflation, QE2, QE3, it doesn't matter. I'm just waiting for this economy to die, So we can start a new one!

W.C. Varones said...

Benjamin,

Is your middle name Shalom?