Dissecting Yesterday's FOMC Statement... Very Very Slowly
Normally I rush through whatever the Fed did or didn't say but there might be more written in the latest FOMC statement than your average media asshat managed to catch. Not to imply that the Fed is going to say anything different because it's all been the same shit since I started watching here on JDA in 2008. It's the same cut and paste commentary; ZIRP isn't going to change, conditions aren't going to change, the disclaimer about their alleged mandate that they are currently violating by creating the potential for inflation isn't going to change. Deflationistas like Bernanke and Krugman don't care about potential and any decent economist or asshat blogger who half knows this shit could tell you potential doesn't really mean anything right now. That's the slack they fondle so delicately when trying to counterpoint my you're fucked point with proof that they have plenty of room to keep pumping out free money to save us from deflation. Oh no! Anything but that!
While we're on the subject of deflationistas, I'd love to bring back Mish's February 2008 Deflationistas Do It For Less so we can all be reminded of just how fucked the Fed is at this point. I'm not arguing that deflation isn't a threat, it's what keeps Zimbabwe Ben up at night getting blisters on his thumb from hitting the "create blip" button in the Board basement and is a very real threat...to the guys whose job it is to keep the debt machine lubed and in good working order. I just want to point out how truly fucked the Fed is by identifying the non-deflationary threat that they don't talk about anymore. There still needs to be a way for them to climb their way out and as yet I haven't seen any definitive proof that they have even a remote blueprint of that strategy. We stopped talking about it months ago and for some reason don't seem to care to pick that all-important conversation up again. Anyone know what the plan is? Someone? McTeer, you got anything?
I acknowledge their counterpoint but it's getting old and the clock is ticking... hear it?
Obviously their data has failed them or they have failed the data, I don't think we know that yet and honestly I don't care, do you? We can figure out who fucked up what procedure later, for now it's worth pointing out that they're wrong or the data is wrong so what they judge can't necessarily be trusted. It's confusing, they could have access to far more precise data than whatever garbage they spit out to us in the form of M2 ("that is not money"), unemployment numbers and all subsequent adjustments or revisions to previous garbage data. Scarier, judging by previous Fed failures to actually see what the hell is right in front of them (like the little housing thing), the crap data they put out is the best they have to look at. Let's hope not.
Like this blast from the FOMC's past from January 2007:
Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market. Overall, the economy seems likely to expand at a moderate pace over coming quarters.Whoa! I bet the Committee yearns for those balls of yore eh? I know I do.
Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures.
The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
I wouldn't have to swap out any commentary on this FOMC post for previous comments I've made in the last year and a half, though, as they're all pretty much the same and have been for as long as I've been doing this. We aren't going to do anything and we have no idea what is going on so let's just buy anything that isn't nailed down and hope these banks flush this shit rotting on their books. They've never been here before. The data did them wrong. Worst of all, they have no idea how to get out.
So that's pretty much all the latest statement said. There's no way out! Devaluation isn't the only way out as WC Varones claims, it's the only inevitable result. Imploding the money supply by frantically creating more "not money" to stave off a "devaluation" (which is really more like a correction, something any artificially-inflated and manipulated money supply might want to do every now and then to get itself back to sanity) isn't a way out at all, it's just what's going to happen whether Zimbabwe Ben and his merry band of deflationista boneheads like it or not.
That's why they're ready with the firehose to put out the fire with gasoline. At least that was my interpretation.