According to The New York Times, the Fed is unleashing a new round of Quantitative Easing, despite its earlier hints that it would tighten up the money supply:
Fed Maintains Stimulus, Awaiting Sustained Growth
WASHINGTON — The Federal Reserve, still uncertain that the American economy can grow unaided, announced on Wednesday it would press ahead with its stimulus campaign of asset purchases and low interest rates.
It reminds me of the fabled land of Katroo, as chronicled by Dr. Seuss in his 1959 book Happy Birthday to You!.
In Katroo, on your Day of All Days, you are invited to party like there’s no tomorrow. “If you wish, you may eat with both hands and both feet. / So get in there and munch.” The party then continues into the Night-of-All-Nights-of-All-Nights in Katroo:
So America has become the new Katroo. Let’s enjoy the party while we can.
The NYT had more to say:
The Fed maintained a relatively optimistic economic outlook in the statement, released after a scheduled two-day meeting of its policy-making committee. It said the economy continued to expand “at a moderate pace” and that the availability of jobs continued to improve.
But the Fed reiterated its blunt assessment that “fiscal policy is restraining economic growth,” referring to enacted cuts in federal spending and the unresolved, episodic standoff over the federal budget.
It also said that the housing market, which grew strongly during the first half of the year, had cooled, because in part of higher interest rates.
“Taking into account the extent of federal fiscal retrenchment over the past year, the committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy,” the Federal Open Market Committee said in its statement. “However, the committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”
The Fed noted that inflation remained below the 2 percent annual pace it considered most healthy, and it said persistently low inflation “could pose risks to economic performance,” but it reiterated its expectation that inflation would rise modestly over the next few years.
It’s important to remember that when the Fed talks about “inflation” here, it means price inflation. The money supply is already hideously overinflated. At some point prices will inflate to reflect the engorged supply of dollars, but for the moment we can still dance the night away here in Katroo.
More from the Old Grey Hag:
Fed officials had spent much of the summer preparing investors for a retreat from the bank’s stimulus campaign before the end of the year. That remains a possibility: The Fed’s policy-making committee is scheduled to meet for the final time this year in mid-December.
But analysts increasingly expect that the Fed will continue with the present pace of asset purchases well into next year.
There is still little sign that the Fed has succeeded in stimulating job growth. The share of adults with jobs remains at roughly its postrecession nadir. The unemployment rate has fallen, but largely because fewer people are looking for jobs.
So it’s official: QE doesn’t solve anything. It just keeps the banks in business as usual.
The Fed and the Treasury have no idea of what to do except to keep printing money — the 21st-century version of money-printing being the repeated purchase of Treasury instruments by the Fed to keep interest rates low.
Doubts are creeping in around the edges now, however:
Also, inflation has dipped well below the 2 percent annual pace the Fed has established as its goal. Prices rose in August at an annual pace of 1.2 percent, excluding food and fuel, according to the Fed’s preferred measure, the Commerce Department’s index of personal consumption expenditures.
This has prompted some Fed officials, and outside critics, to question whether the asset purchases are worthwhile. Ms. George, in her dissenting statements, has repeatedly cautioned that the purchases may disrupt financial markets.
While some people want to party even harder:
Other critics draw the lesson that the Fed is being too cautious. Some argue that the Fed should increase the volume of its asset purchases; some want the Fed to consider other, more radical, measures, like a temporary increase in inflation.
The key word in there is “temporary”. Who can guarantee just how temporary price inflation will be, once it starts? And what will happen after a year, or two years, of steady price inflation? Or even hyperinflation?
We’ll find out soon enough. In the meantime, cut yourself another piece of cake, and eat it with both hands and both feet.
Inflation below the 2% level? Are you kidding me? I suppose if you don’t eat anything and use no energy that might be the case… The “core” inflation rate does not take into account the price of food or energy (their reasoning is that those two parameters are “volitile.”) Such nonsence. We Americans have seen a drastic increase in food, fuel and taxes. Our paychecks have not kept up with it.
What I know is what I go into the marketplace and see. Gasoline at $3.95/gal, cucumbers at $0.75 each, chicken @3.49/lb. If you don’t think that is incredible price inflation then maybe you haven’t paid for food and energy in a while.
My taxes… I am experiencing a $700/year increase that pushes it above $17,000/year… I don’t know how we can live here much longer.
And the sick thing is that most public employees take these incredible pensions and move out of the area to a lower cost of living state thereby not even using their dollars in the local economy.
And then we get to Obamacare. I have two sons under the age of 30. They have/had catestrophic health insurance, which is perfectly reasonable for healthy young people like them. No good… They now have to pay for insurance policies that cover pre-natal care, maternity care, vision and dental for pediatrics and lactose instruction! They are single males; none of this pertains to them… This is socialized medecine.
The American people voted for this. They will now be carried by my two sons.
If your sons have children, will they not be grateful for “socialised” education paid for by those who don’t?
While I admire much about the US, I’m far from alone among Brits- and citizens of other western-style democracies- in perplexity that yours is the only such society to have such a problem with government-run health insurance; it seems at odds with Americans’ fine tradition of generosity and care towards others.
We hear plenty of stories about the British healthcare system.
We know that our rates of cancer survival are higher than yours or Canada.
We know that many Canadians who can afford it come to the U.S. for medical care if they have serious health issues.
We know that most of the important medical innovations are coming from the U.S. That’s because we haven’t had your medical system.
Despite what the ignorant think, poor people here have always been given medical care, paid for–on way or another–by others.
I guess it doesn’t bother you that your economy is hitting the wall?
We forsee a breakdown in the future should present trends continue in your country.
I guess it doesn’t bother you–should present trends continue– that you will also lose your culture and your civil liberties?
Of course, that’s only what our dear leader Obama wants for us as well. There is a direct connection in our country between the new health”care” law and the progressives plan to legalize tens of millions of illegals and give them welfare and medical care–which, for the most part, they HAD ANYWAY here–in exchange for votes.
Get it?
Not only Canadian patients, but Canadian docs flee here. They can get continuining education more easily, keep up-to-date with changes, and are not limited in the their decisions.
Canada has a great system for the healthy and for chronic conditions that can be managed by the usual means – e.g., heart care and diabetes. But the treatment is hardly cutting edge.
As for serious, acute illnesses, be it stage 4 cancer or something similar, the US has a better record.
It is in small countries that socialized medical care, combined with first rate training – Denmark, say, or Israel – works well.
Here’s a site with some good commentary:
http://www.obamacarewatch.org/
Somewhere on there, they’ve done a good description of Israeli and Australian health care, pros and cons. I believe they’re planning to do other countries.
We are already paying for socialised education and it is doing a piss poor job of educating the children of this nation.
Your country is one fifth the population of the US and, quite frankly, you don’t seem to be doing such a great job of delivering health care. Imagine scaling it up 5X’s… You have elderly dying of thirst because they have been put on the “death path.” I never want to see that happen in my country and yes, I would much rather our citizens be given the freedom to choose their health coverage than have the gov’t regulate it. My sons do not need pre-natal care and should not be forced to pay for it.
And BTW, my grandchildren will in all probability go to private school or be home schooled because the “socialised” school is such a disaster.
Socialism never was about making the world a better place, its about expanding the governments power and ensuring that the party in control of that power remains so. An example is Obama’s knowledge that millions of Americans would loose their insurance coverage back in 2010 and health costs for the middle class would skyrocket, but still plowed forward anyway with Obama care. The reason for such cynicism is that in order to underwrite Obama care, the middle class must be forced into the exchanges and forced to pay the overinflated prices. It was planned to be that way to make sure it works and the free stuff goes out and votes keep coming in.
It really amazes me how blinkered some people can be. Not just mistaken about things, but utterly unaware of them. In the UK the faults of socialism are all around from a failing economy to muslim rape gangs courtesy of government engineered immigration, and yet people still think this is a good thing.
Government-run education, government-run health insurance protectionism, don’t forget the government-run minimum wage (see: “Edgar the Exploiter”.
Kind regs from Amsterdam,
Sag.
P.s.: here in Holland, patients cross the border in droves (Flanders) because we have a huge problem with our corporatist healthcare system (run by government in cahoots with big insurance companies). We “thank” our system of govt-run healthcare (say, Prussian health care, like the schooling system, part of Bismarck’s clever invention, the “Versorgungsstaat”.) to a decision made by the then occupying forces of Nazi-Germany.
The Fed cannot raise interest rates. Just think what a 2% increase in the interest rate would do to the global economy. It would destroy it. And Corzines buddies at companies like MF Global would lose their profit margins and crash, thus destroying the economy. When you can borrow from the Fed at 0 interest rate and buy distressed bonds from Greece, Portugal, Italy, Spain and others at 4%, its free profit, until it all collapses and very soon. Once a call is made on those worthless bonds, it will show the lack of funds to pay for same. A look at MF Global will show you our future.
sorry, but I don’t quite get you.Looking at a 2% rise in intrerest rates would cause a world disaster? I don’t think so.
Here in the US we have already seen a tremendose increase in food and energy; no matter what our “officials say.”
Some banks may go under, especially in the German Republic that relied on cheap money from Greece, Spain, et all…
The German bankers are driving this.
We are headed for another Great Depression. We and Europe are following the same Keynsian economic model in spite of its obvious problems.
I agree that Keynes is outdated in some respects, but he had an important point: unfettered capitalism is very good at providing abundant consumer goods at low prices, but less good at providing basic necessities (affordable food, shelter, healthcare) for everyone.
In the old Soviet Union, with its very many faults, including (sometimes violent) coercion, people had a home (even if it was a cramped flat) and a job (even if it was a made-up one where they did little or no work). I’m not justifying that inefficient system; to do so would be an insult to the brave souls who risked, and sometimes lost, their lives opposing it or trying to escape from it. This does not mean that it has no lessons to teach us in the “decadent” West, where the gap between rich and poor continues to widen. The French Revolution (and others) may have been hijacked by extremists, but it didn’t arise in a vacuum!
Yeah tell us about the benefits of Soviet economy and their social programs like health care. I lived there as a youngster and can tell you how half of my kindergarten group wound up in a hospital after a nurse came to give us vaccines and used the same needle on each child. One of the kids from that group died. Insulin was impossible to obtain for diabetics, even in the 1990’s and people used and continue to use herbal remedies because effective western medications are not available. Do you realize there are hospitals in Russia without running water? What the heck do you think one does in such a place – you go there to die. Now lets talk about Soviet economy, communal apartments, and huge numbers of men being driven to alcoholism because they are all so content. We talk about black violence against whites epidemic in the U.S., but if you lived in Russia you would see the same statistics without any significant black presence. Soviet Union collapsed because it was unworkable and left behind a huge mess. I don’t want the same fate to happen to the U.S. because some dodos never learn and think socialism is just dreamy.
Not only Canadian patients, but Canadian docs flee here. They can get continuining education more easily, keep up-to-date with changes, and are not limited in the their decisions.
Canada has a great system for the healthy and for chronic conditions that can be managed by the usual means – e.g., heart care and diabetes. But the treatment is hardly cutting edge.
As for serious, acute illnesses, be it stage 4 cancer or something similar, the US has a better record.
It is in small countries that socialized medical care, combined with first rate training – Denmark, say, or Israel – works well.
Here’s a site with some good commentary:
http://www.obamacarewatch.org/
Somewhere on there, they’ve done a good description of Israeli and Australian health care, pros and cons. I believe they’re planning to do other countries.
That is why I say we should go to Federalist solutions; each state their own laboratory…
Trying to scale up socialised medicine to 320 million people is impossible.
Everyone that points to a possible success in Europe and Canada fails to compute the scaling up to a country of 320 million people.
Listen to the guy that was raised in the USSR and they only had 150 million people under their thumb.