Bloomberg is reporting the rate-setting Federal Open Market Committee FOMC has considered doubling the frequency of its forecasts and extending their horizon.
“Any enhancement to the FOMC’s forecasts will be very valuable in terms of helping us understand the committee’s economic views and anticipate future monetary-policy actions,” said Brian Sack, senior economist at Macroeconomic Advisers LLC in Washington, who used to work at the Fed.
My comment: It won’t help a thing because no one can possibly believe what they are saying.
The Fed governors and district-bank presidents who comprise the panel have discussed publishing outlooks four times a year on inflation, growth and unemployment, officials familiar with the talks said last month on condition of anonymity. The projections would span three years, rather than two, as is the current practice, they said.
My comment: They cannot get two years right. Now we have to listen to them getting three years wrong.
Such a proposal would fall short, for now, of Bernanke’s ambition of having a formal, numerical, long-run inflation objective.
My comment: Inflation targeting, given that Bernanke means price targets, is pure madness. Prices cannot be measured and even if they could, the Fed cannot remotely come close to controlling prices in a global economy.
Besides, as Ron Paul suggests there is not a single person in the US that believes the CPI numbers. Heck, I am a deflationist and I think they are grossly understated except for housing which is now grossly over stated.
And given that food and energy will be tossed aside and asset bubbles ignored, the whole idea is just another way for the Fed to punish savers. The entire proposal is nothing more than an excuse to inflate when the price of widgets from China drops.
Finally, there is a moral hazard with price targets. Attempting to purposely produce positive price increases is a an attempt at purposely producing dollar debasement and theft from wage earners.
“We’re trying to give more clarity to the markets of why we’re thinking what we’re thinking,” Fed Governor Kevin Warsh told economists in New York this week.
The fed is not saying what’s on their mind now, nor are they likely to anytime soon. See What’s Really On the Fed’s Mind? for more on this topic.
Bernanke and his colleagues asserted in the past 10 days that economic risks are “balanced” between slower growth and faster inflation.
If you are looking for proof of lies, look no further than the above statement. As I said before: Actions speak louder than words, and this Fed is clearly spooked.
So what will we get from more frequent reporting from the Fed? We will get more frequent lies, and that’s about it. This should easily be transparent to all.
By the way Caroline Baum is back writing again after a bit of an absence with her hand in a cast. Her first post back is one of my favorites ever. Please consider the hilarious Rubin Favors `Strong Stock’ Policy for Citigroup.
Welcome back Caroline, we missed you.
Mike Shedlock / Mish
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