It must be scary to have an entire nation counting on your organization's ability to control the economy . . . when, in reality, you're all completely clueless.
On the brighter side, at least the Fed is beginning to realize that it is clueless. That's progress!
AUGUST 31, 2011
Economy Deeply Divides Fed
New Records Show Central Bank Officials at Odds Over How to Revive Recovery
By JON HILSENRATH
wsj.com
Federal Reserve officials are as deeply divided as they've been in decades about how to spur the flagging economy, records released Tuesday show, as they stake out positions on what, if any, action to take at their September meeting.
Minutes of the Fed's Aug. 9 meeting, released Tuesday after the normal three-week lag, offered new evidence that some officials wanted to immediately restart a controversial bond-buying program aimed at spurring the economy. Others felt that even the smaller steps the central bank instead chose were too aggressive.
Officials considered a range of actions—which included setting numerical targets for inflation and unemployment, rejiggering their holdings of Treasury securities and trying to push already-low short-term interest rates a little closer to zero, all with the purpose of boosting markets and economic growth. They also considered doing nothing.
After the minutes were released, investors cheered the prospect of more bond-buying. The Dow Jones Industrial Average finished the day up 20.70 points, at 11559.95, after being down earlier. Gold rose and yields on U.S. government debt fell.
Various Fed policy makers have been positioning themselves for the debate at the meeting on Sept. 20 and 21. The minutes suggested that, barring a shift in coming indicators, some policy makers will keep pressing for more action to spur the economy.
In times of economic weakness, the Fed normally pushes down short-term interest rates to lower borrowing costs and encourage investment and spending. But it already has lowered short-term rates to just above zero. At the August meeting, officials ultimately decided by a 7-3 vote to make what amounts to a conditional promise: They would keep short-term interest rates near zero for at least two years, as long as inflation doesn't threaten to rise too much or unemployment doesn't fall substantially before then. It marked the first time since 1992 that three Fed officials dissented from a policy decision
Full story: http://online.wsj.com/article/SB10001424053111904332804576540651581740740.html?mod=WSJ_hp_LEFTTopStories
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