View the complete Fed comments from March 18, 2015
Fed comments are in GREEN. Catherine Austin Fitts’ translation follows:
“Information received since the Federal Open Market Committee meeting in January suggests that economic growth has moderated somewhat.”
The global economy is slowing. The domestic economy is not doing as well as the Fed had expected.
“Labor market conditions have improved further, with strong job gains and a lower unemployment rate.”
U.S. employment has increased. Many people have temp positions, minimum wage services jobs, or they have dropped out of the job market entirely. The goal is a strong corporate economy without growth in wages.
“A range of labor market indicators suggests that underutilization of labor resources continues to diminish.”
The Fed seeks higher levels of employment without labor inflation. All productivity increases in recent decades have accrued to investors; not labor. Fed policies will help this to continue.
“Household spending is rising moderately;”
Higher food prices and mandated health insurance mean that we spend more on necessities – it is called “inelastic demand.”
“Declines in energy prices have boosted household purchasing power.”
According to the U.S. Commerce Department, lower gas prices have helped Americans spend nearly $10 billion less at gasoline stations in February than they did in the same month in 2014 (source: Wall Street Journal).
The oil card is working and global consumers have reason to be grateful to Mr. Putin and the Russian people.
“Business fixed investment is advancing…”
Banks and business can borrow at 0.1-4% and access equity markets. Consequently, they are reinvesting in plant and equipment, including the planet and equipment that will help them automate and reduce employment.
Small businesses, students and taxpayers must pay many multiples more; small businesses are not allowed to access or create equity and currency markets.
This engineered divergence in cost of capital between insiders and outsiders is centralizing power and wealth.
“…while the recovery in the housing sector remains slow and export growth has weakened.”
Plan B on housing is immigration and HUD subsidies. Recent surveys on homebuilders are negative, but VA, FHA, Freddie, Fannie have all loosened terms.
If you are a US Veteran, the VA will assure that you can get approved for a mortgage.
A Democratic Administration is going to do everything possible to kickstart the housing market.
This means…
If you have a variable rate mortgage, you should consider converting to fixed income before rates start to rise.
If you are renting in an area where the housing market is strong, you may want to consider buying if you want to own a home. Fiscal and monetary policy are committed to increasing house values in areas important to the 2016 election.
“Inflation has declined further below the Committee’s longer-run objective…”
Notice that there is no mention of the “D” word: deflation.
Deflation is happening for a variety of reasons. One is lack of trust. See the recent survey of institutions. As result, the average guy is trying to elude entanglement with the system.
This means…
The less debt you have, the better; particularly credit card debt or any debt with a variable interest rate.
…largely reflecting declines in energy prices.
If you look at many commodities, not just oil and gas, the decline in prices is significant – like a sign flashing “deflation.”
“Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.”
This means that investors anticipate deflation…not a good sign if the central bank is trying to engineer inflation to manage growing levels of debt.
“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.”
If prices are not allowed to adjust, there will eventually be no employment. Please re-read Atlas Shrugged.
This means….
You want to do everything possible to build resiliency and lower overhead – the more you can do for yourself, the better.
“The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate.”
This is the slow burn.
“The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced.”
We want to grow the economy with cheap labor! We want full employment with low wages!
“Inflation is anticipated to remain near its recent low level in the near term,”
We are fighting deflation…
“but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further.”
…but we think we can beat it. When we do, we’re concerned that labor could start to get expensive and personal spending could draw capital away from business investment…
Got to keep big companies competitive with the Asian juggernaut!
“…and the transitory effects of energy price declines and other factors dissipate.”
Warning: Expect oil and gas prices to head higher. Low prices are temporary.
Boone Pickens says $70 by the end of the year; Kiplinger says $60-65 by August.
“The Committee continues to monitor inflation developments closely.”
Insurance companies and pension funds want higher interest rates. But exporters and the US government want lower interest rates. The politics of managed economies are difficult.
“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate.”
More free money for the banks – the one sector of the economy that has deleveraged since the bailouts. How do you provide political air-cover for all that free money? Talk about employment.
“In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation.”
If we keep giving free money to the banks and government and the government keeps handing out checks, we can keep the slow burn going forever!
“This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.”
Insurance companies and pension funds want higher interest rates. But exporters and the US government want lower interest rates. The politics of managed economies are difficult.
And this will require a lot of coordination with the European and Japanese central banks.
It’s an art, not a science!
“Consistent with its previous statement, the Committee judges that an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting.”
It’s tax time – we will not pull liquidity from the markets before the American people have paid their taxes!
“The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.”
Market consensus has moved back a likely increase in interest rates from June to September to December. If the Fed does not raise rates this year, that leaves them in a position to raise rates next year – during an election year.
“This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.”
Calibrating the slow burn is a FOMC meeting to FOMC meeting thing…
“The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.”
Quantitative easing will continue through roll overs from the back door.
“When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.”
We want a steady slow burn – no hiccups that could upset the political applecart.
“The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”
No matter what happens, we reserve the right – in coordination with the US government – to engineer free money into the pockets of our members and select insiders.
“Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair;”
Who is deeply concerned about intrusions and threats from Congress. Wait! There’s more to worry about. Bill King reported that S&P futures rallied 12 minutes before the FOMC announcement was made public. That indicates a leak. Time for the Fed to build a Faraday Cage board room?
“William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams.”
Puzzling over how to keep the economy going with monetary policy while Congress is politically unable to address fiscal policy held hostage by a national security state operating outside the law.
