Fed Kicks the Can Down the Road

The Fed made no substantial changes to policy or the statement. The key sentence on “exceptionally low levels of the federal funds rate for an extended period of time” was unchanged. Essentially, they didn’t want to take any chances of disrupting the fragile recovery and will kick the can down the road as far as the dollar and inflation.

As far as inflation, they continue to “expect that inflation will remain subdued for some time.” What about the roaring financial markets? What about gold near $1100? What about the dollar getting crushed? Not an issue, apparently.

At some point, they’ll have to start to remove their enormously easy monetary policy. But they’ll put it off as long as possible. The next FOMC decision is in 6 weeks on December 16th. Things will be very interesting between now and then. Will the dollar hold up? Will gold explode? Will the stock market collapse anyways? Will it explode higher?

Comments

[j-dub:]

"Fed Kicks the Can Down the Road"

The problem is, it's a cul de sac.

Nov 04 04:25 PM

[fleeing omega:]

Yep, and they will keep kicking it as long as the can still budges, you can bet on that.

But like the author says, at some point in the future something will spiral out of control and serve to set off a confligration. The higher the market and commodities go, the more pressure on the ill-fated dollar, on bonds, on foreign creditors and on gas at the pump.

Nov 04 05:14 PM

[untrusting ...:]

The Fed's been doing that for many years already, so why would we even think they would do anything different? Paul Volker was the last Fed Chairman with any guts and they have pretty much "silenced" him for now. Greenspan and Bernanke are just closet big bankers whose job it is to ensure the financial industry remains the ringleaders and can maximize their profitability. The real economy is just a secondary issue to Bernake.

Nov 04 05:49 PM