From the Chairman,
Not much has changed since we last met in March. The new data indicates that the economy has gone from growing at a snail's pace to a slightly better turtle pace.The job market has gotten a little better; more people have found jobs but there are still a lot of people without jobs. People are shopping again and businesses are building more factories overseas. Though some things are getting better, the housing ATM network is still under repair. The cost of stuff has gone up a bit, but this is mainly because oil and gasoline prices and thus not that big of a deal. The good news is that your salaries are not going to be rising anytime soon because that phenomena only occurs in Asia these days.
Because a piece of paper says we need to, we will print money to create jobs and keep prices low at the same time. This is probably not possible, but the paper says nothing about that. We think the economy will be pretty chill for a few months and then warm up. Consequently, we anticipate that the unemployment rate will decline gradually to levels that make more sense with what following the paper has produced in the past.
The 10% correction in Apple (AAPL) and the sell off in European stocks could cause some problems. But the increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily. We are not sure why, but that makes sense if you assume we think oil and gas prices won't go up anymore. As a result, we anticipate that subsequently inflation will run at or below the rate that we think is most consistent with what the paper followers have shown us in the past.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with the piece of paper, the Committee will continue to offer free punch for speculators. In particular, the Committee decided today to keep the cost of a glass of punch between zero and twenty-five cent and currently anticipates that economic conditions--including low levels of making stuff and a subdued outlook for salaries over the medium run--are likely to warrant exceptionally cheap punch bowl access at least through late 2014.
The Committee also decided to continue its program to shift from short-term debt monetization to more long-term debt monetization as announced in September. The Committee is maintaining its existing policies of rolling over our portfolio for now. The Committee will regularly review the size and composition of its securities holdings and is prepared to print more money to monetize debt if Apple's correction exceeds the 20% bear market threshold or if sh** in Europe hits the fan again. Of course, anything we do will be in accordance with the piece of paper.
All but one person on the Committee agrees with this view. And the person who disagrees is not saying that we should stop serving punch for zero to twenty-five cents, but rather that we should just admit that the economy is now strong enough for us to tell everybody at the party that we might have to charge a little more for our punch before the end of 2014.