More from the Fed: The FOMC has adopted economic thresholds for when it would commence tighter...

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untrusting investor Comments (9879)
 
So what are the inmates at the Fed asylum gonnna do if inflation does go higher than 2.5%???
12 Dec 2012, 12:53 PM Reply Like

GaltMachine Comments (920)
 
Tell it to stop :)
12 Dec 2012, 12:55 PM Reply Like

limitless Comments (84)
 
How is this fair for people who like to short overpriced companies?
12 Dec 2012, 02:11 PM Reply Like

winningtrader Comments (2265)
 
There are three things they can do:
1. Change the calculation of inflation to make it ''calculate'' lower.
2. Change the target inflation to say 3.5%.
3. Do both 1 and 2.
12 Dec 2012, 03:04 PM Reply Like

Whitehawk Comments (2787)
 
Yet no proof that QTM and linkages to econometrics yields consistently reproducible results. The Fed will buy bonds as long as they can prevent dislocations in the interest rate markets.
12 Dec 2012, 12:55 PM Reply Like

David Urban Comments (1034)
 
What do you mean prevent? They are creating the dislocations.
12 Dec 2012, 02:17 PM Reply Like

Jeremy Johnson Comments (764)
 
The Fed will buy bonds as long as the government is running ~10% budget deficits. The government will run ~10% budget deficits as long as they feel it is necessary to keep GDP growth above 2.5%. Even if inflation goes to 4%, the Fed will merely raise the short-term rate a percent or two in order to make the rate less negative than it otherwise would be.

Unless there is a political storm (on the order of a third party gaining material amounts of votes) due to US Treasuries outstanding / GDP reaching some significant milestone, 150%, 200%, etc., this strategy will not change.

However there will still be huge amounts of debate in Washington about where the money gets spent, everyone will want there piece. Fiscal cliff is really about who gets what, not how bug what is.
12 Dec 2012, 02:28 PM Reply Like

Petelovesamy Comments (178)
 
To celebrate the Obama-Biden Victory, the ultra liberal Fed prints mor $$'s as, "In God we Trust", and leave to the children more devalued money !
12 Dec 2012, 01:11 PM Reply Like

mickmars Comments (1087)
 
Got nothing to do with liberal or "conservative". Remember Alan Greenspan? He was George Bush's personal money printer for eight years.
12 Dec 2012, 02:47 PM Reply Like

blueice Comments (2475)
 
Mick, and both are liberals....Bushneck, did lie when he said he was a conservative...
16 Dec 2012, 10:32 AM Reply Like

donmcint Comments (43)
 
Fed new Credit Card business! Issued one to Obama: No spending limits! Rewards program: Every dollar spent gets a vote!
12 Dec 2012, 01:38 PM Reply Like

Deja Vu Comments (604)
 
So if the unemployment stayed stubbornly high like it has in Europe and instead the inflation rocketed up? Does Uncle Ben really feel that he has the credibility to reverse the long term inflation expectation effect? The fed can inflate, but it's much harder to control the inflation. Already the fed has 3T on the balance sheet for an approx. 15T US GDP. Learned fools rule at the Fed.
12 Dec 2012, 02:17 PM Reply Like

mickmars Comments (1087)
 
Any thoughts on how low the 30 year mortgage could go? 3%? 2.5%?
12 Dec 2012, 02:49 PM Reply Like

David Urban Comments (1034)
 
I am just waiting for that bubble to pop. Can you imagine the bloodbath if interest rates were to rise?

It may take years but will be fun to watch.
13 Dec 2012, 05:51 AM Reply Like

bbro Comments (7844)
 
6.5% Unemployment rate or Housing Starts at 1.25-1.30 mil
12 Dec 2012, 03:14 PM Reply Like

Tack Comments (9248)
 
He's going to find out that his 6.5% unemployment threshold is like that carrot at the end of a donkey's nose; we'll never get there.

Why won't we get there? Because of two interrelated factors:

1) After years of increased productivity in production and distribution brought about by major technological change, corporations, after keeping vast numbers of no longer-needed employees on the payrolls, were forced in 2008 to purge every nonessential employee in order to stay solvent. These former employees are simply not going to be rehired, and many will find it difficult to locate alternative employment for outdated skills;

2) The ever-increasing lengths and amounts of compensation for unemployment, housing, food, healthcare, "disability," etc., have turned unemployment into a growth industry. The benefits are now so attractive that many choose not to work at all, or to work in under-the-radar cash jobs, while pocketing both the benefits and cash pay tax free.

It would take either an amazing growth surge for the economy, a national "make-work" program by the Government, a substantial curtailment of non-work benefits, or outright jiggering of the numbers for this economy to regain 6.5% unemployment, or anything better.
12 Dec 2012, 03:59 PM Reply Like

The Last Boomer Comments (792)
 
Productivity in production and distribution has been increasing for a few thousand years now and particularly fast since the industrial revolution and I bet there were folks 150 years ago predicting how high unemployment would remain high for the very same reason. They were wrong. It has not happened before and it is not going to happen now either. There will be new, more creative ways for people to engage productively in society. New professions will emerge, new industries will be created.
12 Dec 2012, 10:51 PM Reply Like

Tack Comments (9248)
 
Boom

Yes, but being unemployed has never been so favorably subsidized. This matters, especially in a government whose power is enhanced by creating dependency.
13 Dec 2012, 02:53 AM Reply Like

David Urban Comments (1034)
 
So true, the only way to get benefits now is to do nothing which creates a dependency.
13 Dec 2012, 05:52 AM Reply Like

yv204 Comments (114)
 
Interestingly, this most recent statement implies that the rates could start moving up sooner rather than later. So far, the Fed has been guiding the markets toward the latter part of 2014 as the end of the period of extreme accommodation. However, a 6.5% unemployment rate target could be reached as early as the 3Q-4Q of 2013, and inflation expectations that are "anchored" at below 2% are just that -- expectations that can move up or down very quickly (see the last economic recovery).
12 Dec 2012, 04:03 PM Reply Like

june1234 Comments (927)
 
Was it something I said? A decent rally gone after Fed speaks, These QEs seem to be having less and less an impact as we move along in this QE era. the long bond actually went up after the Fed announced it was buying more of them
13 Dec 2012, 02:23 AM Reply Like