Fed to announce inflation target; set foundation for qe#

pmbug

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The Federal Reserve could take the historic step this week of announcing an explicit target for inflation, a move that would fulfill a multi-year quest of the central bank's chairman, Ben Bernanke.
...
While Bernanke has touted a numerical inflation goal as a cornerstone of central bank best practices for years, the idea has become timely because it could help quell nagging doubts that the Fed's unprecedented easy money policies are setting the stage for a nasty bout of inflation.

The U.S. economy strengthened toward the end of last year, with job growth accelerating and the unemployment rate dropping to a near three-year low of 8.5 percent.

But the recovery is not expected to retain the momentum.

By announcing a target, the Fed could smooth the path to another round of bond buying should the recovery falter.
...
More: http://www.reuters.com/article/2012/01/22/us-usa-fed-target-idUSTRE80L0NU20120122
 

swissaustrian

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Jim Rickards says it's gonna be a nominal (= NOT inflation adjusted) GDP target, not inflation itself.
 

ancona

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QE doesn't do anything to help ordinary Americans. It merely keeps enough cash in the Ponzi scheme to continue for a while longer.
 

bushi

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QE doesn't do anything to help ordinary Americans. It merely keeps enough cash in the Ponzi scheme to continue for a while longer.
Exactly! Same thing with the so-called bailouts. In layman terms, it looks like that:

  • Country A pledges to cover Banksters debts, to "rescue the system from collapsing", because otherwise, it would be "Dark Ages all over again the very next day"
  • Terrible move, markets hate it... no one wants to borrow them any money anymore...
  • IMF/ECB steps in... LENDS the money they DO NOT HAVE, thus lending it into existence...
  • Poor bastard Country A, pours billions/trillions of that BORROWED credit into their (inevitably) broken banking system, preventing it from the immediate collapse. Not into their roads, hospitals, police, whatever... Just into insolvent BANKS.
  • of course, once that money is spent on banks, it will not be spent PRODUCTIVELY. And banks, well, they do not lend it further to SMBs, they hold dearly to it. Why should they, if they are spared from having a robust & efficient BUSINESS MODEL, and it is enough to be too big to fail, and collect the monies handed out by stupid governments?
  • because of that, the economy is exactly as fucked up, as it was before the "bailout". With the only difference, that there is a sharp increase in debt, that has to be serviced = increase in taxes and government borrowing. And "austerity measures", which translates to "even less money & services for the people". So, it is actually much more fecked up, than it was before the glorious "manna from heaven"; the Bailout.

This is so fecking stoopid, that it would seem that even a child should be able to grasp that. But not the governments, nor "the people", apparently.
 
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pmbug

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[ame=http://www.youtube.com/watch?v=LtNinfLrebI]Rickards discusses nominal GDP targeting[/ame] (embedding disabled - click link to watch on YouTube)

He basically says it's a blank QE check. Allows them to enagage QE whenever they feel the need without limits on size or constraints on when it might end.
 

pmbug

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Link in OP still works for me.

The YouTube video apparently has embedding disabled though. You need to click the link to watch it on YouTube.
 

swissaustrian

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No inflation or GDP target this time, just (at least) one more year of ZIRP until 2014 now...

I'm calling ZIRP4EVA
 
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pmbug

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lol. Saw the graphs at the top of the home page and thought to myself - "I guess the FOMC announcement was released."
 

DSAbug

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We need to hold these levels by week's end. If we do.. We target 1900 by april...
 

swissaustrian

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We need to hold these levels by week's end. If we do.. We target 1900 by april...
Opex will be critical, I agree.
The banks need a round number at the biggest open interest on opex, so the targets are 1700, 1675, 1650 and so on for gold and 33, 32.5, 32 etc. for silver.
 

cshawcuk

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It's great watching him speak and the gold price at the same time...the more he speaks..every ha ha time he does just watch the gold price...shoots up like a rocket!
 

DoChenRollingBearing

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So, it's ZIRP for the next 2 + years... How horrible for savers, no safe and decent income anywhere.

So, no interest income until 2015... And what does THAT have to say about what TPTB think is going to happen to our economy?

I would HAVE to think that a fair amount of money seeking safety is about to chase gold and silver prices up. Way up.

Future historians will write about how dumb we were to allow our economy to be wrecked by QE-to-infinity and deficit spending...
 

swissaustrian

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So, it's ZIRP for the next 2 + years... How horrible for savers, no safe and decent income anywhere.

So, no interest income until 2015... And what does THAT have to say about what TPTB think is going to happen to our economy?

I would HAVE to think that a fair amount of money seeking safety is about to chase gold and silver prices up. Way up.

Future historians will write about how dumb we were to allow our economy to be wrecked by QE-to-infinity and deficit spending...
My grandfather survived the Weimar hyperinflation, my family has passed the stories about this time on from generation to generation. It's stunning to see how history rhymes itself...
 
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