Fedspeak and Gobbledygook

Two scenarios. In each scenario, Pete told Charlie not to mess with his golf bag. Charlie then messed with Pete's bag.

    Scenario 1: Pete slugs Charlie

    Scenario 2: Pete tells Charlie that he is thinking about someday maybe retaliating in some way against Charlie. 

These scenarios remind me of the Fed and its current plans to retaliate against the hated onslaught of inflation. Keep in mind that inflation has already picked up. The rise in inflation is not probable nor off in the future. It is here and now. 

The Fed reminds me of the parent who threatens and threatens his child but never follows through. The Fed shows it true colors with gobbledygook. The Fed does NOT want to do anything about inflation until it is forced into it kicking and screaming. Meanwhile it resorts to gooledygook.

Below -- in italics below are quotes from an article* published in the WSJ on December 15. Following each quote I comment. The bottom line for all this nonsense is that the Fed cannot be trusted to do one damn thing about inflation. 

The Federal Reserve set the stage for a series of interest rate increases beginning next spring, completing a major policy pivot that showed much greater concern about the potential for inflation to stay high.

     Setting the stage for a future pivot is not an action, is not a date, and shows nothing about concern. A major policy pivot is a glittering generality and not a specific policy action.

The Fed penciled in at least three quarter-percentage-point rate increases next year. 

   Penciled in is not a decision. Notice that the policy changes are indicated for next year. Inflation is a problem now and they are talking about a policy "sometime next year". Are they going to let inflation get rolling for a few months and then get serious about it?

For months, Fed leaders had stuck to a view that higher price pressures this year were caused primarily by supply-chain bottlenecks and would ease on their own. But Fed Chairman Jerome Powell had in recent weeks signaled much less conviction about that forecast, and the projections Wednesday suggest most of his colleagues share his concern.

     Notice this speaks of projections at the meeting. Projections are not a policy or a policy change. Inflation is here and now. Projections underlie real policy changes when? His colleagues are concerned. What does that mean? I'm concerned about global warming but I don't do anything about it. 

They approved plans that will more quickly scale back their Covid-19 pandemic stimulus efforts, ending a program of asset purchases by March instead of June. That opens the door for them to start raising rates at their second scheduled meeting next year, in mid-March.

     Opens the door? Scaling back? This is like you saying that the doctor ordered you to lose weight to prevent a heart attack, so you have decided to schedule a gain of only 10 pounds next month instead of 15. In the old days, the policy would not have planned to scale back purchases. It would have instigated asset sales. That would be a real policy to fight inflation. 

“There’s a real risk now, I believe, that inflation may be more persistent and…the risk of higher inflation becoming entrenched has increased,” said Mr. Powell at a news conference Wednesday afternoon. “That’s part of the reason behind our move today, is to put ourselves in a position to be able to deal with that risk.”

     He clearly says there is a real inflation risk now. The risk is not next March. The risk is right now. Does he deal with it now? No. He wants to put himself in a position. Wow. Now that's action. Putting himself in a position. 

Fed officials in early November agreed to reduce their then-$120 billion-a-month in bond purchases by $15 billion a month, to $90 billion this month. On Wednesday, officials said they would accelerate that wind-down beginning next month, reducing purchases by $30 billion a month. As a result, they will purchase $60 billion in Treasury and mortgage securities in January, putting the program on track to end by March.

      Now Powell is getting specific. But note. The math says that monetary policy is going to keep injecting money. They should be removing money. There are mountains of money out there. Yet he is clear he wants even more.....by $90 million more this month and finally turning off the money hose in March of 2022. March! That's three months from now. If inflation is a real risk today, why does it take so long to get back into neutral? 

For the first time since the Fed slashed rates to near zero when the pandemic hit the U.S. in March 2020, Mr. Powell said nothing to dispel expectations that officials could be contemplating rate rises in the next few months.

“We’ll be in a position to raise interest rates as and when we think it’s appropriate,” he said. 

“And we will, to the extent that’s appropriate.”

      Those above three quotes are about the Fed's policy to raise interest rates. The first one says Powell said nothing to dispel rate rise expectations. Dispel? Why not say it? We are going to raise rates. The second two quotes add words -- "we will be in a position". What does that mean? Is he going to move from outfield to infield? What does "when appropriate" mean? 

Summary: Obfuscation. Gobbledygook. Stop inflation now before it is too late. 

https://www.wsj.com/articles/fed-officials-project-three-rate-rises-next-year-and-accelerate-wind-down-of-stimulus-11639594785?mod=hp_lead_pos1