The minutes from the Federal Open Central Planning committee meeting in Nov reveal a Fed discussing the possibility of creating a big picture framework where policy steps would depend on certain economic triggers, whether it was inflation or GDP targeting in order to better communicate its intentions to the rest of us. No changes were ultimately made because of the challenges involved in this. After a discussion on the economy, inflation and markets, they discussed what next and “a few members indicated that they believed the economic outlook might warrant additional policy accommodation.” Now, only one officially dissented, Evans, so it seems that Dudley, Yellen and Tarullo were the other few that talked about more steps as they’ve said in speeches. Bernanke also of course has talked about doing more if needed. The bottom line with the Fed at this point is when they embark on QE3 as the top people there seem to want it. Whether they couch it in future economic conditions or not, the result is still the same, printing money that they think will create a better environment for economic growth that they haven’t been able to achieve yet. This is because the medicine being delivered by the Fed reflects a misdiagnosis of the disease.
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