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FOMC Statement Translated

— James West

I thought it might be useful to some readers to provide a translation of today’s statement by the Fed on behalf of its Federal Open Market Committee. Though the statement is in English, it tends toward Orwellian Doublespeak, which might be construed as misleading. In fact, I don’t understand why these statements aren’t prefaced with a disclaimer outlining the forward looking nature of these statements, and how theses statements are made by individuals who have a vested income in the result such statements induce – namely, buying of stocks and bonds in U.S. markets.

So, in the interests of simple visual differentiation, the verbatim text of the FOMC statement is in italics, and my translation is not.

“Information received since the Federal Open Market Committee met in June suggests that economic activity expanded at a modest pace during the first half of the year.”

No real economic growth occurred, and the information is a self-generated reflection of the $85 billion fabricated out of thin air by the Fed each month.

“Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated.”

No new jobs have actually materialized. We just booted more people out of the column we arbitrarily adjust to reduce the volume of people we define as unemployed.  Thus, this number is meaningless, while being very misleading.

“Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat and fiscal policy is restraining economic growth.”

The housing sector is strengthening only in terms of the fact that our buying $45 billion a month in mortgage securities makes houses worth flipping back and forth to generate profits for the big banks who are the recipients of  our largesse. These are generally people who support us politically. Mortgage rates are rising as a direct result of our purchase of $45 billion a month in mortgage securities, which creates the appearance of demand for mortgages, and thus mortgage prices rise slightly in response to the competition for available housing supply.

Partly reflecting transitory influences, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable.

We have become as devious and duplicitous in our methodologies for generating statistical inflation data as we have for statistical employment data, and so, as is the case with employment numbers, these numbers are essentially meaningless, but quite effectively misleading.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate.

We are desperate to maintain the illusion of prosperity that our co-conspirators the Financial Media are able to project through our relentless manipulation of statistical data and so we will continue to create statistical incremental economic growth and improving employment regardless of what actually happens in the real world.

This is the boilerplate self-promotional statement we incorporate into every FOMC statement to remind the public that we are utterly delusional about our role and effectiveness at executing these functions.

The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall.

We don’t actually believe there is any hope of genuine economic growth or employment improvement whatsoever.

The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

The only thing we fear more than rampant inflation is deflation or stagflation. These are both present and growing but there’s nothing we can do about it.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.

We found out the hard way that the only way the market will continue to reflect the billions in corporate welfare we are injecting into it through our counterfeiting program is to continue it, and so despite representations of tapering or ending Quantitative Easing, there’s absolutely zero chance of us actually doing that.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability.

It is likely that we are going to have to ramp up our counterfeiting program as the corporate welfare program is growing less effective at generating ersatz GDP and so the cost of perpetuating the illusion of prosperity through the mainstream financial media will probably go up.

“The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.”

We are repeating ourselves for the sake of dramatic effect

In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

We are desperate and don’t know what else to do.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens.

We are so at a loss as to what to do, that we think repeating ourselves is probably a good strategy.

In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.

This is how we will use the savings of citizens far more responsible than ourselves to service our debt while at the same time ensuring free money for our partners in crime at major world financial institutions. Besides – if we allowed the rate to rise we would be actually bankrupt and not just technically bankrupt.

In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

We promise not to cause any market tantrums by head-faking the market with vapid statements about ending this financial welfare to which the markets have obviously become severely addicted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen.Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

Esther L. George is the only sane one among us and so she will be booted off the FOMC and out of the building at our earliest opportunity. If she talks to the media, we’ll have her killed. With a drone.





James West

James West

Editor and Publisher

I employ a Capital Efficiency Model that dictates money should never be exposed for longer than is absolutely necessary to the possibility of being lost. Thus, I routinely sell half my position when a stock doubles from my entry price, and I sell stocks that lose 20%, unless there are...
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