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FOMC Minutes: More of the Same

By: C. Jay Engel

Well, the Fed released the minutes of its January FOMC meeting and lo and behold, there was nothing of interest. It was the same bland “Real Soon Now” talk regarding rates, coupled with a dose of “we don’t really have a clear picture just yet.” Imagine that. They’re going to keep their eye on inflation trends and the unemployment rate, which is comforting given the fact that they are the source of inflation and unstable labor markets. 

The Financial Times reports

After lifting rates twice in two years, Janet Yellen, Fed chair, and her fellow rate-setters are contemplating stepping up the pace of increases as economic growth accelerates and prospects rise of tax cuts by the Republican-controlled Congress.

The thing is, the rate-setters have been in deep contemplation for almost a decade. But they won’t give up until they’ve got rates back to normal! Talk about job security. But here’s the good news: they reflected on the acceleration of economic growth, which is depicted below. If you don’t see any growth (after all, the Obama years marked the first administration since Hoover without a single full year of 3% GDP growth), just use your imagination. 

The entire rate hike narrative is a sham, and the only reason they are talking about it is because they have to maintain the idea that they “fixed the economy.” A fixed economy shouldn’t require absurd monetary policy. They know that. So they keep kicking the can, pretending like all they are looking for is more verification from the data. But as was mentioned Monday, such data accumulation plays right into their central planning hands. They can always interpret it however they want, whenever they want. 

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