Mish’s has the link to the news article – a carefully written report that says everything is swell and the Fed is certain that we’re in a good, solid economic recovery and thus their only concern is just when they’ll raise interest rates to combat the inflation which simply must follow upon the Keynesian stimulus we just finished.
But what if the inflation fails to materialize? What if the whole stimulus thing doesn’t work? Ah, then we have to be prepared – and so there is in the report voice, but very muted, that there’s just that chance things aren’t going to work out as predicted:
…”If events in Europe evolve so that they have a more severe and broad impact on financial markets, then the scope of the problems for the U.S. could be magnified,” Charles Evans, president of the Federal Reserve Bank of Chicago, said in a speech last week….
…”The European sovereign-debt situation is serious, and there are many unanswered questions about how events will unfold,” James Bullard, St. Louis Fed president, said in Tokyo on Monday…
This is known as hedging – it is members of the Federal Reserve making statements which will allow them, post-crash, to claim that they saw it coming and warned us about it. They’ve got their number crunchers who have taken Keynesian economics as a law of nature and thus they’ve come out with “stimulus = inflation = economic growth”. But the problem is we’ve had all the stimulus in the world for a year now and, if anything, the global economy continues to deflate (you might recall – buried under the stories of allegedly increasing retail sales – word that Wal Mart and other retailers are severely cutting prices to try to lure buyers back in to the stores).
If we are deflating and the Eurozone crisis is as bad as some think (and it is) then the double-dip is right around the corner and no one wants to be caught like Bernanke was prior to the past recession – gleefully assuring one and all that nothing could possibly go wrong (as an aside, I don’t think the recession ever ended – the “double dip” will just be a more severe down turn than the slump we’ve already got…I know that GDP numbers show growth, but my bet is that after all the data are in, several years from now, someone will calculate that without the stimulus of entirely borrowed money, no growth would have registered, at all). Brace yourself for it, good people – and, remember, it won’t be all that bad. Poverty is good for the soul, in the long run.
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