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Goldman's Take On FOMC Minutes And "Price Level Targetting"
From Jan Hatzius:
"BOTTOM LINE: Minutes of Sep 21 meeting confirm that FOMC was dissatisfied with the performance of the US economy even though most did not expect either renewed recession or deflation. The committee considered a range of options, focusing on Treasury purchases but including the possibility of adopting target paths for either prices or nominal GDP. Most participants appear to have thought that the status quo would justify renewed easing relatively soon, but a few thought more weakening would be required."
Spot on Jan - now please ask the Spear Leeds boys if they can please invert every single input function in REDI, so that Buy is Sell, and people can at least pretend they are Selling on bad news, and vice versa...
More from Goldman:
MAIN POINTS:
1. The backdrop of these minutes was clearly one of disappointment regarding recent economic activity and inflation, both of which were judged to be unacceptably low relative to the committee's mandates. The staff lowered its growth forecast for the remainder of 2010 and slightly for 2011 as well. While its view anticipated a small absorption of spare capacity by 2012, this was not judged to be enough to prevent a net decline in core inflation between 2010 and 2012.
2. Although the statement released at the conclusion of this meeting highlighted the fact that inflation was lower than most members saw as consistent with the FOMC's mandate, there is no suggestion in these minutes that this position was taken for any reason other than the fact that inflation remains subdued. In particular, while we have surmised that this may have been a back-door way of strengthening the commitment to keep the federal funds rate "exceptionally low" and continue to believe that it has that effect, nothing in the minutes overtly supports the hypothesis that this was a significant motivation.
3. In considering the range of options it might have in responding to ongoing weakness, the committee's main focus was on purchases of longer-term Treasury securities and efforts to influence inflation expectations. However, at least some participants also suggested that the committee could consider targeting the path of the price level or targeting nominal GDP. However, no further details were provided to options that probably are favored by only a few members, albeit potentially key ones, at this time.
4. In the section discussing the decisions taken with respect to the statement, the language hints-but does not specifically say-that some members would have been ready to adopt quantitative easing at the September meeting. Specifically, "…some members saw merit in accumulating further information before reaching a decision about providing additional stimulus." To us, the first part of this reads as if the alternative was to act immediately. Also, "in addition, members wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus." In short, the conditions were in place to act, but some time was needed to figure out how much stimulus to apply.
5. Toward this latter point, the minutes suggest that "many" participants thought that continuation of the status quo was sufficient to justify more easing in policy, while "others" thought more weakness would be required. To our ear, "many" is more than "others," particularly when they are mentioned first.
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http://img202.imageshack.us/img202/7063/drbernanke.jpg
This deserves to be posted as one of those "a picture is worth a thousands words" classics. For the younger ZH'ers, here is the reference.
http://www.imdb.com/title/tt0057012/
http://en.wikipedia.org/wiki/Dr._Strangelove
http://www.hkhinc.com/newmexico/albuquerque/doomsday/pickens.jpg
The Montgolfier brothers would be proud of this market..........
Predates the B-52....
And picture is saved! Love that movie. One of my dad's favorites.
"Mr. President! We cannot allow a mineshaft gap!"
Never seen such wishy washy Goldilocks BS ever.
Q/E2 wont ever be delivered, just a bunch of hype for the sake of hype while they POMO pump daily until the rug is pulled out.
Ben...maybe this time you could send the helicopters in the direction of the peasantry? I'm just sayin' .... as long as you're gonna hand out free money....a few crumbs our way, maybe?
Fuck the central planners.
Tyler,when we say "targeting prices" we mean of treasurys right?
The whole discussion is a how much issue, not an if issue
2 months ago Q/E2 was a done deal certainty of around $5 trillion to be plopped into the markets, and was the excuse given for Septembers ridculous 1,000 point DOW rise. Now its maybe could be depending on what we see, certainly no specific numbers given...and the markets continue to be pumped up? That 1,000 DOW points should have been removed immediately on this Goldilocks garbage. Something is very wrong here.
I would love to have a tradable fucking market. These central planning fucks need to go away.
It's actually been very tradable since summer. When you get swings in each direction of 10-13%, that's tradable. Couldn't ask for a better trading environment.
Each day that passes we see how stupid Bernanke really is after all. Buying more Treasuries does nothing. Rates are already at record lows, yet he thinks lowering them more is going to increase consumption? People have no jobs, they have no more credit, what credit they did have has been taken away by the scumbag banks, and he thinks lower interest rates are going to magically get people to buy anything? Not to mention used cars and homes do not add to the GDP, so what is the point? What a complete moron Obama is to put this moron Bernanke in the FED. When this bond bubble pops, its going to be very very nasty. The crooks that are in deep on these treasuries are going to try to front run the FED out of them, just as they front run the FED into them. Its going to get ugly folks.
Someone explain Bernanke's magical thinking how people are going to buy things by pushing credit on people when they have no job and can't get either one.
In the not too distant past, east coasters were heavily seduced with marketing material about the arid west. Specifically, the idea that "rain follows the plow". All you had to do was plow your newly bought land and it would rain. In the desert. Just for you.
http://en.wikipedia.org/wiki/Rain_follows_the_plow
BB and Co. do NOT work for the American ppl. They work for the owners of the Fed - the private banking cartel. All of their actions need to be viewed from this lens...
ZIRP actually kills economic activity. Bernanke knows this, forget his public speeches.
This is all going according to plan...
Chart: SPX
Goldman Sucks.
http://99ercharts.blogspot.com/2010/10/spx_11.html
Obviously, it is going to be another huge bonus season for these crooks.
I learned my lesson about betting against the house a few years back.
I won't do it again.
LOL....
Hope you get killed long, because youre an enabler for the criminals to continue on therefore no better than any of them.
Man, you need a xanax or something. Robo's just going with the flow. He sees the fraud and stupidity of it all but he just wants to make a little money while the getting is good. He's pretty much on your side other than the fact that he actually sees an opportunity to make some money and you just whine.
Going with the flow of fraud, hope you all get seriously pwned.
Sheepdog
I have a question for you. If the Fed printed up a trillion dollars and handed it to you are you telling me that you wouldn't take it?
Not even to protect yourself by buying silver and gold?
Not relevent. FED buys stocks and bonds with their printed money. The real question is "if the FED came along and offered to run up the price of your empty bag, would you not liquidate?"
See the insider selling data for the answer. ;)
Right. It's real simple. Follow the money. The FED gives the banks "FREE" money to build reserves. They are told to buy treasuries. FED, CB's and public buys and bids up treasuries. Then FED buys treasuries from banks after they build their base. Then tells them to buy the same stocks of banks and select large caps that did their deeds of pumping markets. The reward for this is the CEO and insiders selling at the same time. Look at the ratio of sellers to buyers over the past two years. This should be enough to bring the makets down. But not with all that fresh green chasing the insiders selling. The crime and ponzi is most of the insiders sales are from stocks that were just awarded them vs. purchases.
fraud implies illegality.
The fed is very open and explicit about what it is doing, and it sure isn't illegal.
Stupid, yes, fraudulent, no.
people here throw the word 'fraud' at anything and everything they disagree with.
A dead fish goes with the flow. I'll add my sentiments to yours.
"FOMC was dissatisfied" LOL what did they expect?
Oh yea, FOMC didnt see things as meeting their expectations...well who made these bunch of moron criminals the 'economic judges'? Upon their now obviously failed interventionist actions, they should be removed.
Ejaculative/orgasmic ecstasy 24/7/365.
Don't we all?
"more weakness required" like what, the EOW, mass fires and earthquakes
Joe sixpak is going to be on fire when he sees the price of bread........ more proof that FED is acting for the benefit of the few at the expense of the many, like any government.
and people can at least pretend they are Selling on bad news, and vice versa...
LMAO!!! Ahh, yes indeed! Thanks Tyler, I needed that.
Isn't this all the exact same thing that Greenspan later got ripped for doing, blowing bubbles? Yet, the MSM doesn't say peep about it.
The reason it continues on and never stops? Because the American people have no balls to take it to the streets. People get all fired up and rally over a stupid "sex scandal" or music video, but they do nothing when they simply get ass raped day in and day out by politicans and bankers. I think that about covers it for today.
Get back to us 11/03/2010.
Price fixing by central planners has worked well throughout history, hasn't it?
dollar is finished?
if you aint runnin with 'em, run from 'em..aalright?!?
TD you got me at 2pm EST? Don't let me down..not too much time to bullshit tomorrow so I'll come here to check it out..say 2:15-ish? LMK.
..night crew staff i'll holla in the mornin'..way too mcuh to watch, i need a moment..
We may fail at some point and time, but I have to agree with Tepperman and others that are long a boatload. Have to ride the Fed wave till it crashes. Why fight the fed, they have all the bullets and we have a small limited supply.
Almost every day I read something about an end game, or the end of something happening. The fed is going to do whatever it takes to get inflation. They will not even announce how much money they are going to spend on this QE, because they are going to spend at least 100 billion a month, probably more till we get to their inflation target.
The game has gotten bigger, and we didn't think Ben had the guts to do it, or did we think people wouldn't allow their currency to turn in to toilet papper? Well we have moved close to 15% vs a basket of currencies in a matter of 2 months and you don't see anyone doing anything. My guess is this goes on till Ben wants to stop printing.
I admit I was wrong. I thought someone would say something, do something, but instead what we have is the FED printing another 1-2 trillion dollars next year and most of our ignorant country cheering him on.
Oh well, I still have enough money to make some of this back, but I have to say it has been a painful lesson.
If the Federal Reserve were an American Institution and not a racket of international jewry, I believe we could bring them all up on charges of treason. Hitler was right about everything, after all.
Point #5 is a nice observation. It's not always what they so much as it's how they say it. I like this analysis. Thanks. Still doesn't answer whether or not QE2 is priced in but who the fuck nows anyway right!?