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Fed Officials Are In Disagreement And Don’t Know What To Do

April 11, 2013 by  

Fed Officials Are In Disagreement And Don’t Know What To Do
PHOTOS.COM

Recent Federal Open Market Committee releases illustrating what top Federal Reserve officials feel are the central bank’s best next steps have had a familiar message for several months: The officials are gridlocked between continued money printing and stopping stimulus. The split of opinion says more about the future of the economy than any economist could hope to.

The Federal Reserve’s balance sheet now tops $3 trillion, making some of the central bank’s policy makers a little antsy about the economic monster they have created. It has seemingly now become clear to some Fed officials that the economic benefit of monthly purchases of $85 billion in bonds, combined with near-zero interest rates, is outweighed by the inflationary risk.

But there is no clear word on when the Fed intends to jam the gears of inflationary policy, only the noncommittal suggestion that the central bank should do so “relatively soon.”

The most recent FOMC report, released early by accident yesterday, make it very clear that members of the central bank have no way of knowing what the real impact of its recent policy has been, how the economy will react to its continuance or the economic implications of reversing course, even partially, at this point. “A few” members think stimulus should stop, “a couple” think the Fed should double down and “a few” think it should trickle off slowly.

To put it bluntly, Fed officials are about to get slapped by Adam Smiths’ invisible hand.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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