At Least No One Can Say the Federal Reserve Didn't Know What it Was Doing


Don't worry–the Federal Reserve is very alert to exactly what it's doing. From AP via Yahoo!:

The Federal Reserve doesn't expect the recovery will be strong enough to quickly drive down the jobless rate, and acknowledged its efforts to keep the rebound going could feed a new speculative bubble.

Record-low interest rates "could lead to excessive risk-taking in financial markets," according to documents released Tuesday of the Fed's closed-door meeting earlier this month….Although Fed officials saw the current likelihood of that as "relatively low," they pledged to "remain alert to these risks."

At the Nov. 3-4 meeting, Fed Chairman Ben Bernanke and his colleagues kept the target range for its bank lending rate at zero to 0.25 percent.

Fed policymakers also pledged to hold rates at such super-low levels for an "extended period," to ensure the recovery gains traction. Most analysts predict that means rates will stay where they are through the rest of this year and into part of 2010.

See my November Reason magazine feature on the mainstreaming of anti-Federal Reserve thought.

NEXT: Sing That Song Again, Kentucky

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  1. Woot.

    An equity bubble to fix the real estate bubble that fixed the dot com bubble.

    America. FUCK YA!!

    My forehead has a permanent print of the palm of my hand on it.

  2. Low rates got us into this mess and, Science willing, low rates will get us out.

  3. The Fed pump fake. The Hail Mary will work. If that doesn’t the Statue-of-Liberty.

    Statue-of-Liberty. How can that fail?

  4. This is the beginning of the end of monetary policy.

    Our one last attempt to fake prosperity through credit-induced bubbles.

    It’s like an old pair of panties that have been washed a few too many times, and the holes are starting to appear.

    1. Remind me not to post after 1:00 AM.

      1. At the rate the economy is doing you’d do well to hang onto those old panties – you may need them. 😉

        1. Old panties are worth money in Japan, dude. As a hedge, it’s at least as good as holding gold.

      2. Hazel wins post of the day

    2. It’s more like trying to get the guy at the store to take another check to cover the first two or three that bounced. 😉

      1. Nah, it’s more like drinking off a hang over.

    3. You know, I’d never have thought about it that way if you hadn’t mentioned it. But from now on I bet I’ll never forget.

    4. …the panties your mother laid out for you?

    5. …the panties your mother laid out for you?

  5. “Just because we’ve failed to control the invisible hand before–EVERY TIME–doesn’t mean we’ll fail this time!”

  6. The world would be so much simpler if the supply and demand for credit and the supply of saving and demand for investment never changed. But in the real world, they can change. And so the notion that the price appropriate to those markets will never change is foolish. Low interet rates got us into the problem? Maybe. Perhaps interest rates were too low at some time in the past. But that doesn’t mean that interest rates should never be low. Or that high interest rates are a solution. Interest rates are prices that need to coordinate the actions of millions of households and firms. The level of interest rates that will do this task can and does change. Thinking about the true nature of the problem doesn’t lead to simplistic stories of low interest rates creating bubbles. But it does suggest skepticism about the value of interest rate targeting. I think it is a mistake.


  7. “Just because we’ve failed to control the invisible hand before–EVERY TIME–doesn’t mean we’ll fail this time!”

    The invisible hand is about to give you the visible finger. 8-(

  8. Insert standard definition of insanity cliche here.

  9. Fed officials expected the pace of the recovery “would be rather slow, relative to historical experience.” Recoveries after steep economic downturns are usually robust, the Fed said.

    Duh, that is because you pumped so much money into the system that it is going to take a decade plus to work itself out without hyperinflation.

    You know why this recovery wont be robust? Becuase you didnt allow the economy to fucking crash first. Morons.

  10. Ebeneezer Scrooge wrote:
    Nah, it’s more like drinking off a hang over.

    Hair of the dog?
    The only problem i have with alcohol is that i’m running out of vodka.

    oh yeah … fuck the threaded shite

  11. Tell me again about how independent the Fed is, Daddy!

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