Tuesday, September 21, 2010

The FOMC Reports - and Don't You Go Criticizing Them!

The Federal Open Market Committee (the Board of Governors of the Federal Reserve Bank) has had their meeting and reported today.  You can read it here.  Or don't bother.  Allow me to translate it into Redneck (by which I mean, "plain spoken southerner").
Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.

We been readin' everything we can get our hands on and things suck pretty bad  Things don't look near as good as we thought they would, in fact, they look a mite worse.  Folks just ain't spendin' a lot of money because they're either unemployed, not makin' as much as they need (have you seen the dang prices at Walmart?!?), or they done max'ed out the ol' Visa card.  Businesses are spendin' a bit, but they're too scared to hire anyone.  We expect things are gonna get better (just like we been expectin' Earline the receptionist to agree to go out some day), but it's gonna take a long damn time.  Like when Earline said she'd go out with me "when hell freezes solid" - 'bout that long.  We're gonna have to keep givin' away free money for a while. Heck, if we lowered rates any more, we'd be payin' you to take loans!  We're getting caught by the long bond yield curve.  The dang Chinese are demanding we pay them higher interest on our bonds, but if we start raisin' rates, it'll be like pissin' on your moss when you're tryin' to start a fire.  Guess we'll have to just make some money out of thin air and buy our own dang bonds again. 

I suppose I'm in big trouble now.  About two months ago, Kartik Athreya of the Federal Reserve wrote an article entitled  "Economics is Hard. Don’t Let Bloggers Tell You Otherwise " in which he criticized us unwashed bloggers for saying anything about our insect overlords at the Fed.  He doesn't mean to sound mean-spirited, you know, he's just better than us. 
Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy.
It gets better, in a totally ironic sort of way:
The response of the untrained to the crisis has been even more startling. I listen to Elizabeth Warren on the radio fearlessly speculating about the nature of credit market dysfunction, and so on.
This Elizabeth Warren?   Dude...  That's almost funny.  Good luck with that.

Hat tips to Zerohedge, Bruce Krasting, and FSK's Guide to Reality


  1. "Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy."

    People who do not understand what an appeal to authority is should not be graduate students.

  2. BINGO!! Excellent point - that I wish I had made.