Is the Fed Stupid or Playing Stupid?

KINGSTON, NY, 24 February 2016—You operate the largest printing press on the planet. You seek to hire the most highly qualified people to address current economic conditions and design strategies to maximize future market potential.

However, when crisis strikes and with global equity markets in turmoil, those hired admit they are out of touch with the present and blindsided by the future:

At Meeting, Fed Showed Uncertainty on Outlook

WASHINGTON — Federal Reserve officials threw up their hands in January, deciding that they could not decide whether market turmoil would impede domestic economic growth.

The Fed in recent years has issued an assessment of its economic outlook after each meeting… an official account, published on Wednesday after a standard three-week delay, makes clear that Fed officials simply did not know what to say.

“Most policy makers thought that the extent to which tighter conditions would persist and what that might imply for the outlook were unclear, and they therefore judged it was premature to alter appreciably their assessment of the medium-term economic outlook,” the meeting account said. (The New York Times, 18 February 2016).

Threw up their hands? Did not know what to say? Outlook unclear? Premature to judge even in medium-term economic outlook… let alone long-term?

Is the Federal Reserve stupid, or playing stupid?

From China’s economy growing at its slowest pace in a quarter century, Japan sinking back into recession, Europe’s stagnant Gross Domestic Product, Asian economies jolted by plummeting exports, emerging-market economies and currencies crashing, commodity indexes gyrating between 1991-to-1999 lows, the MSCI’s All-Country World Index treading in bear territory, etc., etc., as detailed in our Top Trends for 2016… the “outlook” is clear: Global Recession.

Is the Federal Reserve stupid, or playing stupid?

Despite the hard data and indisputable facts, in recent testimony before Congress, Fed Chairwoman Janet Yellen declared the Fed had set no new policies because “We want to be careful not to jump to a conclusion about what is in store for the economy.”

And then yesterday, Fed Vice Chairman Stanley Fischer said Fed officials “simply do not know” what course of action to anticipate since “it is still early to judge the ramifications of the increased market volatility of the first seven weeks of 2016.

“Jump to conclusions?” “Simply do not know?”

Is the Federal Reserve stupid, or playing stupid.

As thoroughly detailed in our Winter Trends Journal, equity market turmoil is a direct reflection of dire economic conditions spreading across the globe. And now, even among mainstream media business pundits, there is growing acknowledgement of what we had long forecast: Central banks are running out of monetary ammunition. Neither new rounds of quantitative easing nor negative interest-rate policies will stop/reverse the economic decline or stabilize equity markets.

Trendpost: Fed minutes proved the Federal Reserve was blindsided by the Panic of ’08. Are they stupid, or playing stupid by not seeing the Panic of 2016?

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