Sandra Pianalto could have stayed out of the limelight for another 10 years! She turned ‘blind’ after staying in the dark for so long:
“I’d have to see a substantial change in my outlook” to be convinced the Fed should do more, Ms. Pianalto, 57 years old, said Friday, in the second of two exclusive interviews with The Wall Street Journal over consecutive days. “I don’t think this employment report, in and of itself, is likely to lead to a substantial change in my outlook. Consequently, it would not lead me, at this time, given what I know about my outlook, to change my position on policy.” It was her first interview with a national news outlet in her 10 years as a regional Fed chief.
What does she know about the outlook that some of us don´t? Note that she subscribes to the ‘pay-back‘ argument for the dismal labor market report!
Meanwhile, the Fed´s # 2, Janet Yellen says:
Despite encouraging(!) news on job growth in recent months, “labor market slack will remain substantial for a number of years to come,” Fed Vice Chairwoman Janet Yellen argued in a speech in New York on Wednesday evening. That, and an expectation of subdued inflation, have justified the Fed’s plan to keep short-term interest rates near zero until late 2014, Ms. Yellen said in an elaborate defense of the Fed’s approach. Some of the Fed’s internal economic models, in fact, suggested rates should stay low for even longer than planned, she noted.
Translation: The economy will remain in a ‘comatose’ state for a long time. We´re trying but can´t seem to find the right medicine.
And Plosser just loves to tell ‘jokes’:
“There’s absolutely no reason for people in the United States to get all in a dither,” Federal Reserve Bank of Philadelphia President Charles Plosser said in an interview with The Wall Street Journal.
Mr. Plosser said that in the short run, uncertainty in Europe might even work in the U.S. economy’s favor, via lower U.S. interest rates and energy prices.
Ain´t that awesome?
Oh, yes, with all those (official) pearls of wisdom, only one conclusion: We´re screwed!
Nobody believe that rates would remain near zero until 2012, let alone 2014. What are the odds rates remain near-zero for a decade? Japan continues to look like the best model.
The Plosser quote is just horrifying. I mean Scott tells everyone off for reasoning from price changes, but this … this is truly abysmal. I just want to curl up in a ball and cry.
It is a re-run of the worst arguments from the 1970s and 1980s on unemployment with the worst arguments from the 1930s on monetary policy. But, come to think about it, they were about evading responsibility too …