Courtesy of Pam Martens.
Federal Reserve’s FOMC Meeting in March 2014
Before we analyze in plain English the minutes released yesterday by the Federal Open Market Committee (FOMC) of the Federal Reserve Board relating to its discussions at its last meeting on January 27-28, 2015, you need a few salient background facts.
The FOMC first set its Federal Funds rate at 0 to ¼ percent (the zero bound range) on December 16, 2008. That’s more than six years ago. If the U.S. was in the recovery stage following a deep recession, we would have exited the zero bound range a long, long time ago. Clearly, we have yet to accurately define the economic twilight zone we’ve entered.
Secondly, the Fed’s happy talk about the solid growth in the U.S. economy that may warrant a rate hike sometime this year just doesn’t comport with the reality of the situation. On February 10, Steve Ricchiuto, Chief U.S. Economist at Mizuho Securities USA, who has a Masters Degree in Economics from Columbia University, appeared on CNBC to succinctly explain that reality. Ricchiuto had this to say:
“…I keep hearing over and over again in the financial press about this acceleration in economic growth. That isn’t happening. Last month we had a horrible retail sales number. We had a horrible durable goods number. We’re likely to have a very disappointing retail sales number coming forward. This month we’ve had a strong payroll number – we say everything’s great. It’s not great. It’s running where it’s been. It’s been the same thing for the last five years. There’s no improvement in the economy.”
The unprecedented nature of this period has been captured by David Papell and Ruxandra Prodan, Professor of Economics and Clinical Assistant Professor of Economics, respectively, at the University of Houston. Writing at Econbrowser, the pair had this to say:
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