The Fed continues to engage in wishful thinking to prop up equity markets:
Read that again if you need to. The numbers are forecast to worsen but the Fed's leaders mouth hope for improvement. They wouldn't entertain such schizophrenia unless they could count on the American financial media's distaste for real analysis.
Meanwhile, the Fed is forced to recognize that the real world can make a most unwelcome intrusion into rosy forecasts:
More bond buying on the way? Now we see the connection between downward revisions to forecasts and public optimism about recovery. The Fed overestimates its ability to quantitatively ease the U.S. out of its distress. Go look up "hubris" in your dictionary.
Does all of this make you uneasy? It should, unless you own some gold (like me, IAU and GLD).
The Federal Reserve expects the economy to improve in coming months, even as policymakers have downgraded their outlook for all of 2009.
(snip)
The Fed now expects the economy will shrink this year between 1.3 and 2 percent. The old forecast called for a contraction between 0.5 and 1.3 percent. The unemployment rate may hit nearly 10 percent, up from 8.8 percent in the old forecast.
Read that again if you need to. The numbers are forecast to worsen but the Fed's leaders mouth hope for improvement. They wouldn't entertain such schizophrenia unless they could count on the American financial media's distaste for real analysis.
Meanwhile, the Fed is forced to recognize that the real world can make a most unwelcome intrusion into rosy forecasts:
Some Federal Reserve officials judged last month that the central bank may need to boost its purchases of assets to secure a stronger economic recovery, while all policy makers agreed to hold off on such a move at the time.
More bond buying on the way? Now we see the connection between downward revisions to forecasts and public optimism about recovery. The Fed overestimates its ability to quantitatively ease the U.S. out of its distress. Go look up "hubris" in your dictionary.
Does all of this make you uneasy? It should, unless you own some gold (like me, IAU and GLD).
