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Federal Reserve

The Fed, The Rate, The Target, The Focus

We had an interesting moment yesterday. The Federal Reserve announced they were officially tying their rate decision to the Unemployment rate and Inflation. Their dual mandate for these 2 metrics has always caused them to discuss, vote and act- THEN announce their intentions. This is the first time in History they are tying it to any specific metric.
For Inflation- it needs to stay under 2.5%
For Unemployment- it needs to stay over 6.5%
 
If both of those stay true, then the Fed monetary policy will not change.

QE3- Here it comes, maybe- Is that a GOOD thing?

Quantitative Easing- which we all know as QE- is about to happen from the Federal Reserve to us, the lowly taxpayer. The believe in programs like these is that we need some Fed action to spur economic activity, and through that job creation (which is one of their dual mandates).
 
DO YOU BELIEVE THAT?
 
My opinion is simply this- we have WAY to many issues, uncertainties, and barriers to economic activity to have any meaningful positive impact from a Fed decision. In theory, I get it. In actually, I think it is an act of futility.

The Federal Reserve-

Love it or hate it- it is a piece of our financial institutions and always will be. Agree with it or not, it has a duel mandate of low employment and contained inflation. They are a non-transparent quasi private agency that makes many nervous or worse. The Fed is run by a rotating Board of Governors, headed by the Chairman. They run regions canvassing the US and control all the banks and lending institutions within that region. They work with Treasury, and at the behest of the Presidency.
A critical piece about the Fed- they are not able to do it alone.
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