MarketWatch is run by competent commentators with a slight cast to their writings. It’s part of the Journal’s online offerings. With that in mind, I take an exception to two points of view expressed yesterday in its article about the Fed “running out of bullets.”

First, the article says that the Fed is going to start tightening (shrinking the ) by the end of this year. But the minutes from the last meeting say nothing of the kind, only that a “few” thought the Fed “might” starting taking some money out of the system by December. Here is what it says:

But, the minutes show, the is starting to say, enough is enough. Of the crowd that supported bond buys, a few say they should continue until the end of the year, and several said it could stop, or slow, well before then.

Then they hedge:

To be sure, the change isn’t gigantic. There’s no sense that will increase from the near zero levels that have lasted for over four years.

So, there’s a big change, but don’t expect anything big.

Let’s remember that the Federal Open Market Committee (FOMC) is a “show” institution, to show that “experts” are sharing their “expertise” in a “democratic” setting so that the rubes are comforted that the “best minds” are in charge and taking care of us. It’s all PR: Bernanke is the chairman, he’s the boss, the big kahuna, the man in charge. He decides.

Second, the Fed stated that they were starting a new bond buying program back in September, buying up $85 billion of and government bonds – that’s $1 trillion a year – to keep interest rates low. If they were it would have started showing up in their numbers by now, wouldn’t then? Let’s take a look:  there has been no change in the adjusted monetary base – the money supply – since the announcement.

It’s all words, words, words.

But the boys at MarketWatch think it’s a big deal: “It’s a clear admission the Fed is running out of gunpowder. And that’s quite a shot it has fired to the markets.”

My favorite word to describe this article is: persiflage, meaning a frivolous, light-hearted treatment of a serious subject.

 

 

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