Fed News (Thursday): Jackson Hole – Tomorrow
August 25th, 2011Everyone is speculating the Fed’s next move, don’t count me out! The Federal Reserve is in a position of power that can control the marketplace and its performance. The Fed has two main choices when handling the financial burdens of the US: alleviate high interest rates to increase borrowing AND increase inflation (print money). They have exhausted both choices, to the point where interest rates have no room to go any lower and the past two experiences of money printing have not performed to the administration’s or Fed’s liking.
QE and QE2 (the nick names for the large “bailouts” of major banks and businesses through the act of quantitative easing, or money printing) briefly added a spike to the economy, but the jobs sector was not assisted, and jobs are in the forefront of concern. Jackson Hole isn’t a fresh appearance venue for Bernanke. He released the QE2 announcement last year at the same place, chances are even some of the same people will be there.
Many economists, as we talked about last week, believe there is NO way that Bernanke will be announcing QE3 at this point. Mostly because, as Freakonomics blogger wrote, “The run of data since the last Fed meeting hasn’t really changed, so why would monetary policy?”. That doesn’t convince me 100% to rule out QE3 completely, however it does lead me to believe that an announcement as such could come to us down the road a bit.
The Fed also tries to keep from any drastic policy changes during an election. Hey! We’d hate to make someone look bad! HA! If the Fed waits, perhaps we’ll get the change and real recession our country needs to recover. Expect the market (stocks, investors, etc) to be upset with the lack of major announcements on the financing debt, since they won’t have much to look forward to. I also challenge you to keep an eye out for the precious metal market to react to Bernanke’s speech. I bet Bernanke will fill up his speaking time with a ton of bs jargon, feed it to the press, and walk away as journalists write up mini sound bites of “recovery”, “unemployment improvement”, “[other lines that are regurgitated in 70 different ways to somehow not disturb the equilibrium of the US's economy]“.
We’ll be off interviewing Jon Schaffer tomorrow, so we’re delivering Fed News Friday a day early. We’ll tweet any new developments and the outcome of Bernanke’s speech for you as soon as we can get a hold of the information.
