Published on Zero Hedge (http://www.zerohedge.com)
Guest Post: Fed's Economic Projections - Myth Vs. Reality (Jun 2013)
By Tyler Durden
Created 06/20/2013 - 13:44
The FOMC lives in a fantasy world. The economy is not improving materially and deflationary pressures are rising as the bulk of the globe is in recession or worse. The problem is that the current proposed policy is an exercise in wishful thinking. While the Fed blamed fiscal policy out of Washington; the reality is that monetary policy does not work in reducing real unemployment. However, what monetary policy does do is promote asset bubbles that are dangerous; particularly when they are concentrated in riskiest of assets from stocks to junk bonds. However, if you want to see the efficiency of the Federal Reserve in action it is important to view their own forecasts for accuracy. The reality is that Fed may have finally found the limits of their effectiveness as earnings growth slows, economic data weakens and real unemployment remains high. Reminiscent of the choices of Goldilocks - it is likely the Fed's estimates for economic growth in 2013 are too hot, employment is too cold and inflation estimates may be just about right. The real unspoken concern should be the continued threat of deflation and the next recession. One thing is for certain; the Fed faces an uphill battle from here.
Source URL: http://www.zerohedge.com/news/2013-06-20/guest-post-feds-economic-projections-myth-vs-reality-jun-2013
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