The Federal Reserve will probably push forward with $600 billion in securities purchases even as the biggest jump in business loans in more than two years adds to signs the U.S. economy is gaining strength. Commercial and industrial loans increased at an annual rate of 7.6 percent last month, the largest gain since October 2008, according to Fed data. Total bank credit has risen in three of the past six months as business loans cushioned against declines in real estate and consumer credit.
If you think there is a global inflation problem, wait til you see the problems incurred by anyone who gets in the way of the mother of all inflations the US is in danger of stimulating.
Fed Chairman Ben S. Bernanke and his fellow policy makers will probably note improvements in the economy such as higher consumer spending in a statement to be released tomorrow, former Fed governor Lyle Gramley said. Encouraging signs like firmer bank credit are unlikely to prompt a reduction in stimulus so long as growth remains weak and unemployment persists near 10 percent, he said. “The Fed is not ready to let up on its accelerator,” said Gramley, senior economic adviser for Potomac Research Group in Washington. “They are going to be impressed with the fact the economy has gained some momentum, but there are still strong headwinds to growth, and bank lending is quite modest.”
And the MSM still promote the fantasy that the rest of the world has the inflation problem as the US uses phony implied confidence in its treasury to do as it pleases in the short term.
Policy makers will probably affirm their plan to buy Treasury securities through June to reduce long-term yields and spur lending, said Mark Gertler, a New York University professor and research co-author with Bernanke.
Let's no forget the role of prominent academics in spinning this tale to even curiouser and curiouser levels.
Since reducing its target federal funds rate to near zero in December 2008, the central bank has used its balance sheet as a monetary policy tool. Its assets have tripled to $2.43 trillion from $873 billion in February 2008.
Since reducing its target FF rate to near 0, the CB has used its balance sheet as the curtain behind which the Wizard pulls the levers. Where is all this stuff going to go? Is the Fed going to blow itself up in a final blaze of glory or is this crap going to be returned to the people as hyper inflated remnants?
The committee may continue to describe credit as “tight” while acknowledging a pickup in growth in the fourth quarter to the fastest pace in three quarters, Gramley said.
Oh no, they may have to grudgingly 'acknowledge' growth. It gets harder and hard to keep 'inflate or die' going the rosier things get. Say Ben, why not have a little confidence in the recovery and let 'er run on her own for a while?
Bernanke probably won’t be in a hurry to withdraw stimulus with joblessness persisting at 9.4 percent and inflation low, Gertler said. The Fed will probably affirm its pledge to keep interest rates low for an “extended period.” “This is likely to be a stay-the-course meeting,” Gertler said.
Don't worry Mr. Gertler, jobs always follow velocity of money. Why is everybody so dour? Come on people, have some CONfidence.
When weighing the timing for a withdrawal of stimulus, the Fed will look for a sustained rise in credit such as business loans, said Paul Kasriel, chief economist at Northern Trust Corp. in Chicago. This would signal banks are deploying record reserves, potentially rekindling inflation, he said. “That is going to be a tipoff that the Fed has to start an exit strategy” from its stimulus, said Kasriel, a former research economist at the Chicago Fed. “We are not there yet.” Treasury yields have risen amid signs of a stronger economy. The yield on the 10-year note increased to 3.35 percent at 8:46 a.m. today in New York from 2.57 percent after the Nov. 3 FOMC meeting, when the asset purchases were announced. Yields have increased because of “a stronger economy and better expectations,” Bernanke said at a forum in Arlington, Virginia on Jan. 13.
Hey Paul, how did your usually reasonable voice get in this puff piece? Anyway Paul, go take a look at the 'Gently Bottoming' Business Loans graph in the previous post. We are getting there.
Jim Comiskey, a senior market strategist at Lind-Waldock in Chicago, disputed that view, saying yields have risen on concern that Fed bond purchases will stoke inflation. “The market is scared about the inflationary impact of what the Fed is currently doing,” Comiskey said.
The article drones on, but we'll end with the right minded Jim Comiskey (any relation to the ballpark?) and realize that the MSM does occasionally allow rational voices with no obvious agenda to come forth. http://www.biiwii.blogspot.com
