(Image Source, Wikimedia)
Yesterday, in an article I wrote for Sprott Money News, I discussed how the Minneapolis FED President, Narayana Kocherlakota is calling for more of the same; a continuation of extend and pretend, a strategy that the FED has perfected.
In this case, I am referring to Mr. Kocherlakota’s call for a delay in raising interest rates until next year, and then only marginally. He envisions rates topping at 2 percent by the end of 2017,which is scarcely a raise at all.
Meanwhile, additional members of the FED are calling for a raise in interest rates by June, some say July, and others by the end of the year. As usual, they can’t seem to agree on anything.
Confirming this fact is New York FED president, William Dudley, who only one day later issues a half-hearted statement disagreeing with the Minneapolis FED head. Dudley stated the following, as seen in a recent article by Reuters:
“I could imagine circumstances where a June rate hike is still in play. If the next jobs report is strong… if second-quarter GDP looks like it is bouncing quite sharply…”
Yet, he can’t even agree with himself, let alone his colleagues as only a moment later he goes on to contradict himself and states the following, “…the bar is probably a little bit higher…“, in regards to a June rate hike.
You may be scratching your head and wondering, what does all this mean? It means nothing. This is management of perspective economics in full swing, a.k.a. MOPE.
They don’t want you to know what is coming, this way the market has no real expectations, and the masses simply stop listening and caring. This enables them to make their real move in the future, with little attention paid to it, and with little resistance.
Will a FED rate hike come in June? Unlikely, as any interest rate hike will have serious ramifications to an economy that is duct-taped together. Take note of the words the FED typically use, that enables a way “out” for them, when a time for action is required. Words such as “if“, are words repeatedly used by the FED, including in the statement above by Mr. Dudley.
Extend and pretend. QE to infinity. Call it what you will. This is the new economy and the FED knows one thing and one thing only, how to print money. Lots of it.