Fed – Forget “Escape Velocity,” Not Gonna Happen, Ever
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.
Wall Streets and the medias attention was riveted single-mindedly on whether or not the Fed would include in its statement the two words, considerable time, the two vaguest, stretchable latex words available that describe absolutely nothing and leave the door wide open for wishful thinkers of every stripe. Thats what the Feds gyrations since the financial crisis have so successfully accomplished; they have reduced the market, a place of price discovery, to a crummy joke.
The Fed delivered those two words, but during the press conference, Fed Chair Janet Yellen doused them with so many qualifiers that theyve become even more meaningless, if that were even possible.
Wishful thinkers still see Yellen as a pure dove, while others worry that she has turned into a closet hawk who is afraid of letting this tsunami of free liquidity inflate asset bubbles and build up risks so immense that even a minor hiccup would bring down the entire financial system once again. And this time, under her watch.
Clearly, FOMC members, and particularly Yellen, would try hard to dodge blame. But after having printed $3 trillion, and after having forced short-term rates to near zero and below the rate of inflation for what likely will be more than six years, and after having messed with the markets throughout, they too can imagine that blame for the fiascos these policies might end up causing will be hard to dodge.
But beyond its crummy joke, the Fed has done something else: it has removed Escape Velocity the economic surge in the US that has been falsely promised for five years in a row to rationalize soaring stock prices from its vision of the future. ...............(more)
The complete piece is at:
http://www.nakedcapitalism.com/2014/09/fed-forget-escape-velocity-not-gonna-happen-ever.html