In response to an FT article by Martin Sandbu on 17th September 2015, entitled 'Guessing games have added to volatility'
"In uncertain times, state-contingent policy guidance remains the right approach for central banks"
State-Contingent? As in the early 2014 target of 6.5% for unemployment? Or the slimmed down 6% version? Maybe the lithe 5.5% model? Or even the carbohydrate free target of 5%? Still not good enough? How about a wafer thin 4.8%?
Here's a radical idea. How about measuring 'actual' unemployment, instead of concocting a figure that counts 1+ hours a week as a 'job', ignores the fact that people do 2 or three of these 'jobs' to survive, and discounts unemployed people at the earliest opportunity because they don't count when they are on the non-participation list. It seems that in the cloud cuckoo world of central banking, what isn't counted doesn't matter...even if the Chair is a labour economist who has spent 30 years pondering unemployment statistics.
How about 'inflation'? Ignore for a moment the fact that their target doesn't in any way measure the cost of living, but does conveniently reduce automatic increases to social security...they would prefer something way north of 2%. Why? Because the Fed's preferred solution for dealing with the huge pile of debt is inflation. Why? Because above trend growth is out of the question and they know that. A deflationary collapse is a central bankers worst nightmare, and restructuring the monetary system would require telling a truth they fear to tell - they tried to print their way out of a debt crisis and it didn't work.
The Fed are not data-dependent Mr Sandbu. The data is Fed-dependent. The Fed and Wall Street are co-dependent. Like a pusher and a drug addict they are both invested in keeping this game going.
Apart from the economics of this, being state-dependent requires honesty. The Fed are there to protect the government and the banks. If you trust the government and if you trust the banks, then I understand why you might trust the Fed. I trust neither...and neither do I trust the Federal Reserve.