Off The Cuff: The Fed Is Just Playing For Time At This Point

In this week’s Off The Cuff podcast, Chris and Axel Merk discuss:

• Fire resilience
• The Fed has no clue how to get out of the box it’s in
• The Fed is only looking at the immediate term; it leaves tomorrow’s problems to tomorrow
• Why the best short-term policy is a good long-term policy

Last week saw another FOMC statement, which Fed-watcher Axel Merk returns to the program to de-code for us.

In short, the Fed is giving itself more leeway to deal with a problem it has no clue how to fix. It is simply playing for time, trying to reassure us in the meanwhile that it has everything under control:

The Fed has a new policy that’s been long in the making.

We had two dissents today. One of them was on the hawkish and one on the dovish side. Powell pretty much said “Hey, I’d like to have a little more flexibility”, which is a nice way of saying “I don’t like any of this crap”. When Powell announced the Fed’s new grand average inflation target in August it had been unanimous.

We chat a lot with folks at the Fed – former ones in particular. The feedback I get is the reason why they had no dissents then is not that everybody was on board with this new policy, it’s because they think that this new policy muddles things and makes things more confusing.