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The minutes of Federal Reserve meetings often give us subtle clues about what the Fed's position is on key issues and what steps they are taking to bolster our economy.

The grand debate being discussed by the Fed is deflation vs. inflation. The Fed's move to lower interest rates to near zero is a clear indication that their primary concern is to stop the deflationary cycle caused by our current recession. The only way to do this is to reinflate our economy. To this end the Fed and lawmakers are creating stimulus packages to jump start the economy and turn it around.

At the moment we are in a downward price cycle with the prices of raw materials falling at the wholesale level and deep discounts at the retail level. To turn this around requires a change in perception. So now the Fed and policy makers will need to convince the public that the deflationary cycle is ending and that a little inflation is a good thing.

Fed Chairman, Ben Bernanke, prefers "flexible" inflation targeting in which an inflation target is tied to a fixed time horizon. So I guess we can infer from this that we will have inflation for a fixed time, then what? There seems to be no consistency in Fed policy at the moment. They seem to be flying by the seat of their pants.

What do you think about this?

What does the Fed have up its sleeve? originally appeared on BloggingStocks on Thu, 08 Jan 2009 16:00:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>Fed minutesFedMinutesFeds flexible inflationarey policyFedsFlexibleInflationareyPolicyinflationThu, 08 Jan 2009 16:00:00 EST<![CDATA[100 CEOs call for about $500 billion in fiscal stimulus]]>http://www.bloggingstocks.com/2008/11/19/100-ceos-call-for-about-500-billion-in-fiscal-stimulus/http://www.bloggingstocks.com/2008/11/19/100-ceos-call-for-about-500-billion-in-fiscal-stimulus/http://www.bloggingstocks.com/2008/11/19/100-ceos-call-for-about-500-billion-in-fiscal-stimulus/#commentsFiled under: , , ,

The case for a large fiscal stimulus package has received a shot in the arm, but as with so many economic developments during this decade, there's an upside and a downside.

A group of about 100 CEOs has urged President-elect Barack Obama to "quickly implement" a stimulus package of roughly $500 billion. The CEOs said the package should emphasize investment in infrastructure, including roads, bridges and other construction, as well as alternative energy projects. Their second priority: improving education.

Economist David H. Wang has extracted positive and negative threads from the CEOs' statement.

"On the one hand, the added CEO support will be welcome, I am sure, by the Obama Administration, as it builds the case for its stimulus package," Wang said.

"On the other hand, the fact that CEOs are calling for government spending, which is not a traditional CEO stance, tells you about the seriousness of our economic problem," Wang said. "The U.S. economy is in rough shape and there are few signs of improvement."

Continue reading 100 CEOs call for about $500 billion in fiscal stimulus

100 CEOs call for about $500 billion in fiscal stimulus originally appeared on BloggingStocks on Wed, 19 Nov 2008 17:53:00 EST. Please see our terms for use of feeds.

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