Expect The Federal Reserve To Downgrade the Economy

November 22, 2010

On Tuesday, the Federal Reserve releases the minutes of last Federal Open Market Committee Meeting. We know they decided to begin QEII (Quantitative Easing, part two also called printing money.) Therefore, we can assume they felt the economy was either not improving enough or sliding backward. Consequently, we should expect the minutes to show that:

1.The economy will not grow at the 3.5 to 4% rate used in previous discussions
2.The unemployment rate (one of their mandates) will not improve as quickly as they thought
3.Price stability (there other mandate) or inflation will remain low for longer than they thought at the last meeting (because QEII is a lot of new money.)

Also, Bernanke recently talked about the need for more government stimulus. That’s got to give you confidence---confidence that our monetary managers intend to inflate our way out of our debts.