Wednesday, September 1, 2010
Goldman Sachs on the FOMC minutes
Goldman's Jan Hatzius took offense to the FOMC minutes, and stopped just short of calling the Fed a bunch of myopic liars What seems to have angered Hatzius is the Fed's "bald statement"(sic... or Freudian slip?) that “no member saw an appreciable risk of deflation.” Hatzius goes all out: "This seems surprising given (1) the recent data on economic activity, wages, and prices, (2) the decline in breakeven measures of inflation expectations, (3) a recent article suggesting that at least one FOMC member (President Bullard of St. Louis) is indeed quite worried about deflation, and (4) the observation by an unnamed meeting participant that “…survey measures of longer-run inflation expectations had remained positive in Japan throughout that country's bout of deflation." As a result, Goldman has now revised its call for no action from the Fed until the mid-term election, and anticipates a new round of QE to come as soon as the Fed's next meeting in three weeks. Is Jan finally starting to call the Fed on its bullshit?
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