FED officials avoid stimulus talk

Our dear comrade leader and Smartass VP Joe Biden are currently on a whirlwind tour extolling the virtues of their failed $868B “stimulus” plan. You know, the plan that didn’t really stimulate anything but more economy-crushing debt and unemployment? Yeah, that one.

According to this story (from Bloomberg), Fed officials have recently purged the term “stimulus” from their lexicon.

Federal Reserve policy makers expressed caution about the outlook for the U.S. recovery and bank lending without backing any new steps by the central bank to stimulate growth.

Atlanta Fed President Dennis Lockhart said yesterday that while the recovery isn’t sustainable enough yet to warrant raising interest rates, he doesn’t see a need for additional asset purchases to aid the economy. Fed Governor Elizabeth Duke said it may take years to return to pre-recession credit levels and that there’s “no single step” to unclog lending markets.

U.S. central bankers are sticking to their 18-month policy of leaving the benchmark interest rate near zero with the European debt crisis sapping investor confidence and U.S. stocks plunging to their lowest close since October. Last week Fed officials renewed a pledge to keep the rate at a record low for an “extended period.”

“The underlying conditions are probably less robust than was generally expected,” said Keith Hembre, Minneapolis-based chief economist at U.S. Bancorp’s FAF Advisors Inc., which oversees about $91 billion.

At the same time, “I don’t think there’s any evidence yet at this point that suggests that they are going to be so weak that it will put further downward pressure on inflation and upward pressure on unemployment to the degree that it would necessitate further creative easing on the part of the Fed,” Hembre said.

So what they’re saying without really voicing it is, “the economy is in serious trouble but we don’t want to scare you with more “stimulus” talk right now.” But the outlook isn’t getting any better:

The remarks were some of the most downbeat on the U.S. economy from a Fed official in recent months. Lockhart, 63, doesn’t vote on Federal Open Market Committee decisions this year. Kansas City Fed President Thomas Hoenig has called for an increase in the Fed’s benchmark rate within months and has dissented from four FOMC decisions this year.

The Fed has left the overnight interbank lending rate target at a record low of zero to 0.25 percent since December 2008.

Central bankers are concerned that persistent unemployment May hamper the recovery. The Labor Department will report on July 2 that unemployment rose to 9.8 percent in June from 9.7 percent in May, according to the median forecast of economists in a Bloomberg News survey.

Recent economic data have pointed to weakness in housing and consumer spending.

The biggest culprit here is uncertainty – not knowing what the government space aliens are going to come up with next. Obamacare, financial “reform,” cap and trade, VAT – these uncertainties are causing business and consumers to tighten their belts. Unfortunately, the “geniuses” in government are blind to this.

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