Setting The Table For "Fed Day"

A blog about business and economics.
Sept. 13 2012 10:53 AM

Setting the Table for "Fed Day"

149945279
Federal Reserve Chairman Ben Bernanke in Washington in August

Photo by Saul Loeb/AFP/Getty Images.

Everyone's waiting for a Federal Reserve Open Market Committee statement today. Here's what you need to know:

First off, you really ought to dismiss talk of whether the Fed will do something or do nothing or how much more will they do. There's no quantum of action for monetary policy. Anytime a regularly scheduled statement occurs, the Fed is doing something very important—issuing the statement and adjusting expectations for the future. The question is simply what will the Fed do.

Advertisement

There are a lot of expectations of some kind of QE3. I'd be for that. I'd be for more QE rather than less and more open-ended QE rather than small-bore QE.

But what really matters isn't how much QE the Fed does—how many assets they buy with freshly printed money—it's what they say they're trying to achieve. If they say they're concerned by recent weakness and just want to bump us back up to a bit, that means we'll keep grinding along with a disappointing recovery. The only real game-changing possibility would be for the Fed to state explicitly that they want to push the economy up to a higher nominal growth trajectory. That they want some Reagan-style bounceback and are perhaps willing to endure a year or two of Reagan-style 4 percent inflation. I think it's extraordinarily unlikely that the Fed will make that kind of conceptual leap, and if they don't, nothing will really change.

Another thing to watch for are the dissents. When the Fed decides to issue a milquetoast statement, will any "doves" dissent and call for pro-growth action?

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Talking White

Black people’s disdain for “proper English” and academic achievement is a myth.

Hong Kong’s Protesters Are Ridiculously Polite. That’s What Scares Beijing So Much.

The One Fact About Ebola That Should Calm You: It Spreads Slowly

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

A Jaw-Dropping Political Ad Aimed at Young Women, Apparently

The XX Factor
Oct. 1 2014 4:05 PM Today in GOP Outreach to Women: You Broads Like Wedding Dresses, Right?
Music

How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

How Tattoo Parlors Became the Barber Shops of Hipster Neighborhoods

This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century

Moneybox
Oct. 1 2014 8:34 AM This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century To undertake a massively ambitious energy project, you don’t need the government anymore.
  News & Politics
Politics
Oct. 1 2014 7:26 PM Talking White Black people’s disdain for “proper English” and academic achievement is a myth.
  Business
Buy a Small Business
Oct. 1 2014 11:48 PM Inking the Deal Why tattoo parlors are a great small-business bet.
  Life
Dear Prudence
Oct. 2 2014 6:00 AM Can’t Stomach It I was shamed for getting gastric bypass surgery. Should I keep the procedure a secret?
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
  Arts
Brow Beat
Oct. 1 2014 9:39 PM Tom Cruise Dies Over and Over Again in This Edge of Tomorrow Supercut
  Technology
Future Tense
Oct. 1 2014 6:59 PM EU’s Next Digital Commissioner Thinks Keeping Nude Celeb Photos in the Cloud Is “Stupid”
  Health & Science
Science
Oct. 1 2014 4:03 PM Does the Earth Really Have a “Hum”? Yes, but probably not the one you’re thinking.
  Sports
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?