Yesterday the Fed met, talked about the economy, had lunch, and issued an almost unchanged policy statement. What they have been doing, they will keep on doing. This is news?
The Federal Reserve manages the money supply. They set short-term interest rates. They monitor the capital markets and help regulate the banking system. They’re a creation of Congress to help guide a $16 trillion economy through fair weather and foul. But sometimes their policies appear to be on auto-pilot, for all the pomp of the Governors and regional Presidents arriving amidst super-secret proceedings.
It’s like Samuel Beckett’s play, Waiting For Godot. In this drama two tramps stand around waiting for Mr. Godot to arrive. What they will do when he gets there is unclear. As they wait they discuss religion, philosophy, their health, the weather, economics—all sorts of issues. Other people come and go. But Godot never shows up. In fact, a second act takes place in which many of the conversations are repeated, but the opposite character voices them. And again, Godot fails to arrive.
The play has been described as a drama where the audience remains rapt, and yet nothing happens, twice. Its message is that life goes on, whether we can give it any meaning or not. The difference between Godot and the Fed is that with the central bank, nothing seems to happen eight times.
Douglas R. Tengdin, CFA
Chief Investment Officer