Reflections on the Yellen Taper-Hike Announcement; What Does the Fed Know?

Yesterday everyone was gaga over the news Yellen might actually hike interest rates a few months earlier than they thought. Will she? Won't she?

It all depends on the state of the economy. What does the Fed know? The answer is a lot less than anyone thinks. Really, the Fed is clueless.

About the only comment regarding yesterday's FOMC announcement that I saw worth mentioning came today from Saxo Bank Chief economist Steen Jakobsen.

Via email, Steen pinged me with this comment earlier today.

The “surprise” in the FOMC announcement was that the consensus among FOMC members for hike seems to have moved forward to June 2015 (from September-December). Personally, I think it’s more positioning creating volatility than actual belief in that FOMC projection. An excellent example of Fed’s lack of reality during the 2008 crisis was released earlier this year and a nice summary was done by New York Times: The Fed’s actions in 2008: What the transcripts reveal.

Please, do not think for one minute that FOMC have any clue about the economy six months from and even less so looking into 2015.

• John Hussman: Founder of Hussman Funds, Director of the John P. Hussman Foundation which is dedicated to providing life-changing assistance through medical research
• Steen Jakobsen: Chief Economist of Saxo Bank
• Stephanie Pomboy: Founder of MacroMavens macroeconomic research
• David Stockman: Ronald Reagan's budget director, best-selling author, former Managing Director of The Blackstone Group 
• Mebane Faber: Co-founder and the Chief Investment Officer of Cambria Investment Management
• Jim Bruce: Producer, Director, and Writer of Money For Nothing: Inside the Federal Reserve 
• Chris Martenson: Reknown speaker and founder of Peak Prosperity
• Mike “Mish” Shedlock: Investment advisor for Sitka Pacific and Founder of Mish’s Global Economic Trend Analysis