When Walt Disney allegedly plagiarized a “known variant” of “Supercalafajalistickespeealadojus” from the Gloria Parker and Barney Young 1951 Super Song in 1964, it was, according to the film, a word to say when you have nothing else to say. Reading the FOMC statement from this week’s meeting, I found myself thinking that a better theme song for the Fed would be Paul Overstreet’s and Don Schlitz’s:
It’s amazing how you can speak right to my heart.
Without saying a word you can light up the dark.
Try as I may, I could never explain what I hear when you don’t say a thing.
The smile on your face lets me know that you need me.
There’s a truth in your eyes saying you’ll never leave me.
The touch of your hand says you’ll catch me wherever I fall.
You say it best when you say nothing at all.
Now here’s the trouble. I like the whimsical nature of Disney’s Mary Poppins and I love hearing Allison Krauss’ throaty rendition of the Overstreet Schlitz song so I mean neither disrespect by linking them to the Fed or the FOMC statement. I just couldn’t help but sit in wonderment when I read the same words emanating from the Fed. Upon close inspection – which I don’t recommend – you’ll notice that the Fed has been incapable of demonstrating a solitary piece of evidence that their intervention is doing ANYTHING for employment or prices. They are erroneously misreading the housing data as they’re oblivious to the fact that it’s not American homebuyers who are buying real estate. It’s investors – foreign and domestic – who are hedging future investment volatility at the unwinding of QE (infinity) who are the ones taking advantage of the low Fed Funds rate with their purchase of real estate. In other words, nothing is working so we’ll do more intervention!?
The only bright spot in the report was the fact that Kansas City’s Esther L. George, an MBA from University of Missouri-Kansas City and a career employee of the Federal Reserve Bank of Kansas City, had the good sense to point out that someone needed to be a voice of rational dissent on the Committee. While dissent from the consensus made good sense, how she arrived at her conclusions suggest that she’s more concerned about the Fed’s future credibility than convinced of the efficacy of “stimulus”. Her concern, validated by the Friday repudiation in the equities market following the Fed’s non-statement of non-conviction based on non-facts, was that by continuing its accommodative path, the Fed may be misconstrued as weak and may harm its future relevance. Yes and Yes.
While I do my best to avoid referencing the nemesis of critical inquiry and thought – Wikipedia – I found their entry on Disney’s nonsense word to be tragically cute. The etymology of the non-word was loosely, “Atoning for educability through delicate beauty.” Now while this definition actually resembles poorly translated signage at antiquities sites in China (one of my favorite pastimes), it seems like a suitable bridge from the FOMC to my inspirational songs. What makes the Fed so charming is their near constant ability to convince everyone of the gravity of their importance while watching asset values dance around their fickle commentary on data that’s more reliquary than relevant.
In a 1964 world – the world of Walt – the then Federal Reserve was far more credentialed and circumspect. In their assessment of the preceding 3 ½ years of economic growth, the 1964 Fed highlighted the need to understand the nature of the “circular chain of cause and effect.” They stated the need to “distinguish between underlying forces of supply and demand that result in changes in bank deposits and credit, and the actual changes themselves, after these underlying forces have worked through the economy.” The 1964 Fed actually acknowledged that they participate in, not form the basis of, the public economy. It’s as though the heliocentric wisdom of antiquities has been replaced with New-York-centricity which would make Ptolemaic philosophers scratch their bewildered heads. The 1964 Fed was famous for measuring their contribution to commercial credit flows – not to agency and non-agency mortgage buttresses. (For a nostalgic view, make sure you read the New York Fed’s Monthly Review, December 1964.)
Well, just when you thought we had another quarter of inaction supported by incomplete assessment of meaningless data stimulating the inflation of yet another bubble that worries pretty much everyone who actually is in the business of finance (a credential that is not often welcome at the Fed), we’ve got one woman who’s about to shake things up. And no, I’m not talking about Janet Yellen. I’m talking about the well alloyed Angela Merkel who just won her third term. Her victory speech tonight actually sounded Supercalifragilisticexpialidocious. “We have just done something fantastic. This is a Super Result.” Hey, say all this in German and it starts sounding rather precocious! When Angie shows up in the German parliament fresh off her victory, she’ll have to figure out how the coalition has shifted and, lest you think that she’s going to be cavalier about how the Greens and the Left view the euro, European unemployment and accommodative fiscal policy, think again. The weeks ahead will be choppy ones. Thinking that inaction defers the global economy’s desperate need for accountability is for the birds… which reminds me of my favorite song from Mary Poppins…
“Come feed the little birds, show them you care
And you’ll be glad if you do.
Their young ones are hungry,
Their nests are so bare;
All it takes is tuppence from you.
Feed the birds, tuppence a bag….”
Listen to wisdom from 1964 and see if together, We the People can do one better than the birds!