Below is my reaction to the release today of the minutes for last month’s FOMC meeting. Once again, they have an Orwellian (or Japanese) tone:
Consistent with its statutory mandate, the Committee seeks to foster maximum employment...The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate.
First, Fed tradition requires the FOMC to bow to Mecca and intone that it “seeks to foster maximum employment”, in the same way that the city of Sverdlosk committed to meeting the goals of the 10th Party Congress, and the Archdioscese of Cincinatti seeks to promote greater holiness in the tri-county region. The words are cant, devoid of any practical meaning. A layman, uninitiated in the Fed’s secret rites, might imagine that a mandate to foster maximum employment would mean that the Fed would be obligated to target maximum employment, but he would be wrong.
Permit me to translate Fedspeak into English: “The Committee is in favor of maximum employment, thinks it’s an absolutely wonderful idea, and will keep doing the kind of things that it’s been doing which, it is hoped, will over an indefinite time horizon, increase employment”. The mandate is not to achieve full employment, but to bow humbly in its general direction.