The Fed's "WAR OF THE WOR(L)DS"

Like many in the investo-blogosphere I eagerly devoured David Merkel's "FOMC Statement, Redacted Version" today. I am very grateful that someone has taken the time to do this on a regular basis as it saves a lot of time compared to reading the 2 statements side by side. Maybe its just me being "fed up with fed-speak" (sounds like a good WSJ article name if it hasn't already been used!), but it seems that our thesaurus-loving friends at the fed are really trying to engage in more of an "anxiety-easing" policy than a QE policy at the moment. Now that interest rates tools are sayonara the fed has really stepped up its newest weapon against all things deflationary before QE becomes the proverbial kitchen sink: a war of words.

Yes of course Greenspan made this method famous and Ben Bernanke, being the astute pupil that he is, certainly paid attention to Greenie in English class all those years. But until this most recent statement, I didn't really get the vibe from the Bernanke-led fed that they were trying to "game the system" by fooling us with vagueries and empty statements. I thought he was a straight-shooter a la Mr. Bush?

Here are selected excerpts from this meeting's statement and my interpretations of those statements given their change in language vs. last meeting.

They write:
The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.

I read:
We sure hope the market turns around by the end of this year, but we don't think it will

They write:
The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets.

I read:
So last time you were evaluating it. This time you're ready. God the suspense is killing me! Either you are already doing it, but want to maintain the illusion that the tool is still available OR you don't want to commit until we have shed another 5% in GDP growth.

They write:
the Committee expects that inflation pressures will remain subdued in coming quarters.

I read:
Look we've made progress! The first derivative of deflation has slowed. I already have next meetings statement prepared: "Inflation pressures have normalized and will gradually revert back to long term historical averages"

Let's stop the madness of Greenspan! Let's work off some debt/leverage for another year and gradually restore confidence in the banking sector. Confidence that they are making loans that they will eventually get paid on... I don't see how lowering long term rates in the near term is going to spur a sustainable increase in loan activity unless lending standards are relaxed (which they won't be). Who is on the sidelines right now waiting to buy a new house based solely on the level of 30 yr fixed rates? Aren't these just the refi- people?

My 2 cents.