clairvoyant (noun, plural clairvoyants)
- A person able to see things that cannot be perceived by the normal senses.
- A person able to foresee the future.
There’s good coverage of this on the web (there are already thousands of results when you Google it). Today’s Wall Street Journal covers it pretty well:
Federal Reserve officials said they expect to keep short-term interest rates near zero for almost three more years and signaled they could restart a controversial bond-buying program in yet another campaign to rev up the disappointing economic recovery.
Fed Sees Low Rates to 2014 | Wall Street Journal | January 26, 2012
The WSJ graph (shown at the bottom of this page) is easier to understand than the official one published by the Fed.
I worry about this projection for two reasons:
- There is a real possibility that the Fed will damage their credibility. The minutes released from Fed meetings back in 2006 illustrate pretty clearly that they failed to really see what was coming.
- They project an illusion of control over something that two, three, even four or five years from now they really have no control over at all. Most people in the financial sector know better, but that doesn’t really matter. Even the WSJ article uses phrases like (emphasis mine), “…businesses see the Fed's assurances”. The words “assure” and “assurances” are thrown around quite a bit. There are just too many variables. If they had that much control – why couldn’t we avoid the current mess?
In the press conference Bernanke provides his requisite CYA, “Our ability to forecast three and four years out is obviously very limited. It's certainly possible that we will be either too optimistic or too pessimistic.” These are the kinds of statements that no one ever hears – instead they just judge your forecast as “right” or “wrong”.