The Committee will also issue forecasts on the economy. These forecasts are valuable in the same way you want to know the alcohol imbibed by the driver before you decide to get into a vehicle. In terms of accuracy, the forecasts are of no value. You can get better forecasts on where the economy is headed in any bar in Manhattan. If you want to get a sense of their ineptness, check out their forecasts as the housing crisis unfolded.
In the afternoon, chief price setter Bernanke will play the role of professor and field soft ball questions from the financial press. They'll ask whether the FOMC takes the developments in Europe into account. They'll ask whether the FOMC is running out of arrows in its quiver and whether monetary policy can do anything further in light of the precarious fiscal policy position of the Federal government.
His responses will provide fodder to talking heads on CNBC and Bloomberg news as they parse each response. Most pundits will say that QE3, if it occurs, won't have an impact. They are talking about the economy. They are talking about GDP and employment. The impact is more subtle, and it has been ongoing. It is pushing harder on retirees and others to take risks in the financial markets they don't understand. It is creating underlying pressures as price controls always do for a spike in yields. Along these lines, the financial press would do well to ask Bernanke to trace the likely consequences on investment markets, the housing market, and the Federal deficit if the yield on the 10-year Treasury spikes.
The bottom line is that all of this is pushing the U.S. towards a cliff other than the much bally-hooed "fiscal cliff." It is like getting sucker-punched when looking the other way. And when rates rise, Bernanke will follow his predecessor Greenspan, writing a memoir explaining why the debacle wasn't his fault.
The cure for all of this is simple. Accept the lesson of history - price controls do not work. Do what Volcker did to bring down the rate of inflation. Get a good definition of money and have it grow in a range of say 2% to 4% and let the market determine interest rates, i.e. the price of money.