No one knows what the Federal Reserve will do

If anyone says they know what the Federal Reserve will do at its next meeting, just look them straight in the eye, crack a little smile and say, “You’re an idiot.”

The Fed’s policy-making committee is set to meet on Dec. 15 and 16, and Wall Street is betting there’s a 75 percent chance that interest rates will be raised — not by a lot, but by enough to send a message.

I would like to tell you what is going to happen, really I would. But then you would have the right to smile at me knowingly and call me an idiot.

Why are only idiots making predictions right now?

Because even the Fed doesn’t know what it is going to do. Indeed, Fed Chair Janet Yellen and her band of confused academics probably won’t be able to come to a decision until the very last moment.

During a speech at the Economic Club in Washington, DC, on Wednesday, Yellen stressed there’s a lot of data coming out between now and the start of Fed deliberations.

Let me be clear about one thing: The Fed wants to raise rates and needs to raise them. This has been true for years now. But each time the central bank gets close to pulling the rate trigger, it loses its nerve.

The near-zero rate policy of the past seven years has been a disaster. It has robbed savers of trillions of dollars, causing those good citizens to pull back spending so much that the US economy may never be the same.

Meanwhile, the actions of the Fed and central banks around the world have been enriching the already rich, driving up the price of things that only rich people buy, such as outrageously priced real estate, fancy cars, scribbles on canvases, and, of course, the pièce de résistance: private aircraft.

On Friday, we will get the first clue as to whether the Fed will find the nerve to pull the trigger in mid-December. At 8:30 a.m., the Labor Department will announce the number of new jobs created in November.

The figure won’t be anywhere near the 271,000 new jobs notched in October, mainly because that number was a fluke that I had explained in detail in this space before that announcement.

For what it’s worth, Wall Street estimates job growth will drop to around 196,000 in November.

I don’t have a clue what the number will be.

But I do know this: Unlike October’s figure, the November data will not be boosted by a hefty Labor Department guesstimate on the number of jobs being created by newly formed companies.

These jobs are phantoms because the Labor Department can’t prove they exist when they are reported each month.

October’s 271,000 gains included a hefty 165,000 of these phantom jobs, generated by a computer program called the birth/death model.

Let’s imagine that phantom-jobs count mirrors November 2014, when a skimpy 16,000 jobs were added.

But it’s actually trickier than that.

If the Labor Department decides to correct October’s bloated figure, that would reduce the total number of jobs. Then, with the lower base of total jobs, that could make November’s gains look better than they actually are.

If the reported job growth comes in at only 150,000 or so, the Fed might be hesitant to raise rates. Even at 200,000, the rate increase would still be iffy — even though The Street’s expectations of 196,000 are below that figure.

Still with me? At 250,000 new jobs in November, which isn’t likely to happen without some major statistical aberration, the Fed will be emboldened — all else being equal.

But everything else isn’t equal. In fact, there are a lot of other things that could stymie the December date with destiny.

Right now the economy in the US is sluggish, growing at only around 2 percent a year.

That’s the same rate since the Great Recession. It’s also the slowest post-recession expansion in US history.

And the Atlanta Federal Reserve Bank on Tuesday reported that growth estimates for the fourth quarter will be even slower, at just 1.4 percent.

The Fed also will have to consider some other important things before making its move.

For one thing, higher borrowing costs here will boost the value of the dollar and hurt companies doing business overseas.

Also, the US will be raising rates while the rest of the world is lowering them. Being that out of sync with the rest of the world economy isn’t good.

What’s more, higher rates will cost the debt-ridden US government a lot of extra money when it borrows. Low rates have actually been a secret tax on savers that has been subsidizing Washington.

There are a lot of other things that could freeze the Fed, including terrorism and a negative reaction from the stock markets between now and mid-December. The panic may have already started in the Chinese stock market.

The Fed should have raised rates immediately after October’s 271,000 job growth. What’s more, it will get another solid excuse to raise them this coming spring when errant statistics will make the economy look better than it really is.

But right now you’d have to be an idiot to make a prediction. What’s funny is how many people are volunteering for that role.