Yellen Admits Fed Failure, Uncorks Inflation Genie
- 'high-pressure' policy may be only way back from crisis- Yellen
- Larry Summers, short lister for an HRC Treasurer, floats "secular stagnation" thesis through Yellen
- Fed's Rosengren blames economy as "Non-conformist"
If We Interviewed Yellen
by Soren K. and Vince Lanci | The quotes are real. We took some liberty with context. But these are the questions we'd like the MSM to ask. Most journalists are either denuded or dumb. So that leaves sites like ours, zerohedge (although we do not put ourselves in their category), and real journalists like David Sirota to step up.
MarketSlant does not have the resources to investigate based on observations and contradictions our leaders exhibit. But we can ask the questions that should be picked up by the people with access to the bubble people. The search for truth starts with questions, and ends with deductive facts. We're just asking the questions we wish someone else would. Sadly, it would seem that cognitive abilities and independent thought are inversely related to proximity from a public official. To wit: Poster child of journalism"s de-evolution.
Lead in to the Interview
Janet Yellen, Friday Oct 14th, on where the recovery may still fall short: "The Federal Reserve may need to run a "high-pressure economy" to reverse damage from the 2008-2009 crisis that depressed output, sidelined workers, and risks becoming a permanent scar"
Yellen Interviewed
MarketSlant: So, your approach was flawed?
Yellen: Not really, the question was whether that damage can be undone "by temporarily running a 'high-pressure economy,' with robust aggregate demand and a tight labor market."
MS: So increased doses of the same tactics may fix things?
Yellen: "One can certainly identify plausible ways in which this might occur,"
MS: And by “temporarily” you mean letting inflation exceed targets for a bit, but being able to reel it in by raising rates after we see economic growth?
Yellen: Yes, similar to Lawrence Summer’s “secular stagnation” thesis, Inflation can go to 3 percent, if we think this is temporary.
MS: So by temporary you mean that once the economy gets going again, you can control inflation by raising rates?
Yellen: Yes, that is the idea
MS: Like how you lowered rates for 10 years to stem deflationary pressures without success. Yet you believe that raising rates when need to quell inflation will be effective?
Yellen: These are questions that need more research, nothing has been decided yet
MS: Then why pose these hypotheticals in question form at all? How does that help anyone? Pondering, plausible, wondering… you don’t really know do you? Are these trial balloons floated for public acceptance? It doesn’t seem to inspire confidence.
Yellen: Well, Rosengren called the economy "nonconformist" because of its slow growth
MS: You mean the economy is not conforming to your wishes. Do you think the economy is sentient and can do as you wish? The alternative being you admitting that you were too slow to recognize you were wrong in your approach
Yellen: Rosengren believes the sluggishness is largely the result of forces like aging and demographics that are unlikely to change.
MS: And not factoring in those parameters absolves you from error in policy?
Yellen: All models have limitations, and we must consider using different models to explain phenomena that current ones fail at.
MS: so the models did it. Do you feel to an extent that the US Fed is an influence, if not a teacher of other Central Bankers in applying their skills and creating the confidence that they can solve problems?
Yellen: We’d like to think that our efforts are for the betterment of mankind, and would not be surprised if as pioneers in policy others have emulated or looked to our successes and errors.
MS: What errors?
Never Admit You are Wrong
Yellen: That was false humility. Got me! Actually, Ben Bernanke thought he was wrong once, but later admitted that was a mistake. Does that count?
END- Yellen quotes and cover pic from Reuters Article
Club-Fed
Meet Vitas Vasiliauskas, head of Lithuania’s central bank and Club-Fed minion who told Bloomberg in an interview that the ECB can still conjure up policy surprises - read inflation - if needed to combat economic shocks and push prices higher.
On the ECB’s TLTRO loans:
“This measure, personally for me, is very sexy.”
On his faith in Central Bank Solutions:
"But we are magic people. Each time we take something and give to the markets -a rabbit out of the hat."
Sexy and Magical Ladies
Over the years, first on fringe blogs who dared to point out long ago that the emperors are actually naked, and increasingly everywhere else there has been speculation that locked deep inside the ivory towers of central banks one could find either career academics or Goldman Sachs alumni who were convinced they were all powerful, all capable deities, who in addition to printing money out of thin air, are comfortable micromanaging not only the world's capital markets but also economies. Just like gods, or "magicians"... but really just insane nutjobs.-Zerohedge
So Far:
- QE, ZIRP, NIRP will increase lending and spending
- The economy will grow and the stock market will reflect that
- Stocks are up, economy isn't?- Do more
- Savers aren't being punished. They are being steered towards better investments.
- The people must be wrong, we must teach them…
- The economy is not conforming. We must induce inflation with a recovery as by product!- Do more!
- Surely $10 bread will make them spend more
- We are Magical
About Summers and Hillary Clinton
Summers is on the short list for Treasury. He is a proponent of combating "secular stagnation" by using large fiscal interventions. Secular stagnation is essentially saying "We did not factor in demographics and aging in our models. So unless we do something on the fiscal side, gov't programs may be a ponzi scheme after all" What form fiscal stimulation takes is unknown. Cynically speaking, it is just a bunch of baby boomers looking for an exit for their positions.
Here is John Podestas's list from Oct 6th for Cabinet recommendations.
Cabinet Example
Position Candidate Examples Diversity Example
Probability of Choice
WH COS Daschle/Emanuel
WH Counsel Kagen/Holder 1 Holder
NSC Jones/Steinberg
State Kerry/Dodd
Defense Gates/Reed
DHS Napolitano/Bacerra 1 Napolitano
DNI Steinberg/Blair
CIA Blair/Steinberg
USUN Rice 1 Rice
Justice K. Salazar/Holder 1 Salazar
NEC Tarullo/Schlosstein/Sperling
Treasury Rubin/Geithner/Summers
OMB Orszag/Spratt/Pryce/Sperling
CEA Goolsbee/Henry/Collins/Farrell .5
Commerce Pritzker/Mulcahey/Parsons/Williams 1 Pritzker
USTR Tysons/Parsons 1 Tysons
Labor Sebelius/Gephardt/Cisneros .5 Sebelius
USDA Clyburn/Nelson/Schwietzer/J. Salazar .5
SBA Hightower/Fong/Nesbitt 1 Fong
Performance Farrell/Gupta 1 Farrell
Energy Council Steyer/Inslee
Energy Rogers/Bryson/Harris .5
EPA Adams/Nichols 1 Adams
Interior Browner/Richardson/J. Salazar 1 Richardson
DPC Barnes/Jarrett 1 Barnes
Transportation Kirk/Sims/Ford 1 Kirk
HUD N. Rice/Sims/Cisneros/Booker/Jarrett 1 N. Rice
Education Powell/Simmons/Reich/Duncan .5 Powell
HHS Gayle/Sebelius/Dean .5 Gayle
VA Duckworth/Shinseki 1 Duckworth
Urban Affairs Jarrett/Canada 1 Jarrett
Total 31
Non-Hispanic White Men 13
Women 11
African American 8
Latino 2
Asian American 2
Native American 0
Disabled 1
Love the minority quota totals at the end there.
If only you really gave a shit about them and werent just protecting your ability to sell incoming immigrants on being Dems.
good luck
Read more by Soren K.Group
