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Business/Finance See other Business/Finance Articles Title: Janet Whiffs Again——Take Cover Now! If Donald Trump has even a partial clue about the nation’s monumental economic mess one of his first acts will be to demand Janet Yellen’s resignation. And for sheer incompetence among countless other failings. She was out there again today talking in completely incoherent circles. On the one hand, Yellen robotically insisted that the U.S. economy is moving steadily toward the Keynesian nirvana of full employment. At the same time, she struck a profile in cowardice that was downright pathetic. Yep, after 90 months of ZIRP the Fed has decided to wait for further confirmation from the “incoming data” before concluding that even one more baby step toward interest rate normalization is warranted. Needless to say, our paint-by-the-numbers school marm has no clue that a money market rate of 0.38 bps has nothing to do with the Fed’s so-called dual mandate. Its sole impact has been to flood the canyons of Wall Street with zero cost carry trades and endless cheap debt for corporate financial engineering and other leveraged speculations. So the Fed kicked the can again for one simple, pathetic reason. It is petrified of a Wall Street hissy fit. Effectively, it has seconded monetary policy to day traders and robo-machines. By contrast, the Fed’s massive spree of money pumping never got anywhere near to the main street. It couldn’t deliver honest full employment through cheap money inducements to borrow and spend because households are still stranded at Peak Debt. Based on the most recent flow-of-fund report for Q1, households now have record debt of $14.3 trillion. Anyone who can scratch an application signature has been given a student loan and all who can fog a rearview mirror have been loaned 120% of the cost of a new car. And, of course, the castles of main street families are still mortgaged to the hilt. So just exactly what is the point of ZIRP? Likewise, the Fed’s perverse pursuit of 2.00% inflation on the flawed PCE deflator less food and energy is also pointless. The deflationary tide impacting commodities and manufactured goods is global and can’t be reversed; it’s the morning after effect of massive excess capacity and malinvestments that stemmed from 20-years of financial repression by all of the world’s central banks. Besides, most of Flyover Zone America has been hammered by the four horseman of household inflation—- food, energy, housing and medical costs—-to the tune of 3.1% annually for two decades running. Yellen’s claim that inflation is only up by 1.3% during the past year—–and therefore that the Fed has not achieved its inflation goal and must defer normalization—–is just plain laughable. Isn’t a 70% increase in the main street cost of living since 1999 enough inflation? Our Keynesian school marm rattles on about the need for a higher core PCE deflator—–which measures barely half the actual cost of living rise—-but fails to see that the overwhelming share of households is already tapped out by too much inflation in the cost of necessities. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: Ada (#0)
The problem isn't Yellen - The problem is the existence of the FED RESERVE.
"Honest, April 15th is the real April Fool's Day". "The almighty Dollar ain't worth a buck". "White Lives Matter Most if you're white" Doug Scheidt
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