Sunday, February 08, 2009

Ludicrous

Wire report on a speech by Janet Yellen, head of the San Francisco Fed:

As the Fed continues to cross "traditional boundaries" in providing liquidity to various corners of the credit markets, Yellen said she was "absolutely open" to the idea of the central bank buying long-term Treasuries if it would help the overall functioning of the credit market.

Meanwhile, Yellen told reporters the Fed needed to fight back against the notion that its liquidity efforts would inevitably lead to higher inflation and higher interest rates, terming the notion "ludicrous."

Print it out, tack it to your wall, and wait.

Revisiting a Yellen speech from September 27, 2005:

In my view, the weight of a decision to deflate an asset price bubble rests on positive answers to three questions. First, if the bubble were to collapse on its own, would the effect on the economy be exceedingly large? Second, is it unlikely that the Fed could mitigate the consequences? Third, is monetary policy the best tool to use to deflate a house-price bubble?

My answers to these questions in the shortest possible form are, "no," "no," and "no."

As long as there are no professional or legal consequences for getting things so profoundly wrong -- see Bernanke and Greenspan -- after-tax personal savings are not safe in the domestic, dollar-denominated system.

6 Comments:

Anonymous Anonymous said...

CR--Please give some hint of where you think assets MIGHT be safe. What currency? What asset class? Are you indicating gold?

2/08/2009 8:48 AM  
Anonymous verc said...

CR,
here's a very good article that challenges the notion that what Bernanke is doing will be inflationary.

via Naked Capitalism:
http://www.nakedcapitalism.com/2009/02/steve-keen-roving-cavaliers-of-credit.html

2/08/2009 9:01 AM  
Anonymous Anonymous said...

"As long as there are no professional or legal consequences for getting things so profoundly wrong -- see Bernanke and Greenspan -- after-tax personal savings are not safe in the domestic, dollar-denominated system."

So let's change that. ;-|

What's even more crazy is when these type of folks get 10's of thousands or millions for speaking, lobbying, or even media careers.

There is no penalty for the rich and connected in the USA: "The IMF estimates that the financial turmoil set off by the collapse of the mortgage market could total nearly $1 trillion. Yet, chief executive officers of the firms most responsible for causing the crisis collected hundreds of millions of dollars in pay last year."

Slumdogs Unite! - Frank Rich has some choice thoughts about key players in the Obama economic team.

Isn't the best place for money/cash flow, a job (easier said than done). It is Wall Street and Washington that made the goal of life all about money, at the expense of Democracy, humanity, families, our institutions, and our infrastructure. CEO's took obscene amounts (pdf) out of corporation (they had their own printing presses called stocks), from employees and shareholders. And we were "okay" with it, as long as we got 1/500th (ay caramba). CEO's get salaries but keep it down, but it was the "other" benefits and compensation they could slide under the table to either hide, disguise, or receive "favorite" treatment, that really matters (Symbolic sure, but does Obama's salary cap mean anything?). I don't see deflation as a bad thing (icks!), and after these HUGE bubbles they should be expected. But I do think, those that gained the most during the bubbles, should pay the most on the downside. It won't happen, but it should.

2/08/2009 5:30 PM  
Blogger Jimmy the Saint said...

When is Maria or Erin gonna present Yellen with the two quotes you posted? I'd give $1,000 to see the dustup that ensues.

2/08/2009 5:45 PM  
Anonymous Anonymous said...

Don't worry about it... our fearless leaders in DC will print up money to solve all our problems.

And if the Chinese think weatherizing buildings, food stamps, and law enforcement aren't good uses of funds, they can just keep on buying more of our debt!

http://inthon.wordpress.com/2009/02/09/why-the-stimulus-package-will-not-work/

2/09/2009 12:27 AM  
Anonymous viagra online said...

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