Why Is Yellen Appearing With These Guys?
Last week Fed Chair Janet Yellen continued to try to convince everyone that the U.S. economy's on the upswing and her policies are right on the mark. Except that latest round found her appearing with none other than Ben Bernanke and Paul Volcker, with Alan Greenspan joining remotely.
Could be that the powers that be think Yellen needs a boost to her credibility. Having talked up rate hikes, then pulled back from the schedule of increases this year (along with the series of Bernanke policies like QE that failed to rouse the economy), the Fed may be losing its charm for too many people. Yellen may have taken the job just when confidence, already shaken, was heading south. So whether we blame her personally or not isn't the issue. It's an overall Fed confidence problem. Hence the triad backing her up.
On the other hand, things might be a lot worse than many of us think. If that's true, the Fed won't tell us. Did Bernanke warn of the financial crisis in 2008? No. In fact, in the face of the subprime market's collapse, he assured one and all that the rest of the economy was just rosy, thank you. So if there is some hulking crisis out there, the Fed will not only fail to warn but will likely do all it can to ignore, oppose, cover over...whatever. They will only admit a problem after it's clear to one and all.
Why would they wait this way? Well, think about it. If they were to announce that a serious crisis looms, it's likely that panic would ensue. In fact, what would likely happen is people would accuse them of precipitating the crisis - as in claiming there would have been no problem had the Fed kept its trap shut. We saw that in the late 90s when Greenspan spoke of "irrational exuberance" in the markets with the result that markets tanked - until he took it back. He learned his lesson. He not only took back what was the truth at the time, but he did all he could to "talk" markets up again - and he succeeded. - only to have the great tech bubble collapse in spectacular fashion in 2000.
So if Yellen appears with these past grand masters of the universe, maybe it's a kind of calming crew talking things up in the face of impending disaster.
But, you know what? We really don't know what they really know. We do know, however what we know. Which is why watching and listening to every syllable of what the Fed Chair and her colleagues say turns out to be more a waste of time than an intelligent or profitable endeavor. Let them talk. We've got bigger fish to fry out here in the real world, surrounded as we are by low interest rates making it impossible to safely get a return on our hard-earned pay. They, on the other hand, are paid handsomely, have multiple opportunities to consult and give speeches to make money on the side, and generally will weather any storm they wind up causing (and they always do) when it eventually arrives.
The U.S. economy is on a solid course with some hints of inflation so the Federal Reserve is on track for further interest rate hikes, Federal Reserve Chair Janet Yellen said on Thursday in a defense of her decision to tighten policy late last year.Rare indeed. And when something so rare occurs, there's always a reason. Like what?
In a rare spectacle, Yellen spoke on a New York panel alongside her three predecessors who ran the world's most powerful central bank.
Could be that the powers that be think Yellen needs a boost to her credibility. Having talked up rate hikes, then pulled back from the schedule of increases this year (along with the series of Bernanke policies like QE that failed to rouse the economy), the Fed may be losing its charm for too many people. Yellen may have taken the job just when confidence, already shaken, was heading south. So whether we blame her personally or not isn't the issue. It's an overall Fed confidence problem. Hence the triad backing her up.
On the other hand, things might be a lot worse than many of us think. If that's true, the Fed won't tell us. Did Bernanke warn of the financial crisis in 2008? No. In fact, in the face of the subprime market's collapse, he assured one and all that the rest of the economy was just rosy, thank you. So if there is some hulking crisis out there, the Fed will not only fail to warn but will likely do all it can to ignore, oppose, cover over...whatever. They will only admit a problem after it's clear to one and all.
Why would they wait this way? Well, think about it. If they were to announce that a serious crisis looms, it's likely that panic would ensue. In fact, what would likely happen is people would accuse them of precipitating the crisis - as in claiming there would have been no problem had the Fed kept its trap shut. We saw that in the late 90s when Greenspan spoke of "irrational exuberance" in the markets with the result that markets tanked - until he took it back. He learned his lesson. He not only took back what was the truth at the time, but he did all he could to "talk" markets up again - and he succeeded. - only to have the great tech bubble collapse in spectacular fashion in 2000.
So if Yellen appears with these past grand masters of the universe, maybe it's a kind of calming crew talking things up in the face of impending disaster.
But, you know what? We really don't know what they really know. We do know, however what we know. Which is why watching and listening to every syllable of what the Fed Chair and her colleagues say turns out to be more a waste of time than an intelligent or profitable endeavor. Let them talk. We've got bigger fish to fry out here in the real world, surrounded as we are by low interest rates making it impossible to safely get a return on our hard-earned pay. They, on the other hand, are paid handsomely, have multiple opportunities to consult and give speeches to make money on the side, and generally will weather any storm they wind up causing (and they always do) when it eventually arrives.
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