Rejoice and be deeply uneasy at the same time?


Rejoice: the Yellen Fed will print money…Janet Yellen is to take over the US Federal Reserve, the world’s monetary hegemon, the master of all our lives. The Fed will be looser for longer. The FOMC will continue to print money until the US economy creates enough jobs to reignite wage pressures and inflation, regardless of asset bubbles, or collateral damage along the way.

No Fed chief in history has been better qualified. She is a glaring contrast to Alan Greenspan, a political speech writer for Richard Nixon, who never earned a real PhD (it was honorary) or penned an economic paper of depth…

She was…quick to sense the danger of a chain reaction through the shadow banking system. Ben Bernanke and the FOMC majority scoffed at worries that the subprime debacle was the tip of an iceberg.

“I feel the presence of a 600-pound gorilla in the room, and that is the housing sector. The risk for further significant deterioration, with house prices falling and mortgage delinquencies rising, causes me appreciable angst,” she told Fed colleagues in June 2007, a 15 months before the storm hit…

she clashed with New York Fed chief William Dudley in December 2007 over the risks of subprime mortgage defaults, which is telling since Dudley (ex Goldman Sachs) was supposed to be the official with his finger on the market pulse. “The possibilities of a credit crunch developing and of the economy slipping into a recession seem all too real. At the time of our last meeting, I held out hope that the financial turmoil would gradually ebb and the economy might escape without serious damage. Subsequent developments have severely shaken that belief,” she said. She was absolutely right again…

The next chairman of the Fed is going to track the labour participation rate. Money will stay loose. Markets have been spared again. The Brics can breathe easier. This leaves me deeply uneasy. We are surely past the point where we can keep using QE to pump up asset prices.

So she’s the most qualified Fed chair in history and he’s deeply uneasy. Well, he’s been on both sides of issues before. Pethokoukis has a more balanced appraisal of the situation.

Bonus business link: Jim Chanos.

One Response to “Rejoice and be deeply uneasy at the same time?”

  1. feeblemind Says:

    Well, you can count me in the ‘uneasy’ camp.

    Sounds like she will continue the money printing for the foreseeable future. Printing money will not create jobs. Getting government out of the way and allowing people to creative and innovative is what will generate jobs.

    Maxine Waters seems to think that she is the ideal candidate and that endorsement alone fills me with dread.

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