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James Bullard: "Current Surge In Oil Prices Does Not Qualify As An Important Macroeconomic Shock"
And another puppet in the gran Fed scheme is out and talking, this time self-annoited hawk (who never voted against the consensus, and who is now a non-voting FOMC member), James Bullard who said that "based on leading economic research on oil shocks, the current surge in oil prices does not seem to qualify as an important macroeconomic shock." And why would it: as the silver "case" has so well demonstrated, all that needs to happen the next time crude is at $115 is for the CME and other exchanges to hike margins in a parabolic fashion and drive out all traders from the market, keep prices artificially low, until stockpiles run out at which point not even negative margins will have much of an impact. Bullard also had some remarks on a commodity (read gold) standard. To wit: "Although commodity standards were last discussed in the 1970s when
U.S. inflation was high and variable, Bullard noted that today,
inflation is quite low. He added, “Tying the currency to commodities
when commodity prices are highly variable is questionable.” While a commodity standard forced some accountability on the central
bank, “it did not always." Yes, you read that right: a central banker against a gold standard (which would make central banking for all practical purposes irrelevant). Surprising indeed.
Full release
Federal Reserve Bank of St. Louis President James Bullard delivered remarks titled “U.S. Monetary Policy and Commodity Prices” at the Arkansas State Banking Department’s “A Day with the Bank Commissioner” event today.
Bullard said that, based on leading economic research on oil shocks,
the current surge in oil prices does not seem to qualify as an important
macroeconomic shock. In addition, he discussed headline and core
inflation and stressed that the key policy goal with respect to prices
is headline inflation rather than core. With respect to monetary
policy, Bullard said that “higher inflation expectations in conjunction
with a zero policy rate amount to an easing of financial conditions” and
that “going on hold allows more time to assess the strength of the
recovery.” Finally, Bullard briefly discussed the merits of commodity
standards and inflation targeting, concluding that “inflation targeting
is a better choice in the current environment.”
Commodity Prices
While there have been substantial increases in commodity prices in
recent months, Bullard noted that energy prices cannot continue to
increase indefinitely. “Still, some sector prices do continuously move
in one direction for a long time,” he added, citing as examples prices
for medical care, which have increased, and prices for computer
technology, which have decreased.
Bullard then discussed oil price shocks, citing James Hamilton of the
University of California at San Diego, who has argued that certain
types of oil price shocks precede U.S. recessions.
Bullard said that “increases in oil prices like the ones we have
recently experienced have occurred many times in the past without
seeming to have much effect on the economy,” and that “it is only the
really extreme ones that are reliably related to U.S. recessions.”
“This gives me some confidence that the U.S. can weather the current price shock without a significant slowdown,” he added.
Core vs. Headline Inflation
Bullard discussed headline and core inflation measures, which refer
to overall price index measures and measures without the food and energy
components, respectively. He said core inflation is often smoother
than headline inflation, but “the ‘core’ concept has little theoretical
backing” and is “very arbitrary.”
“Headline inflation is the ultimate objective of monetary policy with
respect to prices,” Bullard said, noting that these are the prices that
households actually pay. “Core inflation is not an objective in
itself,” he added. “The only reason to look at core is as an indicator
for headline.”
However, “from 2003-2006, core inflation was consistently below
headline inflation,” Bullard said. Core inflation averaged about 2
percent while headline inflation averaged about 2.9 percent for the
Consumer Price Index (CPI) and about 2.6 percent for the Personal
Consumption Expenditures (PCE) price index. He concluded, “Core was not
a good indicator of headline during this period.” He added that
“energy prices were rising and the economy was expanding” during those
years.
U.S. Monetary Policy
“Since last summer, financial conditions have eased considerably,”
Bullard said, noting that the policy rate has remained near zero but
expected inflation has risen. “To the extent expected inflation
continues to rise, financial conditions continue to ease,” he said.
“Past behavior of the FOMC indicates that the Committee sometimes
puts policy on hold,” Bullard said. “This gives the Committee more time
to assess economic conditions.”
He added that hold in the current environment would mean:
- the policy rate remains near zero;
- the “extended period” language remains intact; and
- the balance sheet remains at the level as of the time of the decision to go on hold.
Commodity Standards and Inflation Targeting
Although commodity standards were last discussed in the 1970s when
U.S. inflation was high and variable, Bullard noted that today,
inflation is quite low. He added, “Tying the currency to commodities
when commodity prices are highly variable is questionable.”
While a commodity standard forced some accountability on the central
bank, “it did not always work because governments sometimes changed the
rate between the commodity and the currency,” Bullard said.
“Inflation targeting is another way to force more accountability to
the central bank and anchor longer-term inflation expectations,” he
said. “Make the central bank say what it intends to do, and hold the
central bank accountable for achieving the goal.”
“In this sense, inflation targeting is the modern successor to a commodity standard,” Bullard said.
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what a fiatsco (new term, not a mis-spell)
But the whims of the Fed, Benocide, and Timmaaaaaayyyyy are oh so stable. Not to mention "change we can believe in" (bereave in).
What a farce.
Hey, everyone, Bullard says weak housing is keeping inflation "in check."
Oil to $250 a barrel, loaf of bread to $10 - housing and iPad2, let them eat, bitchez!
05-06 12:23: Fed's Bullard says depressed housing market keeping inflation in check, don't expect sector to improve very rapidlyIt's the old "panacea" argument whenever there is a need to change the staus quo. Those that benefit from the current system refute any claim as "not a panacea", then change the subject.
He says it "forced some accountability..."
"...but did not always work".
Since it was not perfect (and face it, no system is, not even a gold standard since in-flows or out-flows can jostle economy), it is rejected out of hand.
TPTB uses this argument all the time. Watch for it
.
well oil is back over 100 so the bull run may begin again as the bears go back to eating acorns. Those Ruskies and MENA guys are mean when oil falls. Don't play games with a peak product that loves a hard on!
All these Fed-sponsored speeches, press conferences and academic papers should include the following disclaimer: "For amusement purposes only".
Fed puppet James Bullard ? I believe that is FOMC non-voting member Knucklehead Smiff.
http://i161.photobucket.com/albums/t204/quattoo/Copyofknu1.jpg
Hmmm, high inflation in all essential things you need to live but let the serfs eat iPads and be grateful
These guys don't even consider geology. It is going to crush them and they won't even be aware of it.
They may, at most, go out and get "the best oil advice money can buy." Well, that advice is from consultants who have become "the best" by spending a career telling oil drillers what they wanted to hear -- that if they drill they will find it and that the future is bright. Would you continue to hire a consultant who told you and your shareholders your business had no future? No. Of course not.
And so the consultants who actually do stress the scarcity issue won't get called back. He won't be busy every week and won't be able to raise his rates and thereby . . . won't become the "best money can buy".
It's going to "come out of nowhere" and it's not hidden at all. How can they not see that KSA didn't fill in a single drop for Libya? How can they not see that consumption declines don't have to be price related; they can be availability related.
Oh well. It isn't going to matter.
You are illustrating how Gresham's Law works on thought. This is an important axiom to grasp, as it flows from Evolution.
There is a banjo joke that goes "How can you tell if a banjo picker is sitting on level ground? ...The tobacco juice runs out of both sides of his mouth."
So, How can you tell if a FedHead is speaking the truth?.... You can't. The shitty lies gush from his mouth every time he opens it.
Six months ago, gas prices were $2.58.
Last week they were $4.15
That's an increase close to 40%, yet it's not a macroeconomic shock?
Stop using your own brain! It's is not necessary now, this is the new world, the government is your thought process.
I think the net is everyone's thought process. Everything else is a break between surfing.
ORI
Goldman sees new oil rally after predicting drop
http://finance.yahoo.com/news/Goldman-sees-new-oil-rally-rb-3873955572.h...
I predict an influx of shit into the sewer when I flush the toilet.
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." - Alan Greenspan
Rename this guy Jim Dullard
Jim Bulltard?
It's time to buy ropes. With nooses.
We're gonna need them soon in order to hang the crooks from the lampposts.
All these worthless stinking liars and assholes at the Federal Reserve make me wanna puke into their fucking faces.
Gas prices are near alltime highs, food prices dito.
But if you exclude everything from CPI then of course your empty core inflation is 0 %.
Both food and gas are non-essential, right ?!
What an utter joke !
Tall trees with short ropes works well. Donlt spare the bankers families.
You wanna create a rope shortage, too?
So much for the bullshit recovery, but, yes the bullshit has recovered nicely and shows high growth potential.
Their logo says "Central to America's Economy"
Getting very close to "Central Planning America's Economy"
They should rename their logo to "Comedy Central".
Oh wait.
That's already reserved.
"While there have been substantial increases in commodity prices in recent months, Bullard noted that energy prices cannot continue to increase indefinitely."
Really. How is that ? As measured in worthless dollars energy prices could become infinite, the last time I checked.
While a commodity standard forced some accountability on the central bank, “it did not always."
Well what standard are they held to now?
1. messed up prices (near $5 gas in Chicago last time I filled up)
2. no real growth (McDonald's is hiring so I've heard)
3. tons of debt (f-ed up balance sheet and housing still sinking!)
4. U-3 near double digits (I won't even go into U-6)
Oh, I suppose it could have been worse w/o their stellar folks at the helm (same stellar folks that crashed the ship to begin with!). Useless jack-offs, they should've all stayed in academia.
Goldman General Counsel: Company Spent $434M On Outside Legal Fees In 2010Last update: 5/6/2011 11:09:15 AM
DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Goldman Sachs (GS) spent more than $700 million on lawyers last year, its chief counsel told shareholders at the company's annual meeting Friday morning. Responding to a shareholder's question, Gregory Palm said Goldman spent $434 million on outside lawyers last year and $292 million for its own legal staff. The Wall Street giant found itself at the center of scrutiny last year, including heated congressional hearings over its actions before and during the financial crisis. It also paid the biggest penalty ever by a Wall Street firm to the SEC, $550 million to settle charges it misled customers over the sale of a complex mortgage derivative. In Goldman's first shareholder meeting in New Jersey as a public company, Chief Executive Lloyd Blankfein addressed a room of stockholders that was roughly 70% full. Shares of Goldman Sachs were up 0.3% to $150.87 in recent trading. -By Liz Moyer, Dow Jones Newswires; 212-416-2512; Liz.Moyer@dowjones.com (END) Dow Jones Newswires
So that means if I own Goldman Sachs shares, I get the unique opportunity to look the beast right in the eye and ask him some very unpleasant questions ?
For example why he is spending so much time at the Southampton Bath & Tennis club ?
And since he's doing Gods work,
I'm gonna ask him why he can't walk on water.
The title of this story got me thinking... Every time gas prices go up a bit people cry to open up the strategic oil reserve. Does the gas station have gas for sale? Yes? Then STFU.
Bullard said that “increases in oil prices like the ones we have recently experienced have occurred many times in the past without seeming to have much effect on the economy,”
So, what similar increases in oil prices is this incompetent asshole referring to? That of 1973-74? Or 1979-80? Or 1990-91? Or 2001? Or 2007-08? Maybe he's thinking of 1886-87 or something, what a fucktard.
Talk about drinking the Kool-Aid ....
We would never want to see a 'commodity standard' imposed on money creation, or anything that could constrain the rate of printing.
That'd be crazy talk.
/sarc
It doesn't matter what you tie it to, if you don't understand what is being exchanged. When you trade a piece of paper for tangible value, that piece of paper is a contract, not a commodity. The problem boils down to the pure idiocy of treating money as some commodity to be provided by the banking system. The banks will pump out as much as will make them a profit, not what is most efficient for the health of the larger economy.
A market needs a medium of exchange, but the deeper aspects of this need to be examined at a far deeper level than the current model is willing to consider. When it does completely collapse, maybe that will happen.
All it proves is that fundamentals don't matter (including US created civil wars in the Middle East), consumers don't matter. All that matters is market manipulation.
Remember this as oil approaches $200 next year in 2012. It will be raised there to create social change and the excuse will be Middle East uncertainty.
Bullard is a double-talking asshole like Fisher, he should shut his damn mouth instead of manipulating markets as part of the Bernanke Mafia, I hope you are reading this and ROT IN HELL next to Bernanke. Your last appearance on Sqwalk-for-assholes was a pathetic vascilating embarrassment. I only wish you assholes would be forced to get real productive jobs instead of manipulating the masses. GFY !
Maybe The Bernank can pull the plug on inflation in 15 minutes. Commodities took a beating yesterday.
Scary...
What an effing moron. Oil is an integral part of everything except the US workers' circa 1970s wages.
Sit down! and eat your IPad..... LOL
The FED LOL
i have improved a bit oil price prediction after the previos version correctly timed/priced current dip:
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&p=32261#p32261
Current oil price dip will end in May.
haha, can not tie money to commodities you need to buy every day, since these are volatile in price. Soon we will have ultra stable money, but everything you might want to buy with it fluctuates very stronlgy in price. The money is table, it is the price of goods which is volatile.
...all that needs to happen... is for the CME (Chicago Mafia Exchange) and other exchanges (Crime Syndicates) to hike margins in a parabolic (shambolic) fashion and drive out all traders (ie. small fry, not fat fish) from the market (rigging scam) keep prices artificially low (ah socialism for the rich), until stockpiles (what stock?) run out (of toilet paper) at which point not even negative margins will have much of an impact (all Ponzis End Game: Ruin)
No, you are wrong. They can do what they do in many other countries! Don't let the refiners operate at 60% to drive gasoline up for the masses, and CONTROL THE FUCKING PRICE. If that's communism, sign me up. The masses ARE the economy, FUCK CAPITALISM UNTIL IT'S DEAD.
It is interesting to read the posts from the lame brains.
Sure, energy prices are up. That is a driver of increasing costs for everything.
However, when housing prices are now quite a bit lower, and comprise about 15% - 20% or more of the household budget, the lame brains fail to recognize that. In fact, many of them believe that the decrease in housing costs are damaging to the consumer.
Stuck on Stupid.