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Will Obama Pack the Federal Reserve Board With Doves?
There is one decision which Obama has to render soon which no one seems to be focusing on. The president has to appoint three Federal Reserve governors to fill empty seats, the most since President Franklin D. Roosevelt faced the same task in 1935. Obama’s choices in making these appointments rank only second after his selection of the new Supreme Court justice in importance for the country, the economy, and your portfolio.
The betting is that he will pick three monetary doves who will keep interest rates lower for longer, continuing the steroid injections of free money for the economy. This would create enough bubbles to make Obama’s re-election in 2012 a layup.
They will be more activist, consumer friendly, and in favor of stricter regulation of the financial sector. The ghost of libertarian Ayn Rand will no longer be welcome on this board. That’s why you are hearing almost daily rumors of the appointment of noted dove, Janet Yellen, president of the San Francisco Federal Reserve, as a future vice chairman. Focusing only California’s structurally weak economy, how could you be anything but dovish?
The FBI is said to be conducting background checks on two other doves, MIT economist, Peter Diamond, and Maryland regulator, Sarah Bloom Raskin. Conservatives would much prefer to see monetary hawks on the board who will raise interest rates faster and higher, heading off inflation and propping up recently invigorated Uncle Buck, and keeping new regulation at bay.
The 800 pound gorilla in the room is that if Obama takes the dovish path, the dollar’s current strength will end, resuming its 220 year downtrend. The big question then becomes, will the Chinese and other sovereign funds puke their existing dollar and Treasury bond holdings? Alas, another road leads to using this dip to buy the TBT.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out of consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on the “Today’s Radio Show” menu tab on the left on my home page.
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Just a quick correction: Ayn Rand was not a Libertarian. That movement was (in principle) founded by Murray Rothbard in the 1970's. Miss Rand published her novels and articles starting in the late 30's with "We The Living". She intensely disliked the Libertarian movement because it espoused amorality. Her philosophy emphasized the importance of virtues and their role in sustaining a politically free state.
BTW, Alan Greenspan betrayed the principles of Objectivism when he took the job as Fed chairman. For a more detailed explanation, read this: http://www.aynrand.org/site/News2?page=NewsArticle&id=21857
Doves, yes.
I nominate William K. Black and Elizabeth Warren!
Mafia Dones are the ones who hires the Mafia hitmans, is all about getting an aligned mindset.
This is a done deal.
Either the presently collapsing pyramid scheme is replaced by a much larger pyramid scheme and they can shove 10X money into the system and take out the denominator -
OR
The presently collapsing pyramid scheme continues to fail, basically wiping out anyone carrying debt and forcing the termination of both the Federal Reserve and the IRS.
Either way, it looks like the 'game over' crowd has got it right.
They can't create the growth. The energy supply has peaked and is in decline.
It's simply game over for growth economics. All they have now are monetary levers and they're going to find out where that ends up.
ALL fiat currencies are going to 0. The recognition is out there to discount them because debts expected to be repaid with tomorrow's growth are DOA because with tomorrow comes contraction.
They'll try all their negative rates bullshit and they will end up fucking EVERYONE who has paper wealth and FRNs right in the backside. At the end of the day it will all be for naught because without more oil you CANNOT have more people driving more cars more miles. You simply can't have aggregate growth without continuous net energy supply expansion.
You have to remember that EVERY economics treatise or school came of age during a period where oil supply expansion seemed perpetual and infinite. It was an assumption. During Keynes' time, the US was 40-50 years away from Peak and the world was 75+ years away. For a human, that might as well be forever.
My guess is the creation of a much larger pyramid scheme.
Old habits die hard. And for the most part, the game is all these people have in life.
Every Mayan calendar is right once every 26,000 years?
So what did the other FED board members contribute in the past? It seems as if theres a 220 year downtrend, no one has done shit, regardless of the board memebers. Which, if you are insinuating the repeal of the FED, well, no one he picks would matter either direction.
"The big question then becomes, will the Chinese and other sovereign funds puke their existing dollar and Treasury bond holdings? Alas, another road leads to using this dip to buy the TBT."
This is the kind of research my pseudonym looks out for.
The thesis of this article that there is a choice made by Mr. Obama is flawed. The choice is made by others.
Let's not be naive here.
It's not like the hawks would save the world and the doves wouldn't. In both cases, the dollar will at some point collide with reality and Obama's choice just influences number of day we ahve to wait for this to happen.
Janet Yellen, president of the San Francisco Federal Reserve, as a future vice chairman.
Gee whiz, wasn't Mizz Janet head of the FRB that oversaw the California, Nevada, Arizona axis of collapse? That hag is perfect for the New and Improved FED. You might as well pack the FED with three more Jewish names in order to invite the ire of the backward flyover states.
I have no idea what the heritage is of the three, but the surnames and NYC roots suggest that there could be some backlash. Yeah, bring it on.... whatever. That isn't of much importance to me, but it seems to be amongst TPTB.