This page has been archived and commenting is disabled.

Good Cop Time: The Fed's Voting Voice Of Reason Explains His Objection To QE4EVA

Tyler Durden's picture





 

The Richmond Fed's Jeffrey Lacker, a 2012 voting member of the FOMC, who has so far been the sole objector to the Fed's policy of exiting a hole by continuing to dig deeper, has released his traditional "good cop" response to Bernanke's QE4EVA plan. The highlights: "I disagreed with the Committee’s decision to continue purchasing additional assets to stimulate the economy. With economic activity growing at a modest pace and inflation fluctuating close to 2 percent — the Committee’s inflation goal — further monetary stimulus runs the risk of raising inflation and destabilizing inflation expectations....Deliberately tilting the flow of credit to one particular economic sector is an inappropriate role for the Federal Reserve....I have dissented previously against the use of date-based forward guidance, and I supported the decision to drop such language at the December meeting....monetary policy has only a limited ability to reduce unemployment, and such effects are transitory and generally short-lived. Moreover, a single indicator cannot provide a complete picture of labor market conditions. Therefore, I do not believe that tying the federal funds rate to a specific numerical threshold for unemployment is an appropriate and balanced approach to the FOMC’s price stability and maximum employment mandates." Of course, his objection is duly noted, and summarily rejected and forgotten.

Full statement:

Richmond Fed President Lacker Comments on FOMC Dissent

“The Federal Open Market Committee (FOMC) decided on December 12, 2012, to ‘continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month.’ The Committee also stated it will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at year-end, initially at a pace of $45 billion per month. I disagreed with the Committee’s decision to continue purchasing additional assets to stimulate the economy. With economic activity growing at a modest pace and inflation fluctuating close to 2 percent — the Committee’s inflation goal — further monetary stimulus runs the risk of raising inflation and destabilizing inflation expectations.

“I also objected to the continuing purchase of agency mortgage-backed securities. If asset purchases are appropriate, the FOMC should confine its purchases to U.S. Treasury securities. Purchasing agency mortgage-backed securities can be expected to reduce borrowing rates for conforming home mortgages by more than it reduces borrowing rates for nonconforming mortgages or for other borrowing sectors, such as small business, autos or unsecured consumer loans. Deliberately tilting the flow of credit to one particular economic sector is an inappropriate role for the Federal Reserve. As stated in the Joint Statement of the Department of Treasury and the Federal Reserve on March 23, 2009, ‘Government decisions to influence the allocation of credit are the province of the fiscal authorities.’

“The Committee also altered its description of its expectations regarding future interest rate changes, replacing its previous date-based forward guidance with guidance based on numerical thresholds. Specifically, the Committee said it anticipates the current ‘exceptionally low’ target range for the federal funds is likely to remain appropriate ‘at least as long as the unemployment rate remains above 6.5 percent, the inflation rate over the next one to two years is projected to be no more than half a percentage point above its 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.’ I have dissented previously against the use of date-based forward guidance, and I supported the decision to drop such language at the December meeting.

“I agree that it’s useful for the Committee to describe how its future actions are likely to depend on the evolving state of the economy. However, monetary policy has only a limited ability to reduce unemployment, and such effects are transitory and generally short-lived. Moreover, a single indicator cannot provide a complete picture of labor market conditions. Therefore, I do not believe that tying the federal funds rate to a specific numerical threshold for unemployment is an appropriate and balanced approach to the FOMC’s price stability and maximum employment mandates. I would prefer to describe in qualitative terms the economic conditions under which our monetary policy stance is likely to change.

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 12/14/2012 - 08:43 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

He's as mad as hell.....and he's not going to take it anymore.

Fri, 12/14/2012 - 08:58 | Link to Comment EscapeKey
EscapeKey's picture

Are you serious? He's completely in on the scam, his only function in this play is to allegedly give them some credibility.

The entire way the Fed is setup, its operations, its ownership structure - it's all set up to obfuscate, and this puppet show is just another little attempt at obfuscation.

Fri, 12/14/2012 - 09:03 | Link to Comment kridkrid
kridkrid's picture

His next serious post will be hs first. But he is always funny, at least to me.

Fri, 12/14/2012 - 09:14 | Link to Comment insanelysane
insanelysane's picture

Remember the good old days when we could count the number of times the FED members laughed during their meetings???

Fri, 12/14/2012 - 11:58 | Link to Comment smlbizman
smlbizman's picture

that dude is the "mdb"  of the fed....you know they make fun of him,... make him do open mic night....make him post stupid shit on zero hedge....

Fri, 12/14/2012 - 09:33 | Link to Comment Debt-Is-Not-Money
Debt-Is-Not-Money's picture

 

He's about to receive a message from Arthur Jensen/Ned Beatty.:

"You have meddled with the primal forces of nature, Mr. Beale, and I won't have it! Is that clear?"

Fri, 12/14/2012 - 09:43 | Link to Comment GetZeeGold
GetZeeGold's picture

 

Oh shit - Joe Kernen

Fri, 12/14/2012 - 10:11 | Link to Comment jjsilver
jjsilver's picture

Oh thanks shill, now I can go back to sleep knowing he is on the job.

Fri, 12/14/2012 - 08:44 | Link to Comment phoolish
phoolish's picture

As long as fraud is tolerated and rewarded, there will be no "recovery."  A critical mass of "the people" have become aware of the central role of fraud in the system and they are withdrawing their consent one pruchase at a time.

 

Fri, 12/14/2012 - 09:00 | Link to Comment kridkrid
kridkrid's picture

The monetary system is itself the fraud. The incremental "fraud" is actually a requirement. There is no critical mass of people withholding shit, let alone some sort of conscious consent. There is a critical mass of people who are fucking broke, they just don't feel broke because the system is designed to keep the alive a little while longer. For a visual, think of the movie Se7en, and Sloth being kept alive a little longer.

Fri, 12/14/2012 - 08:47 | Link to Comment Ghordius
Ghordius's picture

"I do not believe that tying the federal funds rate to a specific numerical threshold for unemployment is an appropriate and balanced approach to the FOMC’s price stability and maximum employment mandates"

The FED had always a dual mandate. They just decided to be more consequent about it

If you don't like it than just say it: "The FED should only have one mandate, as for example..."

oh, the horror of uttering that phrase in full

Fri, 12/14/2012 - 09:48 | Link to Comment Water Is Wet
Water Is Wet's picture

The Fed does not have a dual mandate.  From the Federal Reserve Act, http://www.federalreserve.gov/aboutthefed/section2a.htm :

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

That sounds like one mandate to me.  The rest is just fluff for the plebes.

Fri, 12/14/2012 - 08:53 | Link to Comment Quinvarius
Quinvarius's picture

Blah blah blah.  Then let the banks fail, the US government collapse, and the currency fail in a bout of hyperinflationary debt default.  No?  Then STFU Lacker.  No one is interested in your utopian idea of how this shitty debt backed fiat system, that you support with your every living breath, should work when placed in a box outside of a real economy.  Go back to gold or just STFU.

Fri, 12/14/2012 - 08:49 | Link to Comment HD
HD's picture

"Of course, his objection is duly noted, and summarily rejected and forgotten."

 For now. In a few years guys like this will be the new nouriel roubini, meredith whitney type that CNBC will put on "Squawk Box" after the next crash (that nobody could have seen coming).

Fri, 12/14/2012 - 08:52 | Link to Comment Cursive
Cursive's picture

At this stage of the game, I don't think Jeffrey Lacker's words are strong enough.  He should be explicitly talking about the failures of monetary policy to address the problem of too much debt.  He should say that we can't fight debt with more debt and, most of all, he should explicitly recognize the repressive policies of the Fed.

Fri, 12/14/2012 - 08:56 | Link to Comment NoDebt
NoDebt's picture

Jeff is not going to have anybody who wants to talk to him at the office Christmas party this year!  I mean, the "holiday" party.

Fri, 12/14/2012 - 08:57 | Link to Comment Ookspay
Ookspay's picture

Jeff will be the toast of the first round, it was his turn to take one for the team.

Fri, 12/14/2012 - 08:56 | Link to Comment Catullus
Catullus's picture

Hey, Ezra Klein, are you reading this?  He's saying you're completely and embarassingly full of shit.  Wonkblog this, dipshit.

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/09/14/heres-why-eve...

You're a 28 year old knave that believes this garbage.

Fri, 12/14/2012 - 09:02 | Link to Comment HD
HD's picture

Wow.  I don't know if this Klein kid is talking out of his ass because it's his job or if he just beyond help. The tone of the entire article is condescending - like being talked down to by a 12 year-old.

Fri, 12/14/2012 - 09:06 | Link to Comment Catullus
Catullus's picture

It's how political science majors talk and write.  They spend their entire academic lives doing this.  Ezra Klein is like their Tim Tebow. 

Imagine a business trying to decide whether it should hire more workers. The basic question it needs to answer is whether people will be buying a lot more stuff next year than they’re buying this year. If business owners don’t see any good reason to think the economy will improve, then the answer is probably, “No, people aren’t going to be buying more stuff next year,” so there’s no need to hire more workers.

But if they think the recovery is going to come, if they think people will be buying more stuff, then they need the workers. They don’t want to be caught without enough product — then their competitors would get those sales.

The Fed is trying to influence that decision. Fed officials are saying: “We’re going to use all our power to make sure there are people out there buying your stuff. So go hire. Do it now. We’re behind you.”

Coming from someone who's never hired anyone. Or even heard of the Marginal Product of Labor.

Fri, 12/14/2012 - 11:48 | Link to Comment Tsunami Wave
Tsunami Wave's picture

That useless eater is the founder of Journ-O-List, which coordinates with liberal "journalists" about what to say and write, and confront controversies.

Fri, 12/14/2012 - 08:58 | Link to Comment francis_sawyer
francis_sawyer's picture

So Lacker is the guy who walks into the room of monkeys celebrating the bottom left to top right direction of the arrow on the graph... He flips it over and sadly tells them they're reading it upside down... Then ~ after about 3 seconds of somber reflection, one of the other monkeys fips it back to where it was & the party continues...

Fri, 12/14/2012 - 09:03 | Link to Comment HD
HD's picture

 Those Fed meetings are private for a reason.

Fri, 12/14/2012 - 09:00 | Link to Comment LongSoupLine
LongSoupLine's picture

Here's how it fucking works...

The Fed releases public "mandates". Then they inact their private mandate (read: treasonous printing and dark pool support of TBTF's and foreign sovereigns).

All these fucking public MSM talking points are complete fucking dogshit meant to distract and pump disinformation up the asses of the lemming public.

Audit the fucking Fed and shut them the fuck up for good.

Fuck you Bernanke, fucking treasonous stinking asshole.

Fri, 12/14/2012 - 09:04 | Link to Comment youngman
youngman's picture

Well what he is saying is true....but it does not matter anymore...the Fed has boxed themselves into a corner....its QE from here on out until it collapses..they have eliminated the Market in Bonds...in home mortgages..and probably they are involved in the stock market more than we know....they have killed savers..and know have the rest of the world thinking up ways to get the US dollar lose its status as a reserve currency..good work boys..now they can manipulate the inflation and employment numbers if they want...but Obama has spending on full speed ahead...so we hae1.5 to 2 trillion deficits for the next few years...probably more...

Fri, 12/14/2012 - 09:18 | Link to Comment kridkrid
kridkrid's picture

What you say is correct, but I think it is remarkably important for everyone to realize that this corner that the fed is boxed into is a requirement of the system that we have adopted. In a system where virtually all "money" is loaned into existence, aggregate debt must expand forever. At some point, the market for debt will be saturated. It will either collapse (it being the monetary system) or it will be propped up for a bit and then collapse. We are X <<<<-----Here.

Fri, 12/14/2012 - 09:24 | Link to Comment eaglerock
eaglerock's picture

Yup, like Al Pacino at the end of Scarface.  Come out with guns blazing knowing full well you're going down.   Collapse is the only endgame.

Fri, 12/14/2012 - 09:08 | Link to Comment BrigstockBoy
BrigstockBoy's picture

Ooh, disagreement among Fed voting members...bullshit. It's a form of appeasement to the sheeple to give the appearance of democracy and free speech.

Fri, 12/14/2012 - 09:10 | Link to Comment Quinvarius
Quinvarius's picture

Before he cast his vote, I am sure he made sure the majority was on the other side.

Fri, 12/14/2012 - 09:07 | Link to Comment q99x2
q99x2's picture

He can inflate this to see how fast inflation is growing. 2% and a pig's ass. Republican vs Democrat dog and pony show. Arrest him.

Fri, 12/14/2012 - 09:31 | Link to Comment madcows
madcows's picture

You know, I was just thinking, we really can dig to China.  All we have to do is keep selling treasuries, and shazzam, we're in China.  Or, at least we become China when they take over all our assets.

Fri, 12/14/2012 - 11:54 | Link to Comment Phat Stax
Phat Stax's picture

I would think he would be a hero to all ZH'ers.  To the hardcore cynics here, what else can the guy do but to try to influence verbally and then cast his vote and dissent?  He has been consistently consistent - not down talking while also up voting like the Texas dude.

If it all goes down as predicted here on a daily basis, he could one day be the new Chairman.

Fri, 12/14/2012 - 12:43 | Link to Comment SgtShaftoe
SgtShaftoe's picture

Yes, tying monetary printing to employment is like rigging your spedo to the number of bugs hitting your windshield.  Does it coorelate sometimes, yes, but it's just fucking stupid.

Do NOT follow this link or you will be banned from the site!