Is This The Moment The Fed Decided To Go All In?

Tyler Durden's picture

In December 2008, two brief conversations from Ms Yellen and Mr Bullard appear to have set the scene for both the scale and focus of the Fed's actions over the ensuing years... ironically it was Janet Yellen's fear of a "rising" labor force participation rate and Jim Bullard's rapid realization that the US was "moving to a Japanese-style deflationary, zero nominal interest rate, situation at an alarming pace." Topics that now are quickly ushered away as nonsense by the mainstream economist crystal-ball gazers...



Yellen sees a rising labor force participation rate, fears a rising unemplyment rate, and lays out the 3 areas on which to focus to fix that...

YELLEN: Turning just very briefly to the labor market, the Beveridge curve chart that Stephanie presented during her briefing suggests that we have seen an unusually large increase in the unemployment rate recently in comparison with the decline in job openings, at least in the JOLTS data. I think one interpretation might be that the unemployment rate has risen in part because we have had an unusual rise in labor force participation during this recession.


Labor force participation has been higher than would be expected, particularly for three demographic groups: young adults, married women, and older workers nearing retirement. Analysis by my staff estimates that this rise in participation could reflect behavioral responses to unusual credit constraints and wealth declines.


Specifically, young adults aged 20 to 24 years appear to be entering the labor force in unusual numbers, and that might reflect diminished access to student loans.


Similarly, more married women are entering the labor force, and that’s a possible reflection of diminished access to home equity and credit card loans.


Finally, an unusually large number of older workers are in the labor market, and that may reflect the negative wealth shock associated with the collapse of housing values and the plummeting stock market.


All in all, I expect the anomalous increase in labor force participation to put continued upward pressure on the unemployment rate.


And what happened - the Fed/Govt juiced student loans, piled liquidity into car loans, and smashed home and stock prices up... and the labor force participation rate collapsed and so did jobs...


Then Bullard comes out all "shock-and-awe"...

BULLARD: In sum, I think we are moving to a Japanese-style deflationary, zero nominal interest rate, situation at an alarming pace.


To stay in the game and control expectations, we need a Volcker-like transformation, something like—although the situation is different—the ’79 announcement, which knocked private-sector priors off the idea that they should trigger all reactions to announcements on nominal interest rates.


You need a dramatic move that emphasizes this new reality. Continued focus on the federal funds rate at this point would not face that reality.

Now, of course, the Labor force participation rate is collapsing, there are no jobs created by the energizing of those credit lines and the Fed is desperate to dismiss any perspective that we are turning Japanese.

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hugovanderbubble's picture

Ukraine + Russia will default next days.

Motorhead's picture

Have a good weekend, bitchez!

The Vineyard's picture

OK,  OK.  Janet Yellen is an evil witch.  We get it.  Bitches.

Levadiakos's picture

the Fed's only concern is to the safety of Jamie's bonus

NoDebt's picture

After all these delicious Fed transcripts, the insanity of their discussions and what do a bunch of central bankers finally, at the end of it all, decide to do?  

Print money.  Lots of it.

Color me shocked.

max2205's picture

Proof yellen killed the economy and that sbe has No clue

Muppet Pimp's picture

Were it not mysogynist and raysiss and war on women, I would say that maybe the whole womens lib movement should retreat, we should embrace marriage like god intended and let the women who were so inclined (more than the liberals will let on) go back to being homemakers and raising our kids right rather than everyone seeking moar trinkets and fightiing over the jobs that do exist.  Apparently thinking women might like to actually spend time with their kids is mysogynist and raysiss and war on women and anti-women and all that other happy liberal horse shit.

More likely whats really going on are the democratic (cough...communist...cough) party really believes what they say, that the children are community property, and that once weaned it is important to get those women back to work and get those little sponges back into our indoctrination centers.  And if that is not enough to crush wages, flood in third worlders to make damn sure prosperity is not be found for the lower strata.  On top of that, the democrats can claim it is actually those who believe in women serving the role of mother to their children that are evil and hate women and that the only way to prosperity is to take moar free stuff from the governement.

Further, maybe the ones who claim equality is putting mothers on the front lines of our military are the ones who have their head in the sand are secretly working to destabilize our military forces and sew discontent by taking what was once elite fighting groups of hardened men and throwing women and gays in there, not to acheive equality, but to demoralize our troops and affect their combat readiness.  Maybe it is not wrong for men to feel different when they see women taking a bullet than another man taking a bullet.  Maybe god programmed man this way. It might not have been intentional, but it is certainly a product of liberal thinking.

IPA's picture

It is happening, i know several women with college degrees but stoped working when they got married or had kids. $50000 to find a husband... 

it aint easy's picture


Spot on muppet brother. Feminism equally screws over men, women, and their children. As for the military, quit fighting bankers' wars and it wouldn't have to be such a behemoth in the first place.

drstrangelove73's picture

Everything you've just said is absolutely true,but the default cultural position is to deny each of these truths and call anyone names who says otherwise.
Stick to your guns...uh oh,another politically incorrect utterance...

disabledvet's picture

insanity? she was spot on. the article clearly states she saw the rising labor participation rate as "going up for all the wrong reasons" and therefore as "temporary."

As far a Bullard goes he looks spot on as well as seeing the need for a "shock and awe strategy" to deal with what he "foresaw" as a Japanese like scenario.

Obviously we can't prove a negative here ("what would have happened had they done nothing?") but we can as Machiavelli said "look to the result" and extrapolate "what could have been."

In other worlds "those interest rates don't lie"...even with trillions on the Fed balance sheet interest rates still collapsed.

And of course "look at Europa" if you're looking for "the other side of that coin" (they raised rates!)

The only winners i see are Australia and South Korea "relative to what the USA did."
China...maybe. Certainly they've been the fuel for Bubble 3.0.
But it's a pretty rare thing to be the "beneficiary" of a Bubble...not that the media doesn't say "that's what you really want...everywhere and always."
just another day of geo-political madness.

mjcOH1's picture

"In other worlds "those interest rates don't lie"...even with trillions on the Fed balance sheet interest rates still collapsed."


Don't you mean...."because of" trillions on the Fed balance sheet, interest rates still collapsed?   Was not that the whole point of QE?   The fed created additional/artificial demand for shitty debt, driving down yield.

Stoploss's picture

"it was Janet Yellen's fear of a "rising" labor force participation rate"


Uhhhh whut???

Now it's starting to make more sense, The FED is now critical in, and complacent to the destruction of the country as well as making sure the participation rate drops no matter what.

Because the FED is simply a political tool severely abused by Barry. This declaration should prove beyond any doubt the true motive of the FED, which now follows no mandate except that given by the dicktater... So, this means the FED WILL PRINT, NOW WE KNOW...................FOR SURE.

Gold is most likely about to be hit, along with everything else. If they stop printing, they risk the participation rate rise. That's the thesis. Trade accordingly..

Oh yeah,

===========================FUCK THE FED========================================

runningman18's picture

Actually, it's the other way around.  Obama is a political tool for the Fed...

_ConanTheLibertarian_'s picture

Why would gold be hit? I would expect the gold price to rise. No rocket science.

Ness.'s picture

JPM.  365-0.


We need to hang Jamie Diamonds on the corner of Wall and Broad St. for all to see.


goldhedge's picture

Where is the Occupy JPM movement?

Let's see what Obama does to diffuse the situation ?


it aint easy's picture

Sorry, the "Occupy JP Morgan" faction wasn't eligible for NGO funding for some strange reason..

HyBrasilian's picture

 "OK,  OK.  Janet Yellen is an evil witch.  We get it."


She turned me into a newt!

overmedicatedundersexed's picture

the elite have learned nothing since the roman republic, sorry to say we all must live with the effects of what they do while in power.the elite have convinced themselves they know more and can avoid the same mistakes all despots keep repeating, too bad we common folks get it in the neck each time, nothing new under the sun.

Angus McHugepenis's picture

Dear "The Vineyard", and your other monikers like orez65, Mister Kitty, The Dunce, and watever others you have.

Please take your links to your worthless Angry Sinner blog and shove them up your useless cornchute. The Tylers booted you a long time ago but it seems you have returned like the plague!

Oh, and FUCK OFF!

........('(...´...´.... ¯~/'...')
..........''...\.......... _.·´

theliberalliberal's picture

beat me to it damn


Edit: you will be able to tell how many accounts he has by the number of downvotes you gets

as we speak he is logging out of one account, into the next so he can down vote you.  

theliberalliberal's picture

@ The Vineyard / The Dunce / Whoever-the-fuck-you-are

I seriously fucking doubt that multiple people are linking to this shitty "angry sinner's blog".

especially with the same hyperlinking YOU BITCH.

"look honey,  i got 10,000 view today,  my blog is popular,  how about that monthly promise"

Fucking link to something on topic or quasi-fucking-intersting.  Not what you had for dinner.

lame cunt



walküre's picture

Russia is very traditional. They still go to war to avoid the perception of default but the end result is the same. Ukraine most definitely is going to default. Bread prices across Europe will skyrocket. Some twat will say "Let 'em eat cake" and BOOM goes the dynamite all that pent up anger and frustration will rip Europe to pieces.

Levadiakos's picture

Has Obama drawn another red line?

zaphod's picture

He's drawn another red lines 5 this week alone.

Even with JFK everyone knew that words were followed with action, but with Obama (like Carter) everyone knows their words are backed by nothing. Putin could start to roll into the EU and I'm sure Obama would abandon bases in eastern EU. Putin knows this.  

Au Shucks's picture

Riiiiiggggghhhttt.  Obama makes these big decisions.  Riiiiiggggghhhhtttt.


Get a clue man.  the president is a goddamn figure head, nothing more.  he does what the handlers who have their hands so far up his ass his ears pop out tell him to do.


ANYbody who thinks Obama is to blame is a fool.  he is culpable, absolutely.  but he is most assuredly NOT the decider of anything important.

old naughty's picture

Czechmate !

"The danger to America is not Barack Obama..."


layman_please's picture

he doesn't decide shit but don't expect the overlords to babysit him or prepare the teleprompter. barry is such a failure that he can't even implement the conveyed policy though the handlers are doing their best with the fool

XitSam's picture

So he was just following orders? 

I won't want a Peace and Recocillation Commission, I will want trials and hangings.

hobopants's picture

They took away his red marker because he didn't have any respect for it. He kept doodling on the white house walls... Word is he cried his eyes out until michelle gave him an etch a sketch.

StychoKiller's picture

Someone should point out to the Obamatron that there are more crayons in the box...

akak's picture

The red one has always been his favorite, though.

caShOnlY's picture

Forgive my ignorance:   If Ukraine defaults could/will this cause the whole shebang to blow?  is this why they want the Ukraine in the Eurozone? to get them under the Western banking SCAM system to stop the contagion from just such an event?

Ness.'s picture

None of the parties involved have any concern for the people of the Ukraine. It's all about the flow of resources.  Ukraine just happens to be "inconveniently", in the wrong place at the wrong time.


Scarlett's picture

the less people in ukraine, the more resources/capita

seek's picture

Russia won't default, but Ukraine -- dozens and dozens of private jets have left the country, many of them being loaded with the contents of armored cars, and many top-level politicians on board; their leadership has flat bailed out, way early in the game. So they likely know something we don't about the state of the country. There are fresh reports that the president has left to Russia.

There are near-real time updates on the private jets leaving the Ukraine, some of them are being denied landing rights, and that they're trying to kill the internet.

I suspect we'll be seeing some big news and headlines here in the next 48-72 hours.

Levadiakos's picture

Yeah what you smokin in that pipe Spicoli?

LetThemEatRand's picture

One day I'd like to see Jamie Cufflinks Dimon and Lord Blankfein boarding such a plane with his armored truck full of stolen loot.  

hobopants's picture

That would be a nice sight, but I much rather a pissed off mob catch them in the act.

Kirk2NCC1701's picture

Hopefully maintained by same aircraft mechanics as John Denver had.