This page has been archived and commenting is disabled.
'Central Bankers' Say The Darndest Things - Bill Dudley Edition
Via Raul Ilargi Meijer's The Automatic Earth blog,
...
First, in the next episode of Kids Say The Darndest Things – oh wait, that was Cosby .. -, we have New York Fed head (rhymes with methhead) Bill Dudley. Dudley’s overall message is that the US economy is doing great, but it’s not actually doing great, and therefore a rate hike would be too early. Or something. Bloomberg has the prepared text of a speech he held today, and it’s hilarious. Look:
Fed’s Dudley Says Oil Price Decline Will Strengthen US Recovery
The sharp drop in oil prices will help boost consumer spending and underpin an economy that still requires patience before interest rates are increased, Federal Reserve Bank of New York President William C. Dudley said. “It is still premature to begin to raise interest rates,” Dudley said in the prepared text of a speech today at Bernard M. Baruch College in New York.
“When interest rates are at the zero lower bound, the risks of tightening a bit too early are likely to be considerably greater than the risks of tightening a bit too late.” Dudley expressed confidence that, although the U.S. economic recovery has shown signs in recent years of accelerating, only to slow again, “the likelihood of another disappointment has lessened.”
How is this possible? ‘The sharp drop in oil prices will help boost consumer spending’? I don’t understand that: Dudley is talking about money that would otherwise also have been spent, only on gas. There is no additional money, so where’s the boost?
Investors’ expectations for a Fed rate increase in mid-2015 are reasonable, he said, and the pace at which the central bank tightens will depend partly on financial-market conditions and the economy’s performance. Crude oil suffered its biggest drop in three years after OPEC signaled last week it will not reduce production. Lower energy costs “will lead to a significant rise in real income growth for households and should be a strong spur to consumer spending,” Dudley said.
The drop will especially help lower-income households, who are more likely to spend and not save the extra real income, he said.
Extra income? Real extra income, as opposed to unreal? How silly are we planning to make it, sir? Never mind, the fun thing is that Dudley defeats his own point. By saying that lower-income households are more likely to spend and not save the ‘extra real income’, he also says that others won’t spend it, and that of course means that the net effect on consumer spending will be down, not up.
He had another zinger, that the whole finance blogosphere will have a good laugh at:
[..] He also tried to disabuse investors of the notion that the Fed would, in times of sharp equity declines, ease monetary conditions, an idea known as the “Fed put.” “The expectation of such a put is dangerous because if investors believe it exists they will view the equity market as less risky,” Dudley said. That could cause investors to push equity markets higher, contributing to a bubble, he said. “Let me be clear, there is no Fed equity market put,” he said.
That’s in the category: ‘Read my lips’, ‘Mission Accomplished’ and ‘I did not have sex with that woman.’ I remain convinced that they’ll move rates up, and patsies like Dudley are being sent out to sow the seeds of confusion. Apart from that, this is just complete and bizarre nonsense. And that comes from someone with a very high post in the American financial world. At least a bit scary.
- 11275 reads
- Printer-friendly version
- Send to friend
- advertisements -


So, how many have left the labor force, and how many have been down shifted in their earnings just since 2008? What if we measure back to 2000 for those same losses, what is the shrinkage, the deflation that is in play. We pretend the GDP has grown in the face of manufacturing jobs morphing into lawn care, auto spas, dog groomers and life coaches. Control frauds have replaced paid for homes, and pensions and 401k accounts with SSN disability and SNAP. The american dream in progress.
“Is the Plunge Protection Team really buying oil now? That would be so funny. Out of the blue, up almost 5%? Or was it the Chinese doing some heavy lifting stockpiling for their fading industrial base? Let’s get to business.”
The Chinese have a “fading” industrial base?! The most spectacular industrial development story of all time, over decades, and they are “fading”?! Are we living on the same planet?
ANSWER: END THE FED - put them all on a short little yellow bus with their foam helmets and take them to walmart or the bowling alley before they kill us all
I'd believe Bill Cosby is a serial rapist before I'd believe any central banker double-speak.
Apparently you can sit on the board of a central bank without ever having heard of a deflationary spiral.
<<<At least a bit scary>>>
No. It's very scary.
"We rely on the stupidity of the American voter scary."
What I find scary is if an author does not know about the different effects of spending on economic activity.
If 10 billion $ are given every month to the Warren Buffets, it has no impact on economy. If they are given to low income ppl, they flow to almost 100% directly into the broad economy.
The money that is spent on fuel, is benefitting only a very small fraction of the economy, while high energy prices are a burden for the broad economy. Writing about economy but never heard about oil choke collar? That's embarassing.
It's really not hard with internet to find the relevant statistics that show the impact of lower oil prices on consumer spending.
It is scary that 90% or even more agree with the BS in this article. You shall never be blinded that much, that you don't see positive short-medium term effects, only because overall you see how everything is going down the drain.
And you should not even need the internet, just common sense to understand that it makes a difference where in the economy the $$$ are spent.
So gas is going down while everything else is going up,it's a wash at best.They can use their gas savings on the increase for Obummer care premiums which are going up.You need to learn how to think critically and stop believing everything the govt tells you.
As long as the US imports oil, lower oil prices mean less money going to foreigners and more of it being spent in the US.
Regarding your statement " If they (10 billion) are given to low income ppl, they flow to almost 100% directly into the broad economy. "
But that money would be spent on real things needing real resources and real manufacturing jobs as inputs. if the real resources/jobs aren't available like they were in past decades, then right there is your disconnect. Eureka, you've found it.
"If 10 billion $ are given every month to the Warren Buffets, it has no impact on economy. If they are given to low income ppl, they flow to almost 100% directly into the broad economy."
Your thinking is stupid because the reverse is true. The billions you give to Warren Buffett will be use to expand his business and employ more people that pays taxes and money to spend. If you give it to 100% of the people (mostly unemployed) they'll just spend it at Wal Mart buying Chinese trinkits. Yes indeed you have just emproved the economy because 70% of GDP is spending (which is where GDP is nothing but bs) but you never thought that actual economy improvement is in China because they're the producer.
Yeah, the Buffets, Soros and Icahns create jobs!
You really have deserved this regime.
So you believe central banker double speak, because it sure as hell looks like Cosby is a serial rapist.
I'm practicing being unclear and contradictory. You never know when the Fed is going to be looking to hire another economist.
Ah, tricky tricky. Good tactic and it might just work.
im anticipating cosbys next tv show 'rape victims say the darndest things'
Hey NoDebt, I never pegged you as rayciss.
Wait wait, the oil price coming down should be a boost the American economy. This author is getting trapped in the Keynesian way of thinking that I'm sure he hates. No, no new money is being added, but we get to keep more money due to the ballance of trade shifting. Since we are a net importer of oil, if oil prices drop more money remains in the United States, and can be spent on other products being produced in the United States rather than going to Saudi Arabia, Canada or Mexico. The price of something going down, particularly if it is something that is imported is a good thing. Granted I have no clue what the reason for the price drop is and if it is some kind of manipulation or hurts our oil production more greatly then foreign producers (highly likely) the effects may not be as good, but the author, not Dudley, is the one that is a fool in this instance. Rare when dealing with a Fed Official.
Am I missing something?
So what are you saying,,, Theres never been a better time to buy?
But you're not thinking of the actual affect of that to the US employment. Oil price drop will cause slowdown in fracking which is where most of the so called "improving economy" is coming from. This will result in more people unemployed and less people paying taxes. It's like saying we're buying all our trinkits cheap because they're made in China is good but what happened to the people in the US that used to make them, they're unemployed. I myself would rather pay higher price for US made product as long as I'm employed but when I'm unemployed what use is a cheap import if I don't have the money to buy it?
It's easy to see that Via Raul just doesn't understand the wonders of modern central banking.
Proof positive that the Fed as become political. Or at least that sounded like a political speech. An aweful of BS spewing from those lips.
You need proof for that? The proof is the existence of the fed that's politicized money and has been for 100 years. Economics IS Politics. Drink espresso, that drip isn't cutting it.
Bill Dudley manipulates markets on a daily basis. That does not mean he will come out and admit it or say something like "2.9% yield on the 30 year bond is the line in the sand that the NY FED will defend and help my bank dealers positions in future markets".
This guy is the biggest existing threat to our children's future, destroying it every day. Much worse than any "terrorist".
Fuck the William Dudley.
so, less money to middle east, but more money on chinese goods? Which side are we on again?
I think we're in the middle of this circle-jerk clusterfuck...
He made Total sense to me and I had total clarity on what he said but then again I'm a total drunk
Totally.
Warren was showing him some love
https://www.youtube.com/watch?v=BffmHqVy0do
If the folks don't spend it, we can't count it twice.
We USURYied some folks.........
I'm not sure I'm following Raul here. Transportation costs make up a disproportionately larger % of total income to the lower class than it does to the upper class. All things being equal, lower energy costs will decrease the amount of expense in that department and increase the expenditures on other things, hence stimulating those other sectors of the economy. Since the majority of oil company profits flow through to the upper class who happen to be marginal savers then theoretically a lower energy cost should boost the velocity of money somewhat. That's my thinking anyway.
Maybe after a month they'll save enough to bring the family to a fancy restaurant like Applebees and afford an appetizer and dessert.
It was Art Linkletter, not Cosby....But thanks for the entertainment, nevertheless. Yes, what you say is true! Anything saved is negative for GDP.
Math Geniuses
Prescription Drug Junkies
Wages haven't changed but the expectation is that GDP will increase in a country where consumer spending accounts for most of GDP.
Mr. Meijer is a painfully poor economist and his posts are nearly always absurd. I'm no Dudley fan, but this is a stupid article
Since we import so much oil, it is pretty obvious that an oil price decline improves GDP, assuming of course that consumers will spend the bulk of the savings on domestic goods.
It is always possible that consumers will piss away the entire decline in oil/gasoline/heating oil prices on Chinese Christmas ornaments and LCD TVs. But it is unlikely.
Enough Meijer for Pete's sake. He should pass Econ 101 first before writing a economics blog.
Lower imports would improve the Trade Balance. In fact, lower Dollars for crude produced domestically would equal lower GDP, would it not?
What about econ 101 still holds true? What about any economic theory still holds true? Economics is not a hard science no matter how many algos they pull out of their asses.
Perhaps. I apologize for expressing much too faith in economics.
But we still run a trade deficit in oil. So common sense, forgetting Econ 101 as you recommend, suggests that sending fewer dollars abroad to Saudis and OPEC and spending the money here in the US instead is most likely good for the US.
Drinking a bit early Captain? "spending the money here in the US instead is most likely good for the US."
spending the money here in the US on Chinese shit instead is most likely good for China.
Fixed it for ya.
Correct, more money to spend on gold an silver.
These (2) sentences are just asinine.
Lower energy costs “will lead to a significant rise in real income growth for households and should be a strong spur to consumer spending,” Dudley said.
Yea right! The first thing the looted middle class is going to want to do is go out and take on new debt.
The drop will especially help lower-income households, who are more likely to spend and not save the extra real income, he said.
You mean they might actually be able to trade up to Spam from canned dog food Dudley?
Yen - most people in debt up to their eyeballs (that I know) have resigned themselves to that fact, have no expectation of getting out, and will spend the extra money. If they find a chance to improve their lives for one meal or a trip somewhere, why wouldn't they take it.
I find it to be backwards thinking, but it's their lives and I have found that discussing the insidious nature of debt with people to be an unpopular topic. Instead I just give their kids silver coins for their birthday/baptism/communion, hoping that it will spur some curiousity in the parents or at least the kid when he/she grows up and learns about crazy uncle Venkman.
That is not to say that Dudley is correct from a macro perspective.
Yeap.... I am one of those. Thanks to the crash in properity value and being forced to move, I am fucked.
Many of my friends, many ex military are fucked too. A suicidial society burning those that are actually productive.
My wife and I are getting no place fast, and we are both professonials and are frugal.
It is all a bullshit sandwich.
Dudley must think that the 'poor' will be able to take the money that they would have spent on gas and start their own corporations and/or invest the money in Stawks!
Ron Paul says Janet Yellen (aka Dudley et al., all making money by printing money and buying up financial assets to make the main owners of those financial assets wealthier) may end up “being Ben Bernanke on steroids.”
The former Texas Congressman noted in “Texas Straight Talk”, “there wouldn’t have been a dime’s worth of difference between Yellen’s and Summers’ monetary policy.
“Yellen, like Bernanke, Summers, and everyone else within the Fed’s orbit, believes in Keynesian economics. To economists of Yellen’s persuasion, the solution to recession is to stimulate spending by creating more money. Wall Street need not worry about tapering of the Fed’s massive program of quantitative easing under Yellen’s reign. If anything, the Fed’s trillion dollars of yearly money creation may even increase.”
“As a result,” Paul says, “the American people will continue to suffer decreases in the purchasing power of the dollar and a diminished standard of living. The phony recovery we find ourselves in is only due to the Fed’s easy money policies. But the Fed cannot continue to purchase trillions of dollars of assets forever. Quantitative easing must end sometime, and at that point the economy will face the prospect of rising interest rates, mountains of bad debt and malinvested resources, and a Federal Reserve which holds several trillion dollars of worthless bonds.
“The future of the US economy with Chairman Yellen (aka Dudley aka Goldman Sachs) at the helm is grim indeed, which provides all the more reason to end our system of central economic planning by getting rid of the Federal Reserve entirely. Ripping off the bandage may hurt some in the short run, but in the long term everyone will be better off. Anyway, most of this pain will be borne by the politicians, big banks, and other special interests who profit from the current system. Ending this current system of crony capitalism and moving to sound money and free markets is the only way to return to economic prosperity and a vibrant middle class.”
http://www.theglobaldispatch.com/ron-paul-janet-yellin-might-even-end-up-being-ben-bernanke-on-steroids-2602
All true, but you must admit Bernanke would look pretty cool on steroids.
Enter WilliamBanzai7.
Obamacare will sponge up any savings that would have been realized from lower oil prices as it's implementation ratchets up.
Yup higher Obamacare premiums. oh and penlites...
and the hidden taxes and huge deductibles
Bill Dudley's trading desk in coordination with Goldman Sachs controls stocks.
This guy is the one supporting high stock prices
"Let me be clear, there is no Fed equity market put"
LOL
Keep poker face on, Bitchez.
Again, Dudley’s speech is geared for keeping up the market by bringing investors news that consumer spending will increase and the Fed will not raise interest rates too fast. It’s the same old mantra the bankers will be using until the day they get hit.
The World Should Have Learnt Enough Lessons | Stagflation
December 1, 2014 / Bruno de Landevoisin
Submitted by Bill Fleckenstein – www.fleckensteincapital.com
Those of us who object to money printing and know that it only leads to misallocation of capital are often talking about unintended consequences, which are usually impossible to see ahead of time. One such consequence — as perverse as it is sounds — is that money printing helped cause the price of oil to break. I know that sounds absurd, but here is how that happened.
Oil Not-So-Well
Money printing caused the stock market to go to the moon and suppressed the level of interest rates here and around the world. It also caused the junk bond market to be completely forgiving, so anything with a pulse is once again financeable. A lot of what received financing was exploration and production companies in the shale oil business (roughly $200 billion of junk debt outstanding). This ultimately created lots of jobs and plenty of oil supply here in America.
This capacity has now come on line at a moment when the world economy is very weak and getting weaker. Thus, when the Saudis decided not to try to support the oil market and keep it rigged, along with our excess supply, the always present cheating-wherever-possible OPEC, and world economic weakness, it caused the oil price to get smashed over the Thanksgiving holiday (in addition to the prior weakness). I suspect that the price of oil will stay below $80 for quite some time, as this will require a period of a lot of corporate re-jiggering.
Despite the fact that money printing, which is a bad thing, caused the price of oil to break, the breaking itself is beneficial to lots of businesses. However, from an economic standpoint, the amount of money that consumers will save may not help the economy as much as people think, because job creation will also suffer. Still, those who believe in money printing think it is the greatest thing in the world. What it has wrought is a stock market that has soared, a dollar that has gone with it because folks misinterpret the stock market strength as a sign of economic strength, suppressed bond markets, and an oil price that is at a level where people think it is bullish for the economy. ...
The bottom line is expectations are ridiculously high for everything here in the U.S. when the actual facts have only deteriorated. For example, since the low in 2008 we have added about $6 trillion to the national debt, which has gone from roughly $11 trillion to $17 trillion, and is now over 100% of GDP. Of course, that level of debt “doesn’t matter” because of the Fed’s monetization, which brings us to where we are now with no more monetization, along with earnings expectations for a lot companies that I believe are going to be way too high. Thus, fourth-quarter earnings reports are liable to be a recipe for disappointment. So regardless of how maniacal the stock market trades between now and the end of the year or into early January, I think it is on borrowed time, as there is no way the ridiculous expectations that folks have can be met.
All Goosed Up and Nowhere To Go
Meanwhile, if you want to know how dicey things are, the stock market has never been more expensive from a price-to-sales standpoint (thank you, Fred Hickey, for pointing that out in his most recent letter, which was fabulous, as usual), while the market-cap-to-GDP ratio, which is said to be a favorite barometer of Warren Buffett (everyone’s favorite “stock guy”), was only higher in the first quarter of 2000. So the risks are obscenely high and the problems are intractable, meanwhile expectations are even higher than the risks. In short, there is no way that 2015 doesn’t lead to trouble, even if the rest of 2014 continues to be a fantasy land.
http://zirpqe.wordpress.com/2014/12/01/the-world-should-have-learnt-enough-lessons/#more-5127
Hey Dudley, you feral Federal Reserve FUCK, it may be cheaper to fill my tank but I'm not spending any more because it does. My advice to you, go fuck yourself!
Die Federal Reserve!!
Dudley Do Wrong has dipped into the bowl of blow one too many times. His incoherent babbling is indicative of his last two brain cells being on life support so as to confuse the public and soothe the algos.
The biggest problem no one at the Fed or DC live in the "real" world.
The didn't fight the wars, start a business, work at whatever is available to put a roof over heads and feeding people.
The get paid regularly, have their expenses covered, are set for retirement and walk around like little pot bellied gods.
They run our lives, how sad is that?
There is no way around this except going off the grid, making do with less and being free. What they don't know benefits you.
I've done it. It isn't easy, but its possible and the rewards in liberty and quality of life are worth way more than what their vision of what my life should be.
Dill Budley dancer. Dancing around the truth. Just pure turd polish. How did we get here? We were led here by this kind of expert.
Think this clown does not know its bull? He knows. Man it would be nice to do a Q and A with him in a public forum. This crap wouldnt last five minutes in an honest debate. FOS not even plausible potty mouth trash. We might be better off listening to bums at the park.
So why are all the bozos calling for an inflation rate target when they are admitting here that deflation is good for the consumer? More doublespeak from forked tongues. I was trained as a nuclear engineer, and one of the things I noticed early on, is that the less people understand your line of work, the more secure your job is. The same applies for the field of finance and law. These jerk-offs want to confuse as many people as possible to ensure they keep the reigns of power. It is wrong on so many levels, including the level of species preservation. The guys just don't give a shit about anything other than holding onto their position and wealth. Well, I'm looking forward for the end of this ride. It got old a long time ago.
I'm afraid that most americans are not just under-educated in the field of finance.... they are too intellectually lazy (distracted?)
What WS wants, WS gets. Only don't call it a PUT
Mr. Dudley -- wouldn't the SELLING of Stawks mean that there is MOAR MONEY for the ECONOMY to GROW?? If so, then shouldn't the FED POLICY be to encourage the SELLING of STAWKS!
NoWayJose - Exactly, and well put.... ahmm... well said.
Dudley is saying that there is no Fed Put, but there is a Fed bid on the Stalingrad and Poorsky Index.
Central Banksters should have figured out that lowered gas prices
six years after the crash of 2008 would do nothing for an economy that is already tanked, flatlined, and imploding. Gas prices have been lowered to sabotage the Russian Government and President Putin's
move into Ukraine. Gas prices were not reduced to help out the poverty striken masses purchase a GI Joe with a Kung Foo grip for Christmas.
Also to reduce Russian aid to Assad in Syria.
TPTB still want to built that natural gas pipeline from the Persian Gulf to Europe via Syria and Turkey.
Let's say you have to buy $1mm of shelving for your factory. All shelving is basically the same. You have a choice of buying it
a) 100% from some guy in Des Moines
b) 100% from some guy in Oslo, Norway.
Each shelving is the same. Which would help the US economy more?
We still make shelves here? Whocouldaknowed.
Isn't it good
Norwiegian wood?
Who delivers the fastest?
This is Bill spewing junky logic.
Well it will shift spending see and we can concentrate on those areas and not the crashing energy sector.
No worries, I suspect a huge propane shortage any day now.
i just did this exercise in another post. there are 135 billion gallons of gas sold in the usa(142bil in 2007) in 2013. at a 50 cent/gal savings 70 billion dollars are transferred from the energy side of the ledger to the walmart side. if it was qe it is not much but it is just an opportunity for the poor to buy other stuff rather than a neccessity like gas. they may be able to splurge on a slurpee now, no, not that kind , the drink. so the only good thing is some money is spent in "better" places than the gas pump.
Food prices seems as high as ever and gas prices haven't dropped signficantly. Makes me conclude someone along the way is ensuring prices remain fixed.
"How is this possible? ‘The sharp drop in oil prices will help boost consumer spending’? I don’t understand that"
If you're really too stupid to understand that, you shouldn't be writing articles, except perhaps to your mommy.
Since you are probably not too stupid to understand that, then you are just a really bad liar, in which case then, please see the advice above.
enough with the adhominen attacks. offer something useful.
let 'em eat ipad ...
Anyone here think Dudley has the skill to remove a switchplate from a wall? Better yet , even if he does have the skill , does anyone here think that Mr. Dudley BELIEVES he is above such menial labor? His basic hubris is not only his problem but many other so called financially educated peoples' problem as well. The baby crawls first , learns to balance , learns to walk , learns to run , learns to catch and then somewhere down the road learns to THINK. These people who think they know what is best for society in general are very mistaken about what privileges they BELIEVE have been bestowed upon them simply because they spent enough money to have an institution certify that they completed a set number of courses with a set number of credits. These people are so full of themselves that they forgot to examine their consciemces and their motives. Prosperity will evolve naturally like that baby's motor skills if the Fedral Reserve Act is repealed , together with every regulation that was ever promulgated under it. The sooner we do this the better and SAFER we'll be.
Which is why non-producer Dudley doesn't know or care or understand what Bruno de Landevoisin posted today:
“Money is stored labor. Labor is part of human life. To devalue money is to debase life itself.
“When the state declares the exclusive right of the issuance of money, freedom is impossible.” – Hugh A. Thomas.
http://www.cbc.ca/player/News/Business/ID/2623085441/
The Exchange with Amanda Lang | Dec 1, 2014 | 7:30
Crude and currency
Economist Jim Rickards weighs in on the impact of low oil prices on currencies
Who here is saving an extra $50 bucks a month on gas and then they go spend it ? Not me.
Anyone with any intelligence will use it to pay down debt, or, if they have no debt, will use it to buy silver coins each month.
I'm putting in the Boss 302 or other toys
“When interest rates are at the zero lower bound, the risks of tightening a bit too early are likely to be considerably greater than the risks of tightening a bit too late.”
It's already too late. The global debt bubble is 156 trillion.
the scary part is maybe 5% of americans know who dudley is, what he does, and says, so it will up to the msm to explain it to the public.
dudley can't state his real economic beliefs, according to his keynesian theory, ferguson, and beyond will be the biggest monetary multiplyer in americas economics for a long time, (break thou neighbors window), rioting will have to subsitute for war for now.
dudley can't state his true personl beliefs either , globalism, one world order, ridding the world of 1/2 of it's population, with him telling you where to live, what to eat, what your job will be, how much money your allowed.
“Let me be clear, there is no Fed equity market put,” he said.
He left out the word, perfectly. Without the word perfectly, the comment strains credulity.
dear mr. dudley,
please send me a job for christmas so i can buy a jar of peanut butter, and some bread, and maybe a chocolate bar or two.
Best regards,
losing faith in america fast