"We Can't Do This Forever," Fed Admits "Market Will Overwhelm Us"

Tyler Durden's picture

In a somewhat stunning admission of the truth in central planning (that the Swiss just experienced first hand - and perhaps Venezuela has been experiencing for years), The Philly Fed's Charles Plosser explains the following...

"It may work out just fine, but there’s a risk to that strategy, and the risk is that we wait until the point where markets force us to raise rates and then we have to react quickly and aggressively. I believe that if we wait too long, then we run the risk of falling very far behind the curve or disrupting the economy by rapid rate increases.




The history is that monetary policy is not ultimately a very effective tool at solving real economic structural problems. It can try for a while but the problem then is that it’s only temporarily effective, and when you can’t do it anymore you get the explosion yesterday in the Swiss market.


One of the things I’ve tried to argue is look, if we believe that monetary policy is doing what we say it’s doing and depressing real interest rates and goosing the economy and we’re in some sense distorting what might be the normal market outcomes at some point, we’re going to have to stop doing it. At some point the pressure is going to be too great. The market forces are going to overwhelm us. We’re not going to be able to hold the line anymore. And then you get that rapid snapback in premiums as the market realizes that central banks can’t do this forever. And that’s going to cause volatility and disruption.


...I think the jury is still out on the costs. Because the cost I was worried about was the longer-term cost of unraveling all of this. So maybe I was right, maybe I was wrong. That remains to be seen.


I do worry about the longer-term implications for the institution. Part of my criticism has been that we have pushed the boundaries into fiscal rather than monetary policy. That has brought us praise and opprobrium. Perhaps justifiably on both counts. I do wonder as I look down the road five or 10 years, how will that shape the institution? What happens to our independence? What happens to our ability to do things effectively? Given all that we’ve done — maybe it was all for the best, but even if it was — are there going to be longer-term ramifications that we may end up regretting later?"

*  *  *

So - what happens when the markets realize this?


Source: The Washington Post

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y3maxx's picture

Not gonna get "Venezuela'd" up here in Canada....I'm stocked up on toilet paper

max2205's picture

Chuck, fuck your institution 

ZerOhead's picture

"I do worry about the longer-term implications for the institution."

Personally I worry about the implications of the institution being around for the longer-term.

nope-1004's picture

What does Plosser do, make, or contribute to humanity that will bring about a better life for me, my kids, and my neighborhood?











Thought so.

Looney's picture

This fucking cunt is just trying to create an excuse for himself, “I was warning about the RISKS”, just like Mr. Yellen was “warning”.

Disgusting cunts! All of'em! ;-)


MillionDollarBonus_'s picture

I also worry about the independence of our Federal Reserve, as monetary policy comes under increasing scrutiny. Our Federal Reserve was specifically set up to be independent. The creators of the Federal Reserve bank were wise, and new that politicians could not be trusted to separate their political motives from monetary policy. The separation of Federal Reserve and government has been one of the greatest decisions in this country’s history, and has led to some of the greatest economic growth and economic stability the world has ever seen. It worries me that voters and politicians increasingly believe that they should have a hand in monetary policy. Undermining the independence of the Federal Reserve could have dire consequences for the economy, and I hope that we are wise enough to see this before it is too late. 

SuperVinci's picture



The FED is the Treasury. The Treasury is the FED.

"but, but, laws, rules!?!"

That doesnt mean shit. When it counts, count on the FED being told exactly what and what not to do by Congress.

TheReplacement's picture

When it counts, count on Congress being told exactly what and what not to do by the banks that own the FED.

TruthInSunshine's picture

Fuck you Plosser, Fuck you Mr. Yellen, Fuck you Paul Krugman, and Fuck the horses you all rode in on.

asteroids's picture

All that debt is a sleeping monster created by the FED and Obozo. Yes, one day that monster will awaken, it's inevitable.

eclectic syncretist's picture








Syrin's picture

I bet you've got shit load of ketones in your urine right now.   Little eslse can explain why you've gone full retard on us.

JRobby's picture

Delusions, triggered by sources both known but also only imagined................

venturen's picture

independent like when Yellen had a powwow with the Democrats yesterday? Before Greenspan the FED didn't even talk to Congress. Your perfect reflection of the worst of the financial community is astounding.  

RaceToTheBottom's picture

"independence of our Federal Reserve,"

The FED is working as designed.  Only morons use the word independant with the word FED.

disabledvet's picture

I've often wondered that actually.


Take a poll of the Big Six....er, cough...Big Four Bankers now and ask them "how about those bailouts?"


Maybe the LAW against monetizing the debt was to protect....the Banker from himself?


Heck of an economy to lend into....especially if you're male and a Christian.

Clowns on Acid's picture

MDB baby ! Slowly backing away from his previous 5 yers of posting.... just like Bill Clinton, sandy Weill, Robert Rubin... etc... 

stant's picture

This is the third central bank of the USA. It will fail like the first 2. There won't be a 4 th.

BigJim's picture

As long as the electorate is easily gulled, there will be central banks.

Does it seem to you the average voter is getting any wiser on this (or any) issue?

Thought not.

dexter_morgan's picture

LOL - good one. Is this Janet Yellen trying to tell us why auditing the Fed is a bad thing?


The creators of the FED were all fucking bankster scum criminals. Get the fuck outta here.

BKbroiler's picture

it is.  watching people go ballistic on their keyboards after one of his posts is always fun.  +1 MDB

Blano's picture

That's been the other half of the fun.

One part being MDB posting more regularly, the other part watching peeps tee off on him who don't know his schtick yet.

Debt-Is-Not-Money's picture

"Our Federal Reserve was specifically set up to be independent."

Correct, and to be independent means they are un-accountable in all meanings of the word!

Blano's picture

Dear MDB,

It's really nice seeing you here on a daily basis.  Please keep it up.

A green arrow for encouragement.

One World Mafia's picture

If it's so wonderful they shouldn't mind a full audit, right? 

I didn't hear you say anything about the debt bomb all that 'stability' is built on.

Bossman1967's picture

Amen what will happen they will die a miserable death as they have made us suffer. Let them worry about thier futures as they have ruined ours

JRobby's picture

Stating the obvious can be a living

El Vaquero's picture

Personally, I'm worried about the possibility that some form of central banking could actually exist in the future. 

ZerOhead's picture

As long as there are deadly weapons and people willing to use them against the population there will be central banking...

Chupacabra-322's picture

Morpheus: The Matrix is a system, Neo. That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it.

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Chupacabra-322 Jan 31, 2015 6:03 AM

The Irony

Cynicles's picture

As long as there are sheeple there will be central banking. OK, NWO's arrival might be the exception.

new game's picture

as long as people act like monkeys and lemmings it is hopeless. the majority are easily controlled.

shed the hope, ha...

find your own trail and don't look back.

Theosebes Goodfellow's picture

Paraphrased: "Snapback's a mudda'fucka', bitchez!"

My advice: "Shoot your jizz on the phyzz!"



Conax's picture

remind me not to buy any silver off you, bub.

Theosebes Goodfellow's picture

lol, you know, I hadn't really thought about it that way, but that is one way to keep others from wanting to "get their hands" on your "stack". And now that I have thought about it..., I'm sorry, poor choice of words. :)

Conax's picture

-I couldn't resist. Money is already dirty enough...

Silver should be pure and innocent, not a low class bukaki ho.

European American's picture

"I'm stocked up on toilet paper"

Yeah, but to put TP to good use, one has to be eating something. In Venezuela they can grow year round. Whereas in Canada...

disabledvet's picture







(like Fed Plan A worked so well Charlie.  What's the price difference between Pennsylvania Hub and Henry Hub again?  Bwhahahahahaha.  No funny money here!)

Farqued Up's picture

Along with toilet paper, you must have beer, saltines, peanut butter and honey, the other staples of life.

McMolotov's picture

Good to know you don't need TP for your bunghole.

(Yep, third day in a row I've said it, but come on... toilet paper has been all over ZH this week. Maybe our collective unconscious is telling us to get ready to shit our pants at what's coming.)

yogibear's picture

"Not gonna get "Venezuela'd" up here in Canada....I'm stocked up on toilet paper"

Dollar bills get real rough after while.

Dungholio's picture

You just need to soak them in urine for a bit, then let them dry off.

mvsjcl's picture

Our funny money up here is plastic. Damn near worthless for that task.

The central planners's picture

The fed has plenty of softy toilet paper too. They called it fed notes. We are being using them as "money"