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Yellen Responds To Allegations The Fed Is Responsible For America's Record Wealth Gap
Earlier we noted what we think was the most important thing Yellen discussed today, namely the potential for the Fed to usher in negative rates and as much as she Yellen felt clearly uncomfortable discussing NIRP at a time when the Fed was supposed to take a victory lap with its first rate hike in 9 years, she admitted that the Fed "would look at all of our available tools. And that would be something that we would evaluate in that kind of context."
What else did she say? Below are the key comments on various economic issues as summarized courtesy of Bloomberg.
On the Rate Outlook
"The recovery from the Great Recession has advanced sufficiently far and domestic spending appears sufficiently robust that an argument can be made for a rise in interest rates at this time. We discussed this possibility at our meeting. However, in light of the heightened uncertainties abroad and the slightly softer expected path for inflation, the committee judged it appropriate to wait for more evidence, including some further improvement in the labor market, to bolster its confidence that inflation will rise to 2% in the medium term"
"Every meeting is a live meeting where the committee can make a decision to move to change our target for the Federal funds rate. That certainly includes October”
On Unemployment
"Although we are close to many participants’ and the median estimate of the longer-run normal rate of unemployment, at least my own judgement, and this has been true for a long time, is that there are additional margins of slack, particularly relating to very high levels of part-time, involuntary employment. And labor force participation that suggests that at least to some extent the standard on employment rate understates the degree of slack in the labor market. But we are getting closer. The labor market has improved. And as I’ve said in the past we don’t want to wait until we have fully met both of our objectives to begin the process of tightening policy given the lags in the operation of monetary policy”
On Below Target Inflation
“An important reason for that is that declines in import prices, reflecting the appreciation of the dollar and declines in energy prices, are holding down inflation well below our target and well below core inflation. We expect those effects to be transitory and with well-anchored inflation expectations we expect inflation to move back to 2%”
On International Developments
“We reviewed developments in all important areas of the world but we have focused particularly on China and emerge markets. Now we have long expected and most analysts have to see some slowing in Chinese growth over time as they rebalance their economy. And they have planned that. And I think there are no surprises there, The question is whether or not there might be a risk of a more abrupt slowdown than most analysts expect. And I think developments that we saw in financial markets in August in part reflected concerns that there was downside risk to Chinese economic performance and perhaps concerns about the gaps where policymakers were addressing those concerns; in addition we saw a very substantial downward pressure on oil prices in commodity markets”
On Fed-Induced Uncertainty
“I know that of course there is uncertainty about Fed policy. As I mentioned, we’re well aware that there’s been a huge focus on the decision today. And you know, I would ask you to appreciate that there are a lot of cross currents in economic and financial developments that we need to take into account in deciding on what the appropriate course of policy is. And we don’t make continuous decisions every single day about our policy. We meet periodically. We do our darnedest to pull together the best analysis we can”
On Housing
“we are envisioning further improvements in the housing market. It remains very depressed. Housing starts below levels that seem consistent with underlying demographics especially in an economy that’s creating jobs and we have lots of people who are still doubled up and demand for housing should be there and should materialize as the job market improves and income growth improves. So are we counting on it? Housing is now a very small sector of the economy it’s not the driver of -- it is not the key driver in my own forecast of ongoing improvements in the U.S. economy”
On Budget Standoff
“It played absolutely not at all in our decision I believe it’s the responsibility of Congress to pass a budget to fund the Government to deal with the debt ceiling so that America pays its bills. We have a good recovery in place that’s really making progress and to see Congress take actions that would endanger that progress, I think that would be more than unfortunate”
* * *
Last but not least, here is here response to allegations the Fed creating the biggest wealth divide in US history: "Do you think the Fed has widened the wealth gap with its low interest rate policy? These people say low interest rates mainly benefit the wealthy.
"Well, I guess I really don't see it that way. It is true that interest rates affect asset prices, but they have complex effect through balance sheets, through liabilities and assets. To me, the main thing that an accommodative monetary policy does is put people back to work. To me, putting people back to work and seeing a strengthening of the labor market that has a disproportionately favorable effect on vulnerable portions of our population, that's not something that increases income inequality. There have been a number of studies that have been done recently that have tried to take account of many different ways in which monetary policy acting through different parts of the transmission mechanism affect inequality, and there's a lot of guesswork involved, and different analyses can come up with different things. But a pretty recent paper that's quite comprehensive concludes that the -- that Fed policy has not exacerbated income inequality.
Well, if a paper written by an economist said so, then it must be true.
Source: Bloomberg
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Well deny, deny, deny, chances are most don't know better.
It's not official until it's been denied.
"But a pretty recent paper that's quite comprehensive concludes that the -- that Fed policy has not exacerbated income inequality."
Yeah. It was written on TOILET PAPER and it was FULL OF SHIT !! "
I see what she did there. She baffled everyone by talking about income inequality instead of wealth inequality. In her perverted mind she was not lying.
Damn, that sociopath got the better of us again!
Nice catch. Same sort of word play that has destroyed this country.
I'm still waiting to hear what the definition of "is" is.
lol. I got kicked off a site once for pointing out how language really has been key. The elite use it very carefully because it is how they are avoid and/or leverage the legal system to which they have tremendous access and influence.
This --> "The elite use it... to leverage the legal system"
Go read draft legislation and then the final versions in any state.
The drafts provide context for why laws are passed and this context is subsequently stripped out in the final by clever language assassins so judges/regulators/etc who are directed to look only at the letter of the law do the bidding of the elite criminals.
Excellent.
One's income can increase with no positive effect on wealth if one's expenses are increasing faster. See my comment below.
Read here how poverty is weaponized
http://thesaker.is/ukraine-sitrep-september-17th-2015-by-scott/
Yada, yada, yada, back to your stalls goys...
Cigarette smoking doesn't increase lung cancer either.
She used baffleshitspeak: its this new thing the kids are doing. Very close to spewbullshitspeak, but less bull more baffle.
Also by she I mean blobfish-with-a-wig.
*EDIT: i wonder if BWAW would look better in a high pressure environment. Clearly not much pressure in the hallowed halls of the FED....
Thanks for that.
I've been struggling to come up with what the Yell reminds me of, and you hit it...
Something from the lightless abyssal ocean depths!
I think she had the waving spine with the illuminated end removed surgically.
When she takes off her wig and makeup, she doesn't look like a thumb, she is Larry Summers in drag...aka Ms. Debtfire.
Fuck you Yellin. You aren't putting people back to work, you fucking hag!
https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1S1t
So basically, yes, it does and you all may think so, and it is probably even true in large part, but we ELITISTS think NOT, because it is an inconvenient truth! Now put that in yer pipe and smoke that! Or, did I misread her response?
The global world of masterminding wealth transfer in a NIRP environment.
Eric Clapton- Cocaine - YouTube
I can't talk with ANYONE about the FED. They immediately make comments about having trust in the FED and their belief that it is there to promote the health of the economy. The faith and trust they show is truly sickening. (they also consider me to be a nutcase and don't want to hear about it). No wonder they are clueless about the reason for bubbles, bursting bubbles, resultant recessions, economic crises, etc which they just see as things about which the FED comes to the rescue and saves the day.
She's such a bad con she can't even baffle um with bullshit .........so sad that our cons are inept too
"Wealth inequality" is a left wingnut canard. "Watch the little birdie!" idiots.
Not when it is the direct result of fraud. Which it is.
The only solution that will work, in that case, is to prosecute any and all fraud.
Now tell me that that is the solution being proposed by the wingnuts blabbering about the "wealth gap."
The blabbering wingnuts just want more forced redistribution. They don't give a shit about the fraud because they either are skimming off the system or are so hopelessly brainwashed into believing a socialist utopia is right around the corner.
WINNER-WINNER-WINNER
chicken dinner? (I tend to food motivated).
Out of context. It is a wingnut thing if we are talking any particular redistributive -ism. In this context it is rampant fraud.
Not being able to differentiate between all of this is the wool that is pulled over your eyes.
Understand what Rahm Emmanuel meant when he said, "Every crisis is an opportunity," and you'll get it.
For sure. Nice to meet you J. You took a cool spin on this part of the thread. Drew some folks like myself right in! I personally have some family in another state that are diehard wingnuts. Drives me nuts. I recently told my wife to just stop telling me what they are saying. lol.
Same here, center. Yeah, I've been watching the water temperature being slowly turned up to a boil on these frogs for many a moon. It has taken a while, but they're almost done.
Sad thing is that we are in the pot so some degree. I am feeling a little medium to medium well myself. ha ha.
https://images.search.yahoo.com/images/view;_ylt=AwrB8pPsS_tVZFsA2gcunIl...
Nasty big link. But this cartoon of recent had me in tears I was laughing so hard.
When telling a lie, the lie must always be adhered to strictly.
Janet knows this.
Let me explain it to you Janet.
First, there's no evidence that QE or supressing interest rates has helped the real economy in any significant way. What it's done is enable the wealthy and connected to borrow (from banks, who loan out customer deposits) at zero or negative real interest rates to buy appreciating assets. This windfall represents purchasing power that is a claim on real goods and services. But since these speculators haven't produced anything for their windfall, their increased purchasing power can only be realized by suppressing others'. This is accomplished by rising prices for things like healthcare, food, rent, homes, and other assets, which disproportionately hurts those working for a living with few assets.
Otoh, does this recent and comprehensive Fed study takes into account wealth inequality?
We're all DOOMED! The world is overrun by psychotic predators in pinstriped suits.
Bat shit maniacs will suck your blood dry...
Aaaaaghhhhhhhh!
If you put a pinstripe suit on Yellen, people might mistake it for the Penguin.
Negative interest rates. I'm feeling like the Tommy Lee Jones character in 'No Country for Old Men". "...I don't want to push my chips forward and go out and meet something I don't understand." So I gathered some metals and played pirate on the kitchen table for the first time in a long time. Feelin' better now.
What is the paper Yellen is refering to?
"The Fed Isn't Responsible for Widening the Wealth Gap", by Janet Yellen, PhD.
That's the same load of shit she has been pelting the last few meetings! We will have negative rates if what she is saying is true, cause the shit they are doing just ain't working Johnboy! You think maybe we should try something else? Naw, it only didn't work the last 1000 times, maybe this time will be different! Gawd, these people belong in the mental hospital and kept away from all adult level decision making! What a freaking shit show! I can't believe I have to share the term human being with them!
"But a pretty recent paper that's quite comprehensive concludes that the -- that Fed policy has not exacerbated income inequality."
Raise the FED rate to the rate of inflation and watch what happens to income inequality that the FED pretends it hasn't exacerbated.
There is no such paper, she lies. End the Fed.
The Supidity is obvoius! But one needs a brain to connect the sunrise to day light. And darkness to its setting.
These people will NOT give up their POWER.
We must take it from them using all means possible.......
"labor market"? you mean SLAVE market?
I read that paper, it was pretty convincing. It was written by an ECON 101 student at Montclair State. It got a B-.
The Fed is a whore to the hedgies and the banks
Yellen forgot to read her bosses September 2015 bulletin, released on the 13th
This reminds me of captain kangaroo and moose dropping the ping pong balls.
https://www.bis.org/
filthy, lying. corrupt, evil whore
Muppet Movie - The Rainbow Connection
http://www.youtube.com/watch?v=jSFLZ-MzIhM (3:21)
Rainbow Connection The Muppets 2011 HD/3D
http://www.youtube.com/watch?v=adDgaBZFdTM (2:42)
Kermit The Frog - Rainbow Connection Lyrics
Why are there so many songs about rainbows
and what's on the other side?
Rainbows are visions, but only illusions,
and rainbows have nothing to hide.
So we've been told and some choose to believe it.
I know they're wrong, wait and see.
Someday we'll find it, the rainbow connection.
The lovers, the dreamers and me.
Who said that every wish would be heard
and answered when wished on the morning star?
Somebody thought of that and someone believed it.
Look what it's done so far.
What's so amazing that keeps us star gazing
and what do we think we might see?
Someday we'll find it, the rainbow connection.
The lovers, the dreamers and me.
All of us under its spell. We know that it's probably magic.
Have you been half asleep and have you heard voices?
I've heard them calling my name.
Is this the sweet sound that called the young sailors.
The voice might be one and the same.
I've heard it too many times to ignore it.
It's something that I'm supposed to be.
Someday we'll find it, the rainbow connection.
The lovers, the dreamers and me.
Thanks Janet. You just gave away the farm. We know were the put the sideline money, it's not with Wallstreet. The two of you can bleed to death.
MYSTERY SOLVED:
If you want to see why 99% of the population is clueless, just read the coverage in your daily newspaper about the FED not increasing rates.
I read the Philadelphia Inquirer coverage. They have the most shallow, unknowlegable coverage imaginable. And these types of articles form the typical person's opinion. BTW, I read it online like many people now do with major newspapers.
All Fed meetings should be held on live feed video.
All Fed actions should be posted within an hour, Fed inventory should be viewable online.
And someone needs to tell maroons like Yellen there are limits to what monetary policy can do, and she should stop pretending you can use it to bake a cake.
The FED has become one of the most striking examples of human psychological blindness .. a small group of people who are completely entrapped by their own point of view.
These people are worthy of intense pychological research.
Janet needs to watch this:
https://www.youtube.com/watch?v=jt377DV2BKs
So correct me if I'm wrong here.
The discount rate is zero. So basically If I was a giant commercial bank I can borrow 99% of the 5yr tbill over night for zero by pleding it as collateral. The 5 year is paying 1.53% on the market.
So basically I can do this every day and make the 1/2 percent ?
It does not matte how many letter after your name, your title or all the statistics you want to throw around.
Regular people and their entire families - young, old, middle income and the poor are getting rapped by the big corporates and their lackeys like Yellen.
Until a high profile billionaire and their family gets offed in some political fashion the rapping will continue.
If you call a record low Labor Force Participation Rate 'slack' you're nothing more than a freakin fat little mental patient.
Yeah, putting people back to work. You mean putting banksters back to work. You, short, fat munchkin fuck
At least there is one competent Central Banker in the world, probably only one: she is the woman in charge of the Russian Central Bank. She did real work in the face of the unbelieveable sanction against her economy and she achieved results. I know, that is not a common phrase used to describe activities of the central banks in the West.
http://www.rt.com/business/315692-cb-russia-award-euromoney/
The Federal Reserve is a dusgusting group of banksters.
The Ponzi can go on for a while. Someone said 2 years, 3 years ago it would fail.
Next in negative rates and QE4 for the banksters and their stocks.
I used to have debates with a guy at work 25 years ago. When he was losing, he would always say "well I have a paper that proves my side."
No one ever saw it.
How's this for a theory;
Inflate every asset so the surfs will only have money left to eat, rent and commute!
Keynesian economics achived!
Easter Bunny and Tooth Fairy!
Oligarchy/Plutocracy 2016
The government loves to hear about income inequality because their repsonse is always to tax more so everybody is poor. Then they say look, problem solved.
My Mom was a government worker who went senile too. Thank goodness she wasn't the fed chair.
in senile condition you mother would do better than all previous chair members combined
The problem is that ZIRP has lured money away from true economy growing activity into nothing more than an attempt to speculate and front-run the Fed in the financial markets. This is the way they have been destroying the economy for the last six years with the undisclosed goal of propping up banks which can no longer stand on their own without the Socialist support of the US government. Pretty ironic for a bunch of Socialist hating bankers. I guess it's only Socialism if it's applied to something other than banking.
"Housing is now a very small sector of the economy it’s not the driver of -- it is not the key driver in my own forecast of ongoing improvements in the U.S. economy”
No shit bitch, it's auto loans student loans and credit card debt!
Welcome to Keyneshia!
"Well, if a paper written by an economist said so, then it must be true."
And that is why I keep coming back to ZH. Well done Tyler(s). The trouble with the central planners is they know so much which isnt so.
I feel much safer knowing that both Iran and the Fed are grading themselves in camera and passing out the summa cum laudes all around.
According to Macquarie Research:
https://app.box.com/s/hx16540dwpct4uj5h5iohxsa4197zozd
Time for a policy U-turn?
Back to the future: British Leyland
From conventional QEs to more unorthodox policies…
- As discussed (here and here), we do not believe that investors are likely to benefit from acceleration in growth rates, trade or liquidity and indeed on the contrary, negative feedback loops from EMs to DMs imply that neither would be able to support global growth. Secular stagnation is the key explanatory variable (here). The deflationary pressures from overleveraging, overcapacity and technology shifts can be either allowed to work through economies or the public sector needs to continue resisting via expansionary policies.
- Since ’08, monetary policies were doing most of the lifting with limited participation by fiscal authorities (bar China). In other words, in the absence of either private or public sectors driving higher velocity of money, it was Central Banks that were supplying incremental liquidity to preclude contraction of nominal GDP and avoid stronger deflationary pressures. However, marginal utility of incremental injections has been declining (witness much lower impact of recent ECB’s QE and increase in BoJ accommodation since Dec ’14).
- Part of the reason for monetary stimulus fading is that supply of US$ remains low. Global economy continues to reside on a de-facto US$ standard and current incremental supply is almost non-existent (depending on definition growing at +2%/-1% clip vs. average since ‘01 of ~15%). In other words, due to lack of recovery in the US velocity of money and lack of QEs, global economy is not getting enough US$ to continue leveraging.
…as efficacy of conventional monetary QE is questioned
- At the same time efficacy of continuing with conventional QE policies is being challenged and not just by independent observes but also ‘insiders’ (such as recent SF Fed paper). As velocity of money globally continues to fall, conventional QEs have to become exponentially larger, as marginal benefit declines. If the public sector is not prepared to step aside, what other measures can be introduced to support nominal GDP and avoid deflation?
- There are several policies that could be and probably would be considered over the next 12-18 months. If the private sector lacks confidence and visibility to raise velocity of money, then (arguably) the public sector could. In other words, instead of acting via bond markets and banking sector, why shouldn’t public sector bypass markets altogether and inject stimulus directly into the ‘blood stream’? Whilst it might or might not be called QE, it would have a much stronger impact and unlike the last seven years, the recovery could actually mimic a conventional business cycle and investors would soon start discussing multiplier effects and positioning in areas of greatest investment.
British Leyland failed, but it might work at least for a while
- British Leyland (formed from nationalized British car companies in the late ’60s) destroyed its automotive industry but for a time it provided employment and investment. Central Banks directly monetizing Government spending and funding projects would do the same. Whilst ultimately it would lead to stagflation (UK, 70s) or deflation (China, today), it could provide strong initial boost to generate impression of recovery and sustainable business cycle. It could also significantly shift global terms of trade (to the benefit of commodity producers) and cause a period of underperformance by our ‘Quality & Stability’ portfolio and improve performance of ‘Anti-Quality’ screen. What is probability of the above policy shift? Low over next six months; very high over the longer term.
"different parts of the transmission mechanism affect inequality"
In the mean time folks, just keep grinding along. We do appreciate your efforts.
How can it not widen inequality? The only ones who can borrow are the ones with good credit. Hence the wealthy. Buffet doesn't borrow his money the way us commoners do.Well he doesn't need to but if he did he gets nearly the same rate as the banks. Can he find a deal with essentially free capital even in times such as these? Sure he can. He'll buy more businesses that actually make it out of the depressed economy so he can pay his wealthy 1% dividends. He'll buy property at auction rates and he'll do what any good investment manager does. Take cheap money to make real returns. THEREBY FUELING MORE INCOME INEQUALITY JANET.
Pray tell how many 50K a year jobs that are in industry and manufacturing has the FED created? You know the ones that actually matter? Hmmm....seems to me from the Zero Hedge updates every NFP day, they have not really created any but rather they have been lost??? Could it be because there is NO demand for jobs like this? Nah...all that student debt is simply there because the stupid students overspend all the time. There are hoards of good paying jobs everywhere.
THe FED cannot raise interest rates, but they stil need everyone to think that they will. WHy? It's the only wy to slow down the bubble(s) that they have created with their ack of understanding as to how the financial physics works. Money cannot be created or destroyed, it can only be stolen from the future. (not really, but it sure is a nice sound bite).
Friday humor.