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Janet Yellen's "Fedspeak" Translated
Submitted by Paul-Martin Foss via The Carl Menger Center,
For those of you who don’t want to take the time reading through the ponderous 7000-word transcript of yesterday’s FOMC press conference, we bring you the shorter Janet Yellen, translated from Fedspeak into plain English. Enjoy!
YELLEN: Good morning. I realize that everyone in this room has already read our monetary policy statement, but for the boobs out there in the general public who weren’t tipped off by us two hours in advance about what our decision was going to be, let me explain it to you even though you’re perfectly capable of reading it for yourself. In summary, we don’t have any clue what we’re doing or what’s going on in the economy. We’ll continue foolishly targeting a 2% increase in prices, and we’ll blame all sorts of external factors when that target can’t be met. Our projections about the economy are complete shots in the dark, but we’ll make a few minuscule changes to our projections from the June meeting just so that it looks like we know what we’re doing and are reacting to market conditions. So now let’s turn it over to questions.
QUESTION: This idea of uncertainty in global markets, isn’t this going to play out over many months, so that the Fed isn’t ever going to hike rates?
YELLEN: Well, global uncertainty definitely is worrisome, and some FOMC members have pushed their projections for rate hikes into next year. But in the end, we expect all of this to be transitory. I mean, it’s not like we’ve created a huge bubble in the US economy, or that China is going to see a huge correction in its markets. Who would actually believe that?
QUESTION: Is the next meeting in play with regards to a rate hike? And what kind of data would you need to see in order to hike rates?
YELLEN: As I’ve said before, a rate hike is possible at every meeting. And we haven’t told anybody before, but we’ve brought you guys in to prep you on how to react if we hike rates at a non-press conference FOMC meeting. After all, we don’t want any journalists to stray from the party line and ignore our propaganda.
QUESTION: There have been some people protesting a Fed rate hike out of a concern that there still aren’t enough jobs. What impact has that had on you?
YELLEN: Yes, I hate those annoying little s***s, but I have to pretend that every peon’s opinion is important. But let’s the cut BS: we make the decisions and we’re going to do it regardless of what anyone on the outside thinks, okay? And we still don’t think the labor market has quite reached the amorphous goal we’ve pretended to set for ourselves, so until we hit that ever-changing goal, we’re not going to hike rates.
QUESTION: Do you think you’ve gotten closer to your inflation goals, and have you complied with the Congressional subpoena regarding the September 2012 leak?
YELLEN: B****. How dare you ask me about the subpoena. Do you remember what happened to the last guy who asked a question like that? He hasn’t been seen or heard from since. So I’m going to give you the longest, wordiest answer of the afternoon, repeating myself three or four times and basically rehashing everything I’ve already said about our inflation targets. That should give the Federal Reserve police enough time to identify which car in the lot is yours and install the tracking device. And now that I’m winding up my answer, the folks upstairs should have also had enough time to permanently revoke your press pass. Next question. Oh, wait, you asked about a subpoena? Yes, we are fully complying with Congress’ request for information, just like we always have throughout our history.
QUESTION: The projections you release basically show a low-inflation environment over the next three years, coupled with an unemployment rate that sits at your view of maximum unemployment. Doesn’t that seem a little unrealistic?
YELLEN: Look, as I’ve said before, we really don’t have a clue what maximum employment looks like. And we can’t predict the future. But we have to keep up a facade of knowing what it looks like we’re doing. So we’re going to keep pulling numbers out of our a** for as long as we can and hope for the best.
QUESTION: I want to piggyback on the last guy and point out that your old targets for the unemployment rate and the inflation rate were both higher. What has changed?
YELLEN: Well, we decided that 2 sounded like a nice number. We don’t like decimals and fractions. So our target is 2%. 2, 2, 2, 2, 2. Got that? But that’s not our ceiling. We don’t really care what the ceiling is, but we want to break through that 2% ceiling. The sky’s the limit, but if we can’t break 2% then it makes us look incompetent, as though we can’t actually cause prices to rise. There hasn’t been a central bank in history that’s been incapable of causing a hyperinflationary crisis, and we don’t intend to be the first.
QUESTION: So, like, you mentioned uncertainty, and, like, uncertainty caused you not to hike rates this month. And, like, so, what are the kinds of uncertainty that cause you not to raise rates, and what kind of uncertainty can you ignore?
YELLEN: That’s a tough question. But you should trust us that we’re carefully evaluating all the data. But the most important data are the unemployment rate and the inflation rate, and everything is viewed through how it’s going to affect those rates. Or at least that’s what we want the public to believe.
QUESTION: Could you talk a little bit more about the foreign developments that you’re discussing? We’re assuming it’s China, so are you concerned about the Chinese markets? And how about US markets, what do you think about them?
YELLEN: Yes, we’ve focused on China, but we’re convinced that their central planners know what they’re doing. After all, our central planning here is working wonders, right? But we’re also looking at declining oil prices and how that’s going to affect a number of countries and what the spillover effects might be. And yes, we s*** bricks every time the Dow drops a few hundred points. That’s why we have the Plunge Protection Team, but we can’t admit that we intervene to prop up markets, so I’ll just give you a BS statement about how we’re purely focused on the US economy and not at all reacting to market turbulence. Oh, and the economic outlook is peachy keen.
QUESTION: Given global interconnectedness and low inflation rates around the world, are you concerned about not being able to escape the era of zero interest rates?
YELLEN: No, of course not. We don’t take into account the possibility or likelihood of any extreme scenarios, and I can guarantee you that when the s*** hits the fan we will be completely blindsided and unprepared.
QUESTION: If the economy improves along the lines of your projections, and you still predict low inflation, what’s the big hurry in raising rates?
YELLEN: We’re going to keep printing goo-gobs of money, and we’re hoping that will start driving prices up. We know every central bank in history that has tried to engage in monetary policy has had to deal with lags in response to monetary policy, and we don’t want to engage in a pattern of trying to fine-tune by tightening, then loosening, etc. Despite the fact that that’s what’s going to end up happening anyway, because there’s no way for 12 people to possibly plan an entire economy, we’re going to pretend that we can do things smoothly and just try to bluster our way through any difficulties.
QUESTION: One of your colleagues wanted negative interest rates. I’m more interested in the cute reporter chick sitting next to me than I am in listening to anything President Kocherlakota says, so I was completely blindsided by something this obvious. Is the Fed going to move to negative interest rates?
YELLEN: Well, we’re a little embarrassed about Kocherlakota too, so we tried to ignore him. And even though the whole world knows that we’re going to have to launch QE4 at some point in the future, we want to publicly state that we would never need any extra stimulus. But in the event that we do need some more stimulus, we would carefully evaluate all the tools in our toolbox, even something as stupid as negative interest rates.
QUESTION: Do you still expect a rate hike before the end of the year? And some people have blamed global turbulence on the possible Fed rate increase. What do you think of that?
YELLEN: I don’t want to give you my own personal opinion, but I think it’s fair to say that the Committee as a whole expects a rate hike before the end of the year. And I think global turbulence is due to concerns about the global economy, not due to anyone getting upset that the Fed might hike rates.
QUESTION: You talked about the strong dollar, do you see your policy decisions affecting the dollar?
YELLEN: Despite the fact that our policy actions are the strongest factor influencing the dollar’s value, I’m going to downplay it and redirect the focus of your question by stating that monetary policy doesn’t necessarily affect the exchange rate? See what I did there? Yes, we devalue the dollar and reduce its purchasing power, but if other countries do the same to there currencies and exchange rates stay relatively constant, then we can say that we’re not really devaluing the dollar. I love the floating fiat money regime.
QUESTION: Can you talk about the housing market? How much are you counting on the housing market for future growth?
YELLEN: We’re hoping it continues to rebound, because there’s still some weakness. But it’s a very small sector of the economy. I mean, if you got rid of the entire housing sector and nobody had a place to live, the effects would be minuscule, right? We’re really focused on boosting consumer spending. Come on people, start buying cars that you don’t need and ringing up tons of debt on your credit cards. That’s the path to prosperity.
QUESTION: There are some people who think that ultra-low interest rates have exacerbated economic inequality and mainly benefit the wealthy, what do you say about that?
YELLEN: I disagree. Sure, savers and people on fixed incomes are hurt by low interest rates. Sure, low interest rates benefit capital-intensive industries, big banks, and hedge funds. Sure, the interest paid on excess reserves is lining the pockets of Wall Street. Sure, quantitative easing has boosted stock prices. Sure, easy money allows big banks to borrow and buy up all sorts of assets that they can then try to sell or rent at exorbitant prices to the hoi polloi. Sure, the continued devaluation of the dollar drives up the cost of living, leading to price increases that hurt the poor more than the rich. But we paid some Fed economists to produce a paper showing that the Fed’s monetary policy doesn’t worsen income inequality, so that proves that we’re not doing anything harmful.
QUESTION: What role did a possible government shutdown play in your decision today? And what would you say to Congress about “shutting down” the government?
YELLEN: Thank you for that softball that allows me to deflect blame from the Fed and redirect it to Congress. Ignore the $4.5 trillion balance sheet we’re carrying, ignore the continued easy money we funnel to Wall Street, ignore the fact that we’re going to drive this country into the ground. Congress is doing really bad stuff. If they don’t increase the debt ceiling and spend trillions more dollars that they don’t have, how are we supposed to monetize that debt by funneling trillions of dollars to the primary dealers?
QUESTION: If you delay rate hikes, doesn’t that also mean that you’re going to delay reducing the size of your balance sheet?
YELLEN: Yes, we can’t start reducing the size of the balance sheet until we start to hike rates. But who are we trying to kid? Does anybody really think we’re going to reduce the size of our balance sheet down to a more “reasonable” level? Come on, people, we’re in perma-QE mode here. Turn down for what?
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'We're gonna need a bigger bus to throw everyone under......'
-The Big Club-
Reminds me of this https://www.youtube.com/watch?v=Go_VtqtxCHY
Would be awesome to see one of these done with the FOMC Q&A
What happened to the “couple means two” as in “we will start raising rates in a COUPLE of meetings”?
Didn’t Yellen promise it when she became the Fed’s Stool? ;-)
Looney
OBama wanted Larry Summers badly. Only the PC police made him back down. Oh, how I wish we had Larry...so the chain of command was more transparent.....barack to larry to jamie, et al
yellen just got in the way by accident
Don't worry we will get the same outcome either way.
Long Jim Bean by the case's.
I don't think there will be as much nail biting before the meetings for the rest of the year or those well into 2016. If the Fed is now dodging bullets for the entire world, the excuses for not raising rates is pretty much endless.
The FED has jumped the proverbial shark. No reason to tune in anymore. The show is over. You'll know the next round of QE has hit when you get your negative income tax refund. If won't stop the deflation, but you can either pay off debt or try to get into assets. After all as Janet Yellen says, if you're poor, get rich.
She also said at her very first presser that they would raise rates "6 months" after QE3 was ended (then quickly walked that back once the markets had a hissy fit).
The really short version:
Yellen: "Fuck you responsible savers to hell! I work for the banks!"
The best analogy for what happend last Thursday, is an airline pilot coming on the loud speaker and exclaiming "we're all going to die"
That's why we have trains.
Janet YELLING: Here's a Joke for you stupid sheep: "What Happens EVERY TIME We switch Fed Heads? YOU ALL GET POORER!!!" LOLLOLLOL!!!!
If Old Yeller tells the truth, it is only by mistake
The truth is you cant taper a ponzi scheme
"You can't taper a ponzi scheme"
That almost has bumper sticker potential.
Too bad next to nobody would understand it.
It's too early to be drunk. It's the more potent heroin from Afghanistan courtesy of the CIA, I presume
Afghan Opium Production Increased 40 Times Since NATO, US Invasionhttp://www.mintpressnews.com/afghan-opium-production-increased-40-times-...
I guess they should be calling it the MOAR on drugs.........
i hear helicopters.....
The thing is nobody wants to admit they seen her naked. Hey Jannet you ignorant cunt. Where are the deeds?
QUESTION: Do you think you’ve gotten closer to your inflation goals, and have you complied with the Congressional subpoena regarding the September 2012 leak?
YELLEN: B****. How dare you ask me about the subpoena. Do you remember what happened to the last guy who asked a question like that? He hasn’t been seen or heard from since. So I’m going to give you the longest, wordiest answer of the afternoon, repeating myself three or four times and basically rehashing everything I’ve already said about our inflation targets. That should give the Federal Reserve police enough time to identify which car in the lot is yours and install the tracking device. And now that I’m winding up my answer, the folks upstairs should have also had enough time to permanently revoke your press pass. Next question. Oh, wait, you asked about a subpoena? Yes, we are fully complying with Congress’ request for information, just like we always have throughout our history.
Priceless,I Tell Ya,Priceless
its a lot easier for her to be pleasant when no one asks annoying questions
What slightly surprised me was the liberal sprinkling of *** and **** - but it is probably right on. Damn though, even this was a ponderous read. I am just too bored with the BS
The central bank is the financial arm of the Global Regime of Interlinking Corporations and Organizations. It is responsible for taking over the US Military and US Government, and responsible for killing 2 million mid easterners, and so on. It has operated financial wars as part of WWIII against the populations of the world in an effort to take over control of the world. Anything else that it says it is doing is subordinate to its primary objective of world domination.
http://davidstockmanscontracorner.com/inflation-targeting-unmasked-today...
im not sure if stockman realizes what he has here. he prefers to offer this as jumbled data and then chastize the fed for trying to read into it, but the numbers really suggest that working america is getting hammered by inflation, inflation in services especially. you see it takes two incomes to run a family, janet. if both parents work something has to give, you have to eat out more often, you have someone clean your house, change the oil in your car. then you go to disneyworld for a few days and you really fork over the cash. lets not shrink from the discussion about the service economy, remember how greenspan praised it, while others economists said america no longer produces anything we are a nation of consumers. greenspan said that the demand for those consumer products and services would create new jobs, that it was a virtuous cycle, so JANET, how about the inflation in the service sector, isnt that evidence of economic growth vis a via inflation? well janet this plank was laid twenty years ago, not its giving fruit, how about it, JANET?
I always use a tried and true method to decipher any inscurt....enscroot......inscootra....puzzling remarks from the Oracle of D.C.:, to wit:
https://www.youtube.com/watch?v=sTGEe96KT0s
Confirmed by:
https://www.youtube.com/watch?v=WvKlqMjfk1Y
Of course we manipulate Gold. If we didn't it would be well above $10,000USD and the whole Ponzi would be exposed. So Gold is a pet rock. And there is nothing you can do about it.
Even shorter: "Our policy has failed to deliver prosperity to main street. With little prosperity to mainstreet the economy doesn't grow. We are buying time until something else can be blamed."
Question... Madam Yellin.. Many of the concepts advanced by the Fed seem so "new normal". Would you agree that is true?
Madam Yellin (in the wilderness).... Son you can't handle the truth. We live in a world of so many conflicting variables that you need PhD's to research and come to decisions that are sometimes outside the box. That is why you pay us the big bucks. The "interest rate buck" stops at my desk. If you can't stand the heat.. or can't handle the "new normal"... then you need to join a preppers club.
I will not be intimidated by self righteous economists who want to go back to the old world ways of doing things. We live in a "new age" and need "new normals" to help navigate the treacherous financial problems we face. I have a greater responsibility than you can ever fathom. You don't want the truth because deep down in places you don't talk about at parties, you want me on to keep interest rates low. We use words like econometric forecasting, turbulent money flow and helicopter droppings. We use these words as the backbone of a life spent defending the Federal Reserve.
I have neither the time nor the inclination to explain myself to a reporter who lives in this great country which was built by the Federal Reserve... and then questions the manner in which I provide policy guidance. I would rather you just said thank you for my honesty and integrity in helping this country. Next question.
According to Bank of America Merrill Lynch:
https://app.box.com/s/2x1jqc1901tv8v00mbqnqjfbu8rrqzzp
The HY Note
Global growth concerns spread from us to Fed
A slow moving train wreck
Today’s Fed decision was the second worst outcome for risk markets, in our view. We have written on numerous occasions that if the Fed didn’t hike rates today initially markets would rally modestly before selling off. The realization that global growth concerns are not only real, but very dangerous right now should cause a risk off environment. And with no room to cut rates, we question the Fed’s ability to manage any further slowdown through what would have to be QE4. However, we can’t see how additional quantitative easing will help, as the goals of QE have already played out: the banking system has recovered, rates are low, investors have driven debt issuance and asset prices to uncomfortable levels, and the housing market has recovered enough to not be a concern.
Furthermore, lower rates don’t help high yield at this point. Whether the 10y is at 2.20% or 2.0%, does the asset class really look all that more compelling? Not in the slightest. In fact, outside of hiking while sounding very hawkish, not hiking and sounding very dovish while expressing concern about the global economy may be the worst thing that could have happened today.
We have been saying for months that the global economy is weak and the Fed’s dovish disposition today only bolsters our view. Europe is about to enter QE2 as inflation and growth remains poor. Japan and Brazil were just downgraded. Commodities remain under pressure and we think, at some point, the narrative could turn from a supply driven story to a demand driven one. Domestically it becomes harder to argue that a strong dollar and the lack of inflation can be viewed as transitory and this headwind is continuing to hurt high yield corporates. Manufacturing is uneven, consumer spending hasn’t improved in a year, and 2014 real median income was down 6.5% versus 8 years ago (and down 7.2% from the 1999 level). Although auto sales remain strong, we would expect as much given low gas prices, an aging fleet and the fact that auto loans are one of the few places in the economy where it’s easy to obtain credit.
Additionally, high yield corporate earnings remain incredibly weak, with yoy earnings growth negative for the first time since the recession (even ex: commodities EBITDA growth is only slightly positive). Leverage is at all-time highs (again, even ex- commodities) and the High Yield index is more globally exposed than it has ever been (35% of the market generates 45% of its revenue from outside of the United States, and that doesn’t include Energy, which is globally exposed despite not realizing significant direct sales abroad).
Not only are earnings weak, but there has been next to no capex investment, debt issuance has been massive, and buybacks and dividends have driven equity valuations as CEOs and CFOs, afraid to invest in organic growth, have chosen to buy growth instead. And as a result, recovery rates are 10-15ppt below historical norms and defaults and downgrades are creeping into the market. Although we understand many will say its just commodities, is it really? What started as coal weakness 18 months ago became coal and energy weakness. But it wasn’t really just the commodity sectors, as retail was also already weak. Now it’s the commodity sectors, retail and wireline (but definitely not all of telecom). The situation almost seems unbelieveable, as everything that seems to go wrong is explained as being isolated (AMD, well, of course semiconductors are in a secular decline) and treated as a surprise (Sprint).
In our view, the makings are there for a risk off environment for some time to come. For non-commodity spreads to be 400bp tighter than in 2011 makes little sense to us. Replace Greece for a much bigger problem: China. Replace Washington dysfunction and debt downgrade with uncertainty about monetary policy and EM weakness (though we may see Washington dysfunction very soon between this fall’s budget talks and the presidential race looming). Replace US QE with European QE. Additionally, replace strong earnings growth and margin expansion in 2011 with no earnings growth, a stronger dollar, and higher leverage today. Replace decent liquidity back then with poor liquidity now. And replace the fears of a double dip recession with the potential for fears of a global recession. Though this last point has yet to play out, we think it’s only a matter of time before investors begin to feel as bearish as we do.
The Fed had an opportunity today to hike rates and begin to build a cushion should the global slowdown be so severe it can’t be ignored. Instead, they chose to wait. In our view, this has left them in a predicament as now the rumbles of never being able to increase rates will become even more exaggerated, and when they ultimately do, we think it will be more painful than if they had gone today. We expect as a consequence for there to be more market volatility, more uncertainty around the Fed’s motives and belief in the economy, and therefore more downside risk. Most importantly, however, the acknowledgment of weakness only bolsters our view that we are in the midst of the beginning of the end of this credit cycle, and we warn investors to tread carefully not try to be a hero into year end.
Now is the time that investors need to be managing risk rather than looking for alpha. 1 or 2 names will destroy the performance for what has otherwise been a good set of holdings. Remember what many have forgotten over the last 7 years, credit returns are skewed to the downside. The best case scenario is to earn coupon and the ultimate payment of principle. The worst case scenario is 40, 50, 60 or more points of loss.
We’re in the midst of watching a slow-moving train wreck, and in our view the Fed confirmed as much today.
Is this article taken from Cracked magazine?
Yellen's comments were a smokescreen. She and the rest of the FOMC stated they were concerned about the global impact if they were to raise rates. Well, it's much easier to hide behind a fiction of protecting the rest of the world than to announce to the public that the Fed is petrified of the U.S. economy going down the drain again.
I found Yellen hiding .. She leaked out just a bit too much ..
Come on. Janet Yellen is a hologram, and a fat, ugly, old, stupid one at that. And, she's a guy.
She's a 1950's hologram. Made by Pixar. All fag CEOs have one on their Apple Watches and think they're Kewl.
"In Fiat we trust" another Ivy league math challenged crony capital..... Hey China going to do another funding? https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1T1Q