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In "Permazero", Fed's Bullard Admits US May Be Entering Permanent Period Of Lower Inflation And Interest Rates
In the first of 6 Fed speaker scheduled today, St. Louis Fed's Bullard did what Fed presidents usually do: issued the usual tripe of contradictory statements.
On one hand he said that:
- US ECONOMY NOW QUITE CLOSE TO NORMAL
And on the other:
- WANTS TO RETURN TO '84-'07 MACROECONOMIC EQUILIBRIUM; NO REASON TO CONT EXPERIMENTING W/EXTREME POL SETTING
Adding that the Fed "may need to alter some fundamental assumptions about how Fed policy works if U.S. stays in persistent state of low nominal rates, low inflation." Like what - hiking rates? Or cutting rates to negative?
So "close to normal"if one excludes the 7 years of ZIRP and the $2.6 trillion in excess reserves. And all it would take to return to 3.5% GDP growth is unwinding $13 trillion in artificial central bank supports of a global economy that would otherwise be in a depression.
Good luck.
But the most important thing Bullard said in his speech titled "Permazero" is that the the US may be entering a permanent period of lower inflation and interest rates. Wait, wasn't ZIRP and QE supposed to push the US economy, boost inflation and hike rates?
Good to know 7 years later that the biggest monetary experiment in history did precisely the opposite of what it was supposed to achieve.
Other highlights courtesy of Bloomberg:
- he reiterated his support for liftoff, sees interest rate peg developing, mentions prospect that U.S. may be permanently stuck at near zero rates.
- tge U.S. economy is “quite close to normal today,” Bullard said Thursday in text of speech in Washington, titled “Permazero”
- 5% unemployment rate is “statistically indistinguishable” from FOMC’s view of equilibrium long-run jobless rate; inflation, based on Dallas Fed’s trimmed mean rate, is at 1.7% or just below Fed’s 2% target
- "Simple and prudent approach" to current policy settings is to move closer to normal levels; “no reason to continue to experiment with extreme policy settings”
- May be situation in which policy rate, inflation rate remain low either because liftoff doesn’t occur or future negative shocks force a return to zero rates
- Stable interest rate peg is a “realistic theoretical possibility”
- May need to alter some fundamental assumptions about how Fed policy works if U.S. stays in “persistent” state of low nominal rates, low inflation
- Post-crisis U.S. monetary policy can be interpreted as an interest rate peg since rate has stayed near zero for almost 7 yrs
- Almost 7 yrs at zero lower bound is “well beyond” ordinary business cycle time
- Low nominal rate peg, far from being harbinger of runaway inflation, would dictate medium- and longer-run low inflation outcomes
- FOMC is already committed to very low nominal rate over next 2-3 yrs
And the punchline: “Realistic” possibility that G-7 monetary policy will spend more time at or near zero rates in coming years
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Duh. No shit asswipe. Glad you're finally starting to figure out that we are Japan. Idiot....
Hey Dickwad Bullard. Their are only two things that are permenant, 1) Death and 2) Your Stupidity
Permanent Period Of Lower Inflation And Interest Rates
How are we just hearing about this?
I agree on the interest rates....good luck with the inflation part.
...and death can be cheated
Welcome to the Party Pal
https://www.youtube.com/watch?v=vD94dVu8lqQ
Permanent?
And the of course this includes the continuing extermination of the middle class..
And the continuing transfer of wealth to the banking, corporate and government elite..
And this “normal” right?
And why would this be?
Oh, it’s just the way the economic cookie crumbles.
Well F You, Asshat.
Your time is going to come.
many americans are exceptionally stupid
Bullard is the most noxious self-contradicting ego addict the Fed has ever spawned.
They come out at key stock market ponts.
Look at the old 60's show laugh-in.
The Fed's become laugh-in.
The host are Yellen and Dudley.
They come out at key stock market ponts.
Look at the old 60's show laugh-in.
The Fed's become laugh-in.
https://www.youtube.com/watch?v=rqXjLCXgbdk
The host are Yellen and Dudley.
A wall of Federal Reserve members that pop out, including Hilsenrath.
Bullard is an asshole, another one those empty suits who have high paid government jobs that require no heavy lifting. If Bullard told the truth, that Wall Streeters with their bankster friends and crooked political henchmen (and women, like botoxed witch Nancy Pelosi) have looted the USA of hundreds of trillions of dollars, Bullard would be facing the wrong side of a nail gun held by a member of one of Obama's hit teams.
Just another one of those people about whom the book "Snakes In Suits" was written.
Permanent Period Of Lower Inflation And Interest Rates = stocks will keep going up
Bullard and all his Fed cohorts need to be gone. They are out of answers and out of moves. They should have never been in the capacity as decison makers in the first place. Never.
What scares them to use the word deflation??!
Inflation is how they steal from you by reducing the value of your money. Deflation means that your money becomes more valuable. It's like when a burglar is climbing out a window, and his burglar bag springs a leak, and he loses some of the stolen goods, and his victims get them back. We can't have that!
Debts become even moar unpayable under deflation.
Gold new 5 year lows.
I'm waiting for it to go to zero.
I'm surrounded by a lot of people that are thinking the exact same thing.
Never in history. Don't hold your breath.
Meanwhile central banks (EAST) are buying.
Not even once?
I find that hard to believe.
Sorry to hear that. If it closes the week below 1084, There will be a lot of nosebleeds the weeks after that. But the nice thing to look foreward too is when the real global panic starts, it will go back into the thousands in a rapid manner.
I'm just telling the facts of the matter being I trade. I guess in a childs mind if someone states a bad senerio, that person is causing it to happen. Good news though. Over time it will ramp back up.
Gold has become a barometer again The more it's manipulated with flash crashes, the more I know just how bad things are for the financial sociopaths (banksters.) They're in a panic, as their imaginary world of paper promises is falling apart.
and the bounce. when stawks algo red and pm's go green i feel right in the world.
Does anyone even bother listening to these charlatans anymore?
Bullard, your staff is broken.
permazero is the permanent plateau of 2015...
the usual tripe of contradictory statements...
stole my comment again. well said.
Should have titled his speech "Permafrost".
BOHICA middle class!
+1 for the acronym
Roll out the Bulltard!
Bulltard is one of the many jokers in the Fed's deck of cards.
One huge fun-house full of smoke and mirrors.
It was the best of times, it was the worst of times.
The bipolar economy keeps rollin' along.
hopefully we'll get some public executions, a la A tale of Two cities. I'd like to see our bourgeoisie a little shorter.
saved by zero. if it weren't for all the faux data, faux money, faux inflation rates and faux interest rates, i'd say "they" are pushing for a sharia compliant one world monetary system to go with their one world sharia religion they'll try to be foisting on us all.
AKA, "crony capitalism".
Permabullshit.
We permazeroed some folks...
PermaZeroHedge.
The Federal Reserve has become a joke.
People like Bulltard, Williams, Dudley and Evans occasionally poke their heads in the media and spew BS.
Evenentually Hilsenrath from the WSJ spews BS.
It must be real bad if all these people come out at stock market inflection points.
AND in other news....James Comey and James Clapper are lying traitors...
If I could get one "free" face punch to anyone at the FED, I can't figure out who it would be.
I hate them All so much.
How the fuck can the US economy be 'back to normal' with zero inflation and zero interest rates? It's never, ever happened in 240 years
And how come no one actually mentions he's talking shite?
It's all a bluff. They won't raise rates.
Trump is right, the Fed is protecting Obama from an economic collapse on his watch which would hurt the Democrats in 2016 and Obama's recovery legacy.
December will come and go and rates will still be at 0% !
The most important thing Bullard said in his speech titled "Permazero" is that the the US may be entering a permanent period of lower inflation and interest rates.
Be very careful about predicting the future... as the esteemed economist Irving Fisher found out... He famously predicted, three days before the 1929 crash, "Stock prices have reached what looks like a permanently high plateau."
FED's Bullard, "[...] inflation, based on Dallas Fed’s trimmed mean rate, is at 1.7% or just below Fed’s 2% target."
SSA, "No, COLA necssary this year."
The government makes up all the economic figures. This isn't a decision to let your medication run out so you die. This is about starving to death retirees. We gotta make room for the illegal immigrants and the refugees!
Every day that passes I see or read an article which makes me think that these psycopaths are either incredibly stupid or extremely malicious. One day the evidence will point to stupidity and the next it will be clear that it is malicious. I go through this battle every day with each new article swaying my view one way or another.
If we go back to basics, in a debt-based fiat currency system new currency comes into being at the inception of a "loan" by being printed out of thin air. However, only the principle of the loan is printed. The interest is not. Therefore, in the initial stages this is inflationary (by the true definition - expansion of money + credit) which leads to a rise in prices and demand for wages. However, when the loan is paid back including interest this is very deflationary (contraction of the money + credit supply) leading to a fall in prices and downward pressure on wages. Of course, in a deflationary environment the repayment of principle + interest becomes a self-reinforcing downward spiral. Therefore, in the long term, QE and all of its fraudulent alphabet named spawn is highly deflationary.
Are we saying that these psychopaths don't understand that arithmetic? Really? How stupid would you actually have to be not to understand that?
Today, my view is that these psychopaths know exactly what they are doing. Tomorrow, who knows.
FED admit it is run by psychos that have no idea what they are doing....beyond making sure their master get rich! Trump will say..."YOU'RE FIRED!"
Here is advice....DO THE OPPOSITE OF JAPAN!
bullardish
Some traders try to make "good" angle about this news. Bwahahaha..
Nice try tough..
The first comment is the right one. Wellcomes to the japanesations of america. So.. This is how it goes from here.
1. Pour more QE every quarter.
2. When everybody choked by your QE? Start buying stocks & future directly on casino's!! Errr.. i mean wallstreet,cme, whatever.
3. Not enough? Start buying corporates debt.
4. Not enough? Start buying derivatives.
Don't worry. There's A LOT of Paper & Inks..
We are already in 8 years of permabullshit talk by the FED
PERMAZERO
Kinda adds a new dimension to the phrase Zero Based Budgeting.
And they laughed the first time they heard the the name Zero Hedge.
Not anymore.
How do you even read this crap? This is like trying to talk to a drug addict.
This is monetary policy in the new politically correct America, where no one wants to pay the price for poor investments,
No do overs for you!
GS on the other hand....
Yeah, yeah. And stocks have reached a permanent high plateau. Hey Bullard! 1929 called. They want their paraphrase back.
This is like the thinking that assured Americans that "the war to end all wars" worked...until it didn't.
"Permanent deflation". I cannot think of a clearer example of destruction of the language than the use of 'deflation' to mean 'down side of the business cycle'. 'Deflation' or 'credit deflation' has no independent explanatory power. It means "nobody is borrowing because there are no customers who are creditworth at the bank's current liquidity and acceptable level of risk, so the bank can't create currency loans".
The 'deflation' buys into Keynesian doctrine, and we see what a big success that has been, again. I personally think we could have skipped this experiment, as the case had been made very well many times before, but gov likes any excuse to borrow.
https://thinkpatriot.wordpress.com/2015/11/11/dynamics-of-national-colla...
"Adding that the Fed "may need to alter some fundamental assumptions about how Fed policy works if U.S. stays in persistent state of low nominal rates, low inflation." Like what - hiking rates? Or cutting rates to negative?"
This is total complete nonsense.
A non-reserve currency can have low inflation and interest rates for extended periods due to capital inflow. The Dollar cannot, because it is the reserve currency.
Low rates happen at the same time as low inflation (the opposite of stagflation, by the way) because of monetization. And that is the only way such a thing can happen.
The low rates exist because money is being created, lowering the value of money by making it easier to get.
The low inflation exists because this monetary inflation is JUST offsetting existing defaults amongst the public, who are unable to take on more debt.
So, if the public isn't taking on more debt, WHO IS???
The Government and the Central Bank are... because they're the only ones left who can.
But this activity draws wealth away from productive businesses and into government, finance, and their cronies. As the real economy loses wealth, they default and go out of business.
As increasing amounts of real businesses leave business, they are replaced by more government, finance, and cronies.
BUT ONLY THE REAL ECONOMY IS THE SOURCE OF REAL WEALTH...MONEY PRINTING IS JUST A REDISTRIBUTION SCHEME.
SO...
What do you get with a shrinking economic pie combined with expanding amounts of currency distributed disproportionately to unproductive business????
Federal reserve policy == perma-fraud.
-----
The true inflation rate has been 8% to 12% since 2009 or 2010.
The true unemployment rate has been 15% to 25% since 2008.
The true federal government debt is now over $225 trillion.
The only reason inflation hasn't shot through the roof is... the astronomical levels of debt greatly reduces demand. In effect, all the debt accumulated in the past 30 years was demand pulled from the future... and now is that future (because debt saturation has been reached).
-----
The debtors of the world are now forming a swarms to denude the accounts of all savers. Since accounts held in fiat are much easier to find and grab, they will be consumed first. Which is why any saver with half a brain should convert virtually all their fiat savings into real, physical goods and goodies starting with gold, silver... and a permanent residence (or at least a bolthole) somewhere far outta dodge.
I suppose it was just a simple oversight they didn't tell us they can never reverse what they've done. Why would any of them give a fuck anyway? The game is rigged to their benefit. The only trouble the oligarchs are having is finding shovels big enough to move their cash without being taxed.
Wouldn't it be possible to raise the rate for large corporations that are doing stock buybacks and give ZIRP for the smaller businesses or at least set restrictions on using loans to do stock purchasing? But what exactly is a large corporation and what exactly is a small business by today's standards? Sure, it may be a little more complicated but they seem to enjoy writing 5000 page documents for free trade acts so why not do the same for loans when scandalous corporations are involved? How long can buybacks continue when eventually there are no more stocks to buy back? Those games cannot go on forever.
5 basis points.
the lost decade(s)
http://www.reuters.com/article/2015/11/12/us-g20-turkey-imf-idUSKCN0T11X...
The U.S. Federal Reserve should wait to see firm signs of rising inflation as well as a stronger labor market before hiking benchmark interest rates, an International Monetary Fund paper said on Thursday.
In a report prepared for the upcoming Group of 20 meeting in Turkey, IMF staff said spare economic capacity and very low inflation justified keeping monetary policy loose in most major advanced economies.
The contrast between rising U.S. rates and probable further easing in other developed countries was one risk overshadowing the global outlook, along with a shift in gears in China and an end to the commodities super cycle, the surveillance note said.
"The Federal Open Market Committee’s (FOMC) decision should remain data-dependent, with the first increase in the federal funds rate waiting until continued strength in the labor market is accompanied by firm signs of inflation rising steadily toward the Federal Reserve’s 2 percent medium-term inflation objective," said the note, which does not necessarily reflect the views of the Fund's executive board.
A Reuters poll published on Tuesday showed a 70 percent chance the U.S. central bank would raise its short-term lending rate at its Dec. 15-16 meeting, after a stronger-than-expected jobs report last week.
Policymakers, who have held benchmark overnight rates in a zero to 0.25 percent range since December 2008, are split over whether inflation is likely to rise from the current 1.3 percent under their preferred measure, which excludes food and energy.
IMF staff urged G20 nations to back China's efforts to liberalize its economy and accept that the transition to slower but more sustainable growth would likely involve some hiccups.
G20 leaders will have an in-depth discussion about migration at their Nov. 15-16 summit, and the IMF note said this was a pressing economic issue for both sending and receiving countries.
Increasing violence in the Middle East and Africa has driven waves of migrants into Europe, but neighboring countries such as Lebanon, Pakistan and Turkey are also struggling to cope with an influx of displaced people and need international support.
Upcoming IMF research showed that the costs associated with asylum seekers in the European Union could rise by a cumulative 0.15 percent of gross domestic product (GDP) in 2015–16 from 2014, the note said.
But since 80 percent of migrants were of working age, continued migration could offset population aging and cut age-related spending in advanced economies by 1 percent of GDP by 2050.
The note suggested host countries could increase the economic contribution from migrants by offering benefits such as permanent residence to those with in-demand skills.
https://www.imf.org/external/np/g20/pdf/2015/111515.pdf
Group of Twenty IMF Note — G-20 Finance Ministers and Central Bank Governors Meeting
IMF Note on Global Prospects and Policy Challenges
November 15-16, 2015