"Very Worrisome Signal For Fed Credibility" - Former Fed President Trolls Federal Reserve

Tyler Durden's picture

It's one thing for a fringe website to mock the Fed (on a daily basis, for the past 7 years), with articles such as this one we posted just before noon today, showing that inflation expectations have once again imploded, less than a month after the Fed's rate hike was supposed to signal confidence in the economy and a renormalization in inflation:

Since The Fed hiked rates in December, the market's inflation expectations have collapsed in yet another clear indication of "policy error." 5Y5Y Forward inflation swaps have crashed below 2.00% for only the 3rd time in history (Lehman 2008 and September's Fed Fold were the other two) as despite central banker promises of transitory low-flation, the money is being bet against them as the regime-shift from full-faith to no-faith in Fed support continues.



However, when a former Fed president, one who was employed as recently as two weeks ago by the Minneapolis Fed, Narayana Kocherlakota, best known for being the biggest hawk to dove conversion in Fed history, and also being the one person to dare put a negative dot on the Fed's ever amusing dot plot, suggesting it is time for negative rates does exactly the same, you know that the Fed's credibility has already run out.

From Kocherlakota: "Very worrisome signal for Fed credibility as 5 yr 5 yr forward breakevens plumb new lows ..."

Of course, the far more worrisome signal for Fed credibility is not that inflation forwards are plunging, but that one of the Fed's faithful has now taken to a public forum like Twitter to troll his former co-workers.

All that it would take now is for Yellen to formally admit the Fed's credibility is gone and to cut rates first back to zero, and then negative, with a solid dose of QE on top, admitting it was always only about the markets.

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DogeCoin's picture

He might actually be right in his prediction on the dot plot and we go negative Q1.

nmewn's picture

Kocherlakota: "This changes everything we thought we knew about economics!"

Fucking Keynesian dumbasses.

ThroxxOfVron's picture

He doesn't even compute that such a statement itself damages/destroys the credibility of economists and economics.

It would appear that the lot know nothing and are merely repeating the same rote pablum regurgitated at their alma maters..

DirkDiggler11's picture

The Fed - Just hang the fucking criminal bastards already, I'm tired of even hearing the word Fed at this point...

nmewn's picture

Well that would require "a law" to be passed (or a revolution) and I don't think there's any politician out there thats ever going to advocate "that law" cuz, ya know...funding & elections & promising Faaarrreee! shit for the vote.


DirkDiggler11's picture

Unfortunately Nmewn you are correct. Our corrupt politicians don't even have the guts to audit the Fed, much less hang the Fed Governors from trees like piñatas.

It will definitely take armed citizens to revolt and put an end to their criminal rule over the US. I personally volunteer to hang the first one...

Stormtrooper's picture

Another idea.  Let's push 'em out of airplanes with parachutes on and then let the patriots on the ground do some target practice.

SillySalesmanQuestion's picture

I'll be smiling for days thinking of that...thank you.

Nothingman's picture

The Creature from Jekyll Island commonly known as "The Federal Reserve" has no credibility except as a tool for warmongering and vampiric slavery...

NotApplicable's picture

Well, that and the "full faith" that Uncle Scam keeps them in business.

Nothingman's picture

Uncle Sam and the "Federal Reserve" that enables all his depravities are as unholy a symbiosis as this world has ever seen.

hangemhigh77's picture

I've been advocating hangings for 20 years. Glad to see you realize the only way to rid ourselves of this lying thieving vermin is to fucking kill them

No More Bubbles's picture

I've had the Bernanke guillotine avatar for 7 years.

Yen Cross's picture

 Doves are flying?

Iam_Silverman's picture

"Doves are flying?"

Yup, lust like in Mars Attacks!

Yen Cross's picture

 Creepy Dude

 Even Powell and Fischer would agree.

hangemhigh77's picture

They always tell the truth AFTER they've fleeced us with lies. Hang this guy anyway. Is there anything this prick could tell us that we don't already know? No. He's just a piece of shit. Even if he did know something we didn't I'd rather get the satisfaction of hanging his ass than hear what he says anyway.

Soul Glow's picture

Former Fed trolls Fed.  Seeing a lot of that lately.

besnook's picture

helicopter money is the only thing that can save the fed.

Niall Of The Nine Hostages's picture

Glad to see he's worried about the Fed's reputation and not trivial things like...oh I don't know...another financial crisis or the condemnation of still more working-class white Americans to permanent poverty at the fringes of the formal economy.

Vlad the Inhaler's picture

Cutting rates and the associated buybacks and other financial engineering won't help equities this time.  You need a break of at least a couple years to sucker new dummies into the market.  After this next crash, everyone will know better than to fall for that dumb trick again.

No More Bubbles's picture

Fed Credibility???

That is an oxymoron!  They haven't had any "credibility" since Paul Volcker ran the show!  It's been a bubble factory since Greenspan started "moral hazzard" (before it was in the vernacular) - all the way back in October 1987! 

saveUSsavers's picture


Iam_Silverman's picture

Federal Reserve credibility?

Aren't hose terms mutually exclusive, like Military Intelligence, Healthy Cigarettes, and Government Assistance?

OK, maybe it's just an oxymoron like NMB (above) stated.

khakuda's picture

Credibility? Uh, let's see. Fed changes inflation benchmarks as it sees fit.  Fed spends past 25 years pumping too much money into the system, leaving rates too low and bailing out every single even minor cock up in an asymetric policy which caused:

   1.  Three extraordinarily huge asset market bubbles, 2 of which have had devastating crashes causing economic hardship so far with a 3rd nearing.

   2.  Prevented the clearing of markets of bad debt and excess capacity which has led to a more fragile, indebted sytem which never gets to benefit from capitalism's harsh, but effective redirection of assets to more efficient uses.

Kocherlakota man, you are the problem.  Serial bubble making and fostering capital misallocation is so obviously not the path to the best use of resources and maximum economic growth.  The guy should not be teaching students even at a mediocre school.

Negative interest rates could cause the banking system to contract, slowing growth.  As counterproductive as thinking that creating excess capacity with zero rates would be anything but deflationary.  To argue that the outright stealing of hard earned money from the bank accounts of honest working people will help growth is idiotic and should be a criminal offense inasmuch as it advocates the violation of property rights, the foundation of the market system.

FedFunnyMoney's picture

Negative interest rates by the end of the year.

Beggar thy neighbor, folks.

Sorry_about_Dresden's picture

Haven't seen Janet Felons face this year?????

I have noticed they are trotting out new FRB spokespeople since the new year.

It is quite unsettling to see a Cleveland Federal Reserve official on Bloomberg on the San Francisco set being broken in on her first, ever, interview.

I see Stanley Fischer is giving speeches but, has vanished from public view.

Stanley "Stan" Fischer is an economist and the vice chair of the U.S. Federal Reserve System. Born in Northern Rhodesia, he holds dual citizenship in Israel and the United States. He served as governor of the Bank of Israel from 2005 to 2013.

I guess they bought Magic Stan on to "add" the most "value" for FRB shareholders as they coordinated the latest catastrophe?


Unleash the Haitian TonTon Macoute with their tires and gasoline!

I suppose they are all in the Bronx now?

Close enough to 740 Park Avenue!


venturen's picture

who would think ZERO INTEREST WOULD DESTROY THE ECONOMY...Oh wait...Isn't this what Japan has done for 30 years?

khakuda's picture

I am old enough to remember when the US said that Japan's problem would be resolved if Japanese banks just wrote down the bad loans on their books and got on with it.  When the shit hit the fan in the US, we suspended mark to market accounting and the government bought the bad loans from the banks and moved them to the taxpayer's books.  Then, we followed Japan into QE and ZIRP as you point out.  All of which has been disastrous as it prevented the real healing by claiming that a free lunch paid for by the taxpayers who have little savings would resolve it all.

EndGamesAreFun's picture

Why do you think this hurts the Fed reputation? By their actions it's easy to see that they want to crash the market. Many people have noticed that the Fed raised the rate but took no liquidity out of the economy. If the market has a 20-25% "correction" isn't that a way to squeeze liquidity out of the economy?

fowlerja's picture

It is not about a company selling a good product that the public wants and needs at a fair price... it is about whether Janet will lower the interest rate to zero...and when we get there..why we will all be in zerohedge land...where you can hedge all your bets with zero percent interest..