This Is What Janet Yellen Thinks Is The "Worst-Case Scenario" For The U.S.
One year ago, when the Fed released its 2009 transcript, we learned that after a terrible 2008, the Fed's sense of humor gradually returned and instances of the word "laughter" in declassified Fed transcripts rebounded in 2009.
As a reminder, the Fed's sense of humor as determined by recorded incidences of "laughter" at FOMC meetings hit their highest level on record in July 2007, which coincides exactly with the moment when the housing bubble finally burst (remember: they weren’t laughing at you, they were laughing with you). The laughter died down quickly after that.
Today, with the usual 5 year delay, the Fed released the transcripts from its 2010 meetings and telephonic conference calls. As the chart below shows, while laughter did pick up on several occasions, most notably in January and November, it was again a relatively subdued year as would be expected at a time when the Fed had to admit its first policy error, when a year after launching QE1, it proceeded with QE2 in late 2010.
Still, it's good to see that as the Fed was busy transferring wealth from unborn future generations and the middle class to the uber wealthy, it kept at least some sense of humor when doing so.
That said, it would not be fair to say that the Fed was only focusing on its erroneous models and undue optimism about a recovery that would never come for anyone except shareholders: according to the August 2010 transcript, here is what according to Janet Yellen was the biggest " a Japan-style deflation remains a relevant worst-case scenario for us going forward." Full quote:
I, too, hope that the long disinflationary trend of the past two years will end, and I think a further disinflation seems unlikely. However, the evidence suggests that prices and wages react with a considerable lag to shifts in output and employment, and Japan provides a useful cautionary example. Japan’s deflation didn’t begin until the mid-1990s, a half-decade after the collapse of Japanese real estate and equity prices. Furthermore, during the early years of deflation, Japanese long-run inflation expectations remained well anchored, averaging about 1½ percent as measured by consensus forecasts. So, unfortunately, a Japan-style deflation remains a relevant worst-case scenario for us going forward.
The irony, of course, is that while admitting this, Yellen never actually learned from the Japanese lesson. As we showed last August, Japan also tried to "escape" its deflation by hiking rates in August of 2000. The "success" of the rate hike lasted all of 7 months before Japan had to cut to zero.
One wonder after what is already the worst start to any year in US stock market history, whether the Fed's attempt to renormalize will be able to last even 7 months.
And here is where it gets even scarier, because if Ms. Yellen loses control of the stock market, then a "Japan-style deflation" will seem like a walk in the park compared to what is coming in the US...
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It's the funny thing about price controls, eventually price discovery wins.
The Fed's price controls will fail.
It was a leaked citibank Memo that turned it..... thereafter it was blatent manipulation
So far no real damage done, no Lehman, or AIG..... Until that happens then this thing could turn on a dime.
Glencore should be the first to go, and then the CDS's. The CD's this time around are alot bigger, at somepoint if it goes to its illogical conclusion the market just wont open. ZERO. The shorts and the longs all in the same boat.
The smartest people in the room my arse!! The only thing QE has accomplished is moar consolidation. Oh wait, maybe that's what they wanted all along. As always, the needs of the few outweigh the needs of the many.
Janet Yellen, the voice of (T)reason.
Bitch should be hung for the crimes she's commited, along with Greenie and the Bernank.
The Fed, with ample help from CON-gress and the resident alien president, have done their best to destroy the USA.
Too bad for them it isn't enough. Be prepared for some serious BLOWBACK, from a blowhard called Donald Trump, and his New York Values, which include, in case you've forgotten, is the gold standard for jurisprudence in this country, the gold standard for Mafioso payback, and the world champeeens in hardball.
It's coming, bitchez! You brought it, we're going to shove it right up your collective asses.
TRUMP/CRUZ 2016 Deal with it!
In what altnerative dimension has Trump remotely called for a 'gold standard' or any similiar currency mode of exchange during the past year?
It's not a scenario, anymore.
One country vs the entire world deflating?
Is this the best we can do?
https://m.youtube.com/watch?v=mkoPq5AOCOA
I have this sneaking suspicion that the Fed raised rates intentionally to cause a crisis which would then provide the cover for bringing NIRP (outright theft) to the United States of America.
Theft is really the only avenue left to the Fed within this dodo bird economic system they adhere to.
There are plenty of other extreme options on the table but almost none of them are ones the Fed and bankers would favor because they wouldn't largely profit from them.
I just don't get the comparisons to Japan at all. I'm a health economist by trade but it is just a shitty comparison for several reaons with the most obvious one being the incredibly high household savings in Japan during the 1990s vs US now, the Japanese citizens' willigness to keep plowing money back into gov't issued bonds and avoid the stock market/real estate speculation after the late 80s, teh very different nature and composition of the Japanese vs US economy, and the relative economic helath of the rest of the world in the mid-1990s.
One thing as a history undergrad (along with biology) is that it wouldn't surprise me if most of the economists on the Fed have read very little actual history analysis that is worth a damn. Shocked hwo many people in my PhD program had never actuallly read Adam Smith or Marx/Engels.
It is just more of USA's "West is best, white is right" hooplah that they have been spewing since day ONE. Truth-be-told, Japan is many times better off than USA. Yes, they have high debt, but they don't hide their debt like USA with their "funded liabilities" and "unfunded liabilities" nonsense.
https://www.youtube.com/watch?v=tXMIjaTGnWk
http://viableopposition.blogspot.jp/2011/04/hidden-american-100-trillion...
http://www.bloomberg.com/news/articles/2010-08-11/u-s-is-bankrupt-and-we...
We lived in USA for 20 years and now live in Singapore and travel often to Japan. Again, I can assure you that average Japanese live better than average Americanos but USA media will never let their people know that. And hence the comparison to Japan time and time again. It is just stupid.
im not sure why the fed would be laughing they are the god damn joke..................maybe david camron should pass the dead pig over to yellen after he snacks on some bloody pussy. you know all the eltie mother fuckers get their own personal "gravied in" hollywood style demorilization to prove their loyalty to satan. Hell yeah fed laught your fucking ass off..............im not the one taking donkey dick up the ass like you boi "you know who" from "you know which bank".........................ZH are some sick santanic fuckers.................just look at the top right of the screen you can see the ZH sign that also forms a reptilian eye to represtent the serpent..........the great and mighty satan.............ZH=666
Janet looks like a penguin. Send up the Bat signal.
Note to Janet...CALL BEN BERNANKE and ask for his Phd thesis on the Great Depression....his good work has forestalled that moment and hoisted it onto your administration so no a dripping deflation is NOT the worst that can happen...if this gets out of control, far worse can occur in a rate hiking environment.
Easy, To the elite the worst case scenero is going to be finding enough lawn care and domestic staff once the culling is finished...
it's funny how she goes on and on about disinflation like it was some mystery, all the while blowimg up everything she sees with the almighty DISINFLATION WEAPON OF FED MASS DESTRUCTION
wake up Yellen, resign if you dont know what the fuck you're doing, cuz you're the source of disinflation dumb bitch
Yellen is going to Tel Aviv for her retirement, good bye goy suckers!
Every time I see that lead in photo of Yellin, all I see is hedgehog face. (My daughter begged for a hedgehog & got one, thx to her wrapped dad.. But I digress).
http://justcuteanimals.com/post/5438
Yellen. ZeroHedgehog? You be the judge.
Fed statistics are so artificial and manufactured we are now measuring how many times those in the know chuckle at their own meeting.
The worse case scenario is the US ends up a smoking ruin that glows in the dark...
Well then, stop following Japan's lead and no more money printing. Fiscal fixes to the .gov is what is needed to fix this problem, not financial engineering301.
She doesn't has any thoughts, she's got emotional responses, which good hedge funds know how to provoke.