John Taylor Is Not Happy With Janet Yellen

Tyler Durden's picture

During a lengthy and technical-jargon-ridden response, Fed Chair Janet Yellen attempted to defend the fact that she is holding rates around 350bps below "fair" value based on The Taylor Rule.


Her argument, simple, John Taylor - the model's creator - is using the wrong rate.

Fellow PhD economist Taylor was not amused and responded rapidly on Twitter...

His paper explains why Yellen is wrong... But Steve Liesman sums it up best - as he truly appears to have come to the heretical non-believer side of the Federal Reserve faith-based policy decision-making...

Taylor-Wieland Paper on Equilibrium Interest Rate April 2016

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pods's picture

If it benefited the banks that own the FED, it would have rates matching the Taylor rule.

But, since we are not seeing that, it is not beneficial to the owners of the FED to have rates up that high.


Oracle of Kypseli's picture

PHD' with no business JOB's fighting with theoretical formulas. Brilliant

knukles's picture

Betcha John Taylor's not the only one unhappy with Janet.

allamerican's picture

couple days find out leaning direction..for now, everyone playing with a group dickfest.

U4 eee aaa's picture

never say lose. Isn't that right Janet?

Lady Jessica's picture

I'm sorry "Dr" Taylor, but your paper is just pseudomathematic gobbledygook.

[No I didn't bother reading it.  It's unreadable.]


Dazman's picture

This gets my vote for most ignorant comment of the day!

"I didn't even read what you wrote, but it's wrong." lol.

At least read it. I didn't, but at least I know I can't comment on it being accurate or not.

FrankieGoesToHollywood's picture

I have not read the paper.  But from the graph, it would seem the Taylor rule demands -4.00% interest in 2009.  ergo, i will continue to avoid reading the paper.

Ballin D's picture

Where are you seeing that? Page 6 has the rule matching actual policy in 2009.


Further along it has r* going below -3 for yellens inputs but not the regular Taylor rule.

Raging Debate's picture

Dazman - You are a wise man. The math arguments matter to politicians listening to advice on such arguments. How many of you hated algebra in school? I did.

Now a couple years ago since I like physics as a hobby dabbled and ap1preciated how equations had to balance. Now intent of simply believing someone telling you how an equation balances toward selling out is certainly corruption but those now tasked with fixing the problem on fiscal monetary policy will need a basic understanding (call it Algebra I) or a refresher course.

It is not that hard but it is necessary for arguments for or against on currency, a form of energy. That understanding and thought exercises help on critical policy on energy in general. 


Boxed Merlot's picture

...At least read it...


I did, or at least tried to.  The tell is in the Conclusion:  "... the results are still inconclusive and too uncertain to incorporate into policy rules in the ways that have been suggested. Furthermore, there is evidence that contradicts the hypothesis.... Instead, the perceived decline found in recent studies may well be due to shifts in regulatory policy and monetary policy that have been omitted from the research."


So why was the exercise undertaken if it was known from the outset the conclusion would be fruitless? 


Look, we all know the plundering will continue until the equilibrium of a popular revolt taking out the plunderers becomes too great of a possibility.  A more useful exercise may be in trying to determine who of these yahoos actually think they will depart from this earth and take any of their "gains" with them. 


It's quite evident our current policy makers have strayed far from a foundational tenet of "doing unto others as you would have them do to you" that the previous idium that the US was great because its people are good is in jeopardy of being a footnote in history.



CNONC's picture

I suggest you read it.  You are, of course, correct that it is pablum.  But it is instructive to actually manipulate the mathmatics yourself, and feel the power of distilling the complex interactions of millions of economic actors into a single, simple formula.  Get your Econ Phd, and you can be as gods.

Lady Jessica's picture

Thank God some people around here have a grip on the concept of irony.

bullet's picture

@steveliesman... your are widely regarded as the biggest idiot/asswipe in financial media today... care to respond...

N0TaREALmerican's picture
N0TaREALmerican (not verified) Jun 21, 2016 10:57 AM


Sure, they both have PhD's, but who has more PhD friends?

I woke up's picture

The Fed's biggest problem is the number of balls in the air they have to keep up.  Theirs is a psychology experiment and it only works when the message is consistent from all sources.  Having reasonable doubt from any source challenges the experiment.

Lady Jessica's picture

I'm inclined to think the inconsistent message is intended.

It's the smoke and whatnot emanating from the Delphic Oracle.

Remember, Pythia was said to utter gibberish which then underwent interpretation by her priests.

Same scam here.

all-priced-in's picture

Janet has replaced the Taylor rule with the Brutal ass raping for savers rule.



SillyWabbits's picture

When economists use math; you know things are not going to add up.

At least a certain percentage of unknown rates when you factor in the variables based upon historical variances which fluctuate stochastically.

taketheredpill's picture



There's a reason they're called "rules". Nice.


101 years and counting's picture

the Fed has zero credibility.  just making shit up as they go now.  their only "justification" is to keep the stock bubble inflated.

Edward Morbius's picture

"Things that you held high and told yourself were true, lost or changing as the days come down to you. ".


Joni said it best.

Infield_Fly's picture
Infield_Fly (not verified) Jun 21, 2016 11:06 AM

What a cunt!!! FUCK YOU AND DIE YELLEN!!!

Consuelo's picture

Liesman vs. Yellen - oh my...


You know it's bad when they start eating each other.   Sorta like Bernie's clients after they found out that one of their own really wasn't delivering 12%+ on their 'investments'...

Seasmoke's picture

Hang Janet Yellen for Treason. (Is Liesman trying to have his hanging pardoned ????)

JamaicaJim's picture

John Taylor always was in Jerry Rice's shadow....


.....................Until SB XXIII



Phat Stax's picture

The Dismal Science is still dismal.

koncaswatch's picture

Dismal for true; but not science. Nuetral rate is a myth in an economy that recognizes the truth of market forces setting the cost of money; but we don't have that, do we. We have the FED. These machinations and aurguments are, and forever will be, endless.

Kagemusho's picture

Greenspan was better at the dissimulation, obfuscation and outright bullshitting game. Poor Janet comes in at a distant second.

RaceToTheBottom's picture

Greenspam had the briefcase indicator.

Janet has nothing....

lasvegaspersona's picture

Einstein made some assumptions, developed some equations and within those bounds was correct. Now (again within the confines of his assumptions) we have been told that black holes, dark matter and energy and neutron stars (none of which can ever be observed) are real just because the math says they can be.

Thus we see in economics, if the math sez it is right it must be right....because no one is going to change assumptions or ever consider different mechanisms. Science' this ain't. It is numerology. Instead of being relatively unimportant in our daily lives like cosmology however, this impacts every aspect of our lives.

I feel the mandate of heaven slipping from the rulers grasp.

RaceToTheBottom's picture

To even make any comparisons with anything Einstein said except his anti war opinions and economics is a farce.

Economics has more in common with Voodoo than it does with any real science.


Farqued Up's picture

Einstein had a brain fart, while impressive, was nothing practical, and will be a sick joke if it is ever confirmed that the speed of light is dependent on factors of space densities, particle entanglements, etc.

At any rate his Serbian wife did the development equations and kept their son while the electrified follicle fucktard was slinking around fucking his First Cousin on the side. Tesla was also Serbian, maybe something was in the water.

They performed biopsies on his brain and it showed nothing extraordinary and ended up lost. It was probably used by a janitor for fish chum. He deserves credit for his fine wardrobe and grooming sponsorships.

johnjkiii's picture

The science of horse shit by the shit shovelers themselves. The cost of money is cheaper than every era except the 1930s. Banks should be able to take that money and earn a large carry. The problem is simple. There are few borrowers because we are still experiencing the overcapacity that prevents any need to borrow. Ms Horse Shit of the Fed helped put us here and all the calculus in the world won't change it. This is a new form of depression, pure and simple.

Yen Cross's picture


Can we please start a LIESman 3x inverse ETF?  I can definitely find some seed capital.

 Even better--- WE can call it the Gartman Liesman inverse fund .llc

  The theme song for the half hour long CNBS informercial can be an endless loop of [Hotel California]

RaceToTheBottom's picture

The rats always know when the ship is going down...

Yen Cross's picture

  That's a very astute comment. Well done ;-)

hooligan2009's picture

quick send a twitter - @hiillaratclinton

bullet's picture

bravo on the gartman liesman inverse fund...

khakuda's picture

I could care less about what any economist think rates should be in theory.  I know they shouldn't be negative or zero because savers, pensions and the entire financial services sector end up bankrupt all because some academic thinks that assets should trade at bubble levels, recessions should be outlawed and consumer price inflation should outpace wage growth.

HelloSpencer's picture

It is kind of funny how things appear to work in economics.

Let us redefine a variable, e.g., the 'neutral rate' (whatever on earth that may actually be), or let us change the way we calculate inflation, or the way we calculate GDP. But let us not call these new variables something like modified neutral rate, modified inflation or modified GDP. Let us just keep the same names and use the models (that were non-sensical to start with) as we did before by simply susbtituting these modified variables in place of the original ones without even bothering to think through wherher or not the model still applies.




All of this will end really badly. In the words of Russel Peters: 'Somebody gonna get hurt real bad.'

macroeconomist's picture

The whole idea of a neutral interest rate is utter Wicksellian nonsense, more so a non-changing one.

Delusions of grandeur shaping economic policy...

numapepi's picture

It's all fun and games until WWIII breaks out.

hooligan2009's picture

PhD = Doctorate of Phuckingpeopleover :)

HelloSpencer's picture

Liesman: if u adjust "a policy rule in a purely discretionary way, then it is not a rule at all any more"

Well, that is obvious, but it is not something novel. Remember the raising of the debt ceiling, for example? Hey we have a debt ceiling and debt cannot rise above that. Once debt reaches the ceiling, hey, let us raise the ceiling.

Occams_Razor_Trader's picture

This guy is just clamoring for attention, nobody has listened to him since the break up of Duran Duran.