Janet Yellen On The Fed Buying Stocks: "Maybe In The Future, Down The Line..."

Tyler Durden's picture

There was an interesting exchange during Janet Yellen's testimony before the House Financial Services Committee on Wednesday morning, when South Carolina Republican Mick Mulvaney asked Yellen if the Fed will openly (as opposed to indirectly via Citadel) buy stocks. Specifically, he said that "there's been some attention in the last few months about the resent decision by the Bank of Japan to start purchasing equities and my question to you is fairly simple. Is the United States Federal Reserve looking at the possibility of adding the purchase of equities to its tool box as it looks at monetary policy?"

This was her response:

"Well, the Federal Reserve is not permitted to purchase equities. We can only purchase U.S. treasuries and agency securities. I did mention in a speech in Jackson Hole, though, where I discussed longer term issues and difficulties we could have in providing adequate monetary policy. Accommodation may be somewhere in the future, down the line that this is the kind of thing that Congress might consider, but if you were to do so, it's not something that the Federal Reserve is asking for."

And there you have the apolitical Fed hinting to Congress all it would to keep the stock market propped up in perpetuity is a small change in the law for Yellen to lift the offer, or as Chuck Schumer would put it, "get to work Mrs; Chairwoman."

Also, not asking for yet, because we are certain that there was a time when neither the BOJ nor the SNB imagined they would have to officially intervene in the stock market to keep it propped up. Furthermore, as the WSJ notes, "Yellen’s tentative openness to changing the law suggests Fed officials have been giving a lot of thought to new ways to jolt the economy in an era of low inflation and low interest rates."

Alas, in a time when the Reuters writes that "any ECB scheme to buy stocks could total 200 billion euros", to keep hammering the idea that central bank purchases of stocks are just a matter of time, we get the feeling that the spot Yellen envisions as being "somewhere in the future" is not that far off.

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Theos's picture

And you fuckers want to short this shit.

oops's picture
oops (not verified) Theos Sep 28, 2016 8:55 PM

In the future? What future? The Sept 11 Bill is the DEATH KNELL for America.
https://goo.gl/oehIgG

Boca's picture

finally an ecomonic catalist to bring this to the ground

auricle's picture

Monetary Cranks. What bullshit. I hate how they did Ron Paul over the past 25 years. Especially how dead on his predictions were. 

Huckleberry Pie's picture

Governments of other countries are already buy US stocks (lol)...geez, get on the bandwagon.

larz's picture

Paul Tudor Jones confirmed the " plunge control team" after 1987 crash.  What s this 2nd grade?

GUS100CORRINA's picture

SNB has been buying stocks for years using money they create out of thin air ...... this ultimately leads to SOCIALISM followed by a Totalitarian Dictatorship!!!

FREE MARKETS and CAPITALISM ARE A THING OF THE PAST AND MORAL HAZARDS ARE CREATED THAT END BADLY.

 

 

RiverRoad's picture

That scheme worked out so well for Japan; it broke their banks.

ersatz007's picture

I'm turning Japanese,

I think I'm turning Japanese

I really think so...

Paul Kersey's picture

At this point, the Fed doesn't have to buy stocks directly in order to keep share prices propped up. The international cartel of central banks all work in concert with each other, and the Fed has already designated the Swiss National Bank as its proxy buyer for U.S. stocks:

"In the second quarter, the Swiss National Bank added $7.3 billion to its US equity portfolio, and according to its just filed 13-F, is now long a record $61.8 billion in US stocks, up from $54.5 billion a month ago. In fact, rising from $41.3 billion in total US stock holdings as of December 2015, this means that the Swiss central bank increased its total US holdings by a record 50% in the first half of 2016."

Additionally, the Fed lends large publicly traded corporations money at zero interest, so that those corporations can buy back their own shares in order to keep prices propped up. It's a circle jerk ponzi.

thinkmoretalkless's picture

Puts "Don't fight the Fed" in a whole new light.

TradingTroll's picture

1000%. I want to short because I am since 18600

You will see. October will be down

auricle's picture

And you fuckers want to short this shit.

 

Absolutely, but only for a short while. 

The central planners's picture

Short everything the FED has touched, now.

Kidbuck's picture

It's fucking weasels all the way down.

MFL5591's picture

This group of trash owns the bond market, hence making interest off the US taxpayers using printed confetti.  Soon, they will own the housing market, Gold market then the stock market and you will be a debt slave to these pigs for life.  Its now or never, get rid of this group elect Trump, he may not be perfect but, he is the only hope we have.  

ArkansasAngie's picture

Nope.  Pack your stock purchases and negative interest rate policy and stick it in your ear!

DontFollowMyAdviceImaDummy's picture

AUDIT THE FED NOW!!! PPT IS REAL!

and DB should already be worth $0.00 as soon as one of their CDS blows-up.

ebworthen's picture

No "refund" in my bank account yet for being ass-raped by the Banks (Libor, CDS, MBS, Bail-Outs, Wells Fargo, etc., etc., etc.).

Go fuck yourself Yellen, with a splintery broom stick, to Hell and back! 

End the FED!  Hang the money-changers and their complicit political lackeys! 

Hang 'em high!  This is TREASON of the first order!

DavidC's picture

Please.

Irresponsible in one word.

Coming out with crap like that she and the Fed deserve everything that's ultimately coming to them

DavidC

tmosley's picture

Purchasing equities with printed money is the same as confiscating companies.

This is Marxism by a different name.

Reminder that communists are animals, and animals don't go to jail--they get put down.

putaipan's picture

this is facism by its proper name.

Boca's picture

we need to educate the people in this country, nobody gets it anymore, I had a 20 year old guy tell debt doesn't mater. we can just keep printing because we are paying the interest back to ourselves, the American people

Paul Kersey's picture

" I had a 20 year old guy tell debt doesn't mater."

 

But Vice President Cheney said to Paul O"Neill:

"You know, Paul, Reagan proved that deficits don't matter."

So that 20 year old guy was almost quoting the Vice President of the USA (even though Cheney was every bit as wrong about deficits as he was about Iraq having "weapons of mass destruction"  and yellowcake uranium.

stocktivity's picture

Futures are up tonight. Maybe she already started buying.

kliguy38's picture

she's been buying for years

NoDebt's picture

Explain to me what purchasing stocks has to do with monetary policy.  I keep asking this over and over and THERE IS NO ANSWER except that they believe the time has come they can be overtly corrupt and show what they are REALLY there to do.  Prop up asset prices.

I believe, ultimately, what they are doing is laying claim to the only productive assets left after classical/Keynesian monetary policy collapses.  And thereby have total control over the economy and everything in it.  But that's just crazy talk, right?

 

DavidC's picture

Right.

Insanity.

DavidC

Neville Bartos's picture

Do you feel that boy? The way the shit clings to the air. Shit blizzards coming

Clock Crasher's picture

When the depression is morphing into out right slavery stock share monetization is vital and necessary.

The corporations sell shares to the Fed

Fed pays corporations of shares with printed fiat

Now that the corporations are also two faced quasi govt agencies because of taking "public" money they will use the money to pay salaries to the starving masses.  There will be no incentive for the corporation to make money, ever, because every quarter the Fed will shove money into their balance sheets in exchange for shares.  Now that there is no incentive to make a profit or product.  There is incentive to passify the lowest common denominator and offer jobs in the name of these govt/private industries.  Everyone who wants to eat will apply for a job there and show up and pretend to work and the corporation will pretend to pay you.  At the end of the work week you spend your salary on bread and butter.  Soviet model in full effect.  Cloward Piven, Carl Marx  head on collision.

 

As was explained to me recently. 

 

Not sure I buy the premise.

Offthebeach's picture

"In the end they will lay their freedom at our feet and say to us, Make us your slaves, but feed us."

Fyodor Dostoyevsky, The Grand Inquisitor

Deplorable's picture

When the system collapses, the FED can load up the SNAP cards with stock options using the acquired companies. 

It would be wonderful to get a SNAP card once a month loaded with Facebook stock...

Billy Shears's picture

Poof... and it's gone! Sorry, your "investment," it didn't do so well... What good are productive assets if either they end up in a pile of ash or no one has any money to afford the output? Only a terrible end can result; these people is CRAZY!!!!!

gregga777's picture

It has nothing to do with monetary policy and everything to with the continuing transfer of wealth from those who can least afford it to those who least deserve it.

Offthebeach's picture

The poor don't have material wealth to be had, or stole from.

But they can be tricked to assume debts. So the governmental elites can live like kings, dukes, earls and well paid lower functionaries and the costs are dumped upon "the voters".

Global Observer's picture

 

Explain to me what purchasing stocks has to do with monetary policy.  

Monetary policy has two components (i) interest rates and (ii) Central Bank money or reserves held by banks. The latter involves the Central Bank buying bank assets to increase the reserves or selling the assets it holds to decrease the reserves banks hold. The assets the CB purchases can be anything held by banks and permitted by the law establishing the Central Bank. Since the repeal of the Glass-Stegal act in the US, banks are permitted to hold stocks as their assets, not just as collateral against loans. So if banks are running out of loan assets to sell to the CB and the CB wants to inject more liquidity into the system (it is anybody's guess why they would want to do it today), it may turn to other kinds of assets banks hold, provided they are allowed by law to hold those assets on their balance sheet.

 

It is just desperation. A collapse is inevitable. But they will do everything in their power to delay it for as long as they can, since a recovery after the next collapse is not possible for decades, if at all.

Yen Cross's picture

    I predict " Moe Howard" will be celebrated as a National hero, in Japan some day.

 The 'Three Stooges' <<< Yellen Draghi Abe.

King Tut's picture
King Tut (not verified) Yen Cross Sep 28, 2016 9:32 PM

 the 3 Stooges and Yellen are all from the same Tribe- which kind of makes sense

gregga777's picture

… and Allan Greenspan, Benjamin Shalom Bernanke, Stanley Fischer, etc., etc., etc.

Yen Cross's picture

  That -Shape Shifting- lizard > Greenspam is definitely invited to the next Quorum of " Off World" politicians. aka> the IMF and ExIm bank. lol

Scuba Steve's picture

Unbelievable she came out and said this and not a peep from anyone in horror.

Yea, IMO, this is chilling and another tell in the Poker game.

Game on officially, The Common Man vs. The State

gregga777's picture

It's the common versus the banking gangsters.

The solution is simple.

HANG
ALL THE
BANKERS

And the other parasites sucking our life's blood like the Con Street swindlers, criminal crony capitalists, and the political parasites classes (politicians, lobbyists, political slush funds masquerading as charities, etc.).

Ali blabla's picture

Maybe that is the only way.. To hang them.. They just continue like nothing happened.. I lost my business, house , everything exept my life... And i still need to pay 90.000€ to the bank who sold my house.. I have paid more than 300.000€ for a house which was worth 200.000.. Have to work all my life to pay that back .. They fart and created money... out of their ass.. and buy shit for it and let us be slaves to their system.. We should all say no more and just stay home.. All of us.. See how long it takes before the whole thing comes crashing down.. I am from the Netherlands , same shit here as overthere in the US..

Offthebeach's picture

I have long advocated a buyers/workers strike. Nothing violent, just extream thrift.

But that seems to be happening anyway.

Question.

Is it me, or has it been since the Bush administration, that I have heard thst we need to save more and at the same time get out there and spend,

Scuba Steve's picture

Well, the saving part was taking more out of check and into your 401K.

The spending more was going all in to stocks in said 401k.

See how that works?

In the last quarter of this charade, the Common Mans pension and 401k will be what pays the bankers heirs lifestyle into the future. And thats without confiscation.

Clock Crasher's picture

Yellen:   Why are you asking me about purchasing securities? I won't be here much longer with Trump coming into office. Me and Benjamin went halves on a private island to wait out the hyper deflation that befalls your equity markets.  But if you think it helps your chances sure pass whatever laws you feel prudent.  

Deplorable's picture

If the FED buys stocks directly, can they deduct the capital loss on their annual tax return when one of their stocks goes bankrupt?

gregga777's picture

They'll never let a zombie criminal crony capitalist conporation go bankrupt.

orez65's picture

The Federal Reserve will buy stocks of companies such as Apple, General Electric, Ford, Toyota, Starbucks, Boeing ....

WITH "MONEY" THAT THEY WILL PULL OUT OF THEIR ASSHOLES !!!!!!

Yen Cross's picture

  Don't forget> AMZN-GOOG- MSFT-TSLA- JPM-WMT- WFC, and all the Oil and Shipping stocks.

 http://www.multpl.com/

 The shipping indexes are a joke.  Flat Lined, and a Major shipping[South Korean] company is bankrupt.

  Keep buying your trinkets Bitchez.

  It makes me laugh how paper keeps "disappearing" all the price discovery.