Having hinted overnight that The Fed could buy stocks "maybe in the future," Janet Yellen blurted out confirmation that buying assets other than long-term U.S. debt is on the table. Despite the total and utter failure of SNB and BOJ direct equity buying to create increased consumption, Yellen explained "it could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions."
Speaking via videoconference in response to questions raised at forum of Kansas City Fed minority bankers, Fed Chair Janet Yellen says there could be benefits to Fed buying equities or corporate bonds, yet would also likely be costs that have to be considered.
The idea of expanding into areas like equities might be “good thing to think about,” yet is not “something we need now,” Yellen said, noting that (for now) The Fed is more restricted in which assets it can purchase than other central banks.
"If we found, I think as other countries did, that they could reach the limits in terms of purchasing safe assets like longer-term government bonds, it could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions."
And as Reuters notes, the Fed could get benefits from buying assets other than long-term U.S. debt if in a future downturn it could not buy any more government bonds, Fed Chair Janet Yellen said on Thursday.
So let's see how those "other countries" equity buying schemes have done.
Japanese Equity ETF purchases have utterfly failed to spark a rebound in Japanese Household Spending...
Let alone even maintain Japanese stocks!!
As we noted previously, 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. However, as the hole the central planner shave dug themselves by not being able to admit impotence, 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.
Pure Einsteinian Insanity... but the textbooks said it would work!!