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Fed Vice Chair Yellen Says Scope Remains For Further Policy Accommodation Through Additional Balance Sheet Action

Tyler Durden's picture




 

That former San Fran Fed chairman Janet Yellen would demand more easing is no surprise: she used to do it all the time. That Fed Vice Chairman, and Bernanke's second in command, Janet Yellen just hinted that she is "convinced that scope remains for the FOMC to provide further policy accommodation either through its forward guidance or through additional balance-sheet actions", and that "while my modal outlook calls for only a gradual reduction in labor market slack and a stable pace of inflation near the FOMC's longer-run objective of 2 percent, I see substantial risks to this outlook, particularly to the downside" is certainly very notable, and confirms everyone's worst dream (or greatest hope assuming they have a Schwab trading platform or Bloomberg terminal) - more cue-EEE is coming to town.

And since there is an entire section dedicated to "The Rationale for Highly Accommodative Policy", here it is, in word cloud format:

Note the prominence of the word Taylor? That's because Yellen uses none other than John Taylor and his famous rule to validate her theory that more easing is needed. The same John Taylor who, two months ago, essentially said the Fed were a bunch of trained monkeys for keep ZIRP as long as they have, and warning that Bernanke's infinte meddling in capital markets will destroy us all. Read "The Dangers of an Interventionist Fed. A century of experience shows that rules lead to prosperity and discretion leads to trouble" by John Taylor.

You just can't make this up.

 

Full speech (slideshow accompanying the speech can be found here):

Perspectives on Monetary Policy

Good evening. I'm honored to have the opportunity to address the Boston Economic Club and I'm grateful to Chip Case for inviting me to speak to you tonight. As most of you probably know, Chip was one of the first economists to document worrisome signs of a housing bubble in parts of the United States. After sounding an early alarm in 2003, Chip watched the bubble grow and was prescient in anticipating the very serious toll that its unwinding would impose on the economy. Chip recognized that declining house prices would affect not just residential construction but also consumer spending, the ability of households to borrow, and the health of the financial system. In light of these pervasive linkages, the repeat sales house price index that bears Chip's name is one of the most closely watched of all U.S. economic indicators. Indeed, as I will discuss this evening, prolonged weakness in the housing sector remains one of several serious headwinds facing the U.S. economy. Given these headwinds, I believe that a highly accommodative monetary policy will be needed for quite some time to help the economy mend. Before continuing, let me emphasize that my remarks reflect my own views and not necessarily those of others in the Federal Reserve System.1 

Economic Conditions and the Outlook
In my remarks tonight, I will describe my perspective on monetary policy. To begin, however, I'll highlight some of the current conditions and key features of the economic outlook that shape my views. To anticipate the main points, the economy appears to be expanding at a moderate pace. The unemployment rate is almost 1 percentage point lower than it was a year ago, but we are still far from full employment. Looking ahead, I anticipate that significant headwinds will continue to restrain the pace of the recovery so that the remaining employment gap is likely to close only slowly. At the same time, inflation (abstracting from the transitory effects of movements in oil prices) has been running near 2 percent over the past two years, and I expect it to remain at or below the Federal Open Market Committee's (the FOMC's) 2 percent objective for the foreseeable future. As always, considerable uncertainty attends the outlook for both growth and inflation; events could prove either more positive or negative than what I see as the most likely outcome. That said, as I will explain, I consider the balance of risks to be tilted toward a weaker economy.

Starting with the labor market, conditions have gradually improved over the past year, albeit at an uneven pace. Average monthly payroll gains picked up from about 145,000 in the second half of 2011 to 225,000 during the first quarter of this year. However, these gains fell back to around 75,000 a month in April and May. The deceleration of payroll employment from the first to the second quarter was probably exacerbated by some combination of seasonal adjustment difficulties and an unusually mild winter that likely boosted employment growth earlier in the year. Payback for that earlier strength probably accounts for some of the weakness we've seen recently. Smoothing through these fluctuations, the average pace of job creation for the year to date, as well as recent unemployment benefit claims data and other indicators, appear to be consistent with an economy expanding at only a moderate rate, close to its potential.

Such modest growth would imply little additional progress in the near term in improving labor market conditions, which remain very weak. Currently, the unemployment rate stands around 3 percentage points above where it was at the onset of the recession--a figure that is stark enough as it is, but does not even take account of the millions more who have left the labor force or who would have joined under more normal circumstances in the past four years. All told, only about half of the collapse in private payroll employment in 2008 and 2009 has been reversed. A critical question for monetary policy is the extent to which these numbers reflect a shortfall from full employment versus a rise in structural unemployment. While the magnitude of structural unemployment is uncertain, I read the evidence as suggesting that the bulk of the rise during the recession was cyclical, not structural in nature [and she has a Ph.D].

Consider figure 1, which presents three indicators of labor market slack. The black solid line is the unemployment gap, defined as the difference between the actual unemployment rate and the Congressional Budget Office (CBO) estimate of the rate consistent with inflation remaining stable over time. The red dashed line is an index of the difficulty households perceive in finding jobs, based on results from a survey conducted by the Conference Board. And the red dotted line is an index of firms' ability to fill jobs, based on a survey conducted by the National Federation of Independent Business. All three measures show similar cyclical movements over the past 20 years, and all now stand at very high levels. This similarity runs counter to claims that the CBO's and other estimates of the unemployment gap overstate the true amount of slack by placing insufficient weight on structural explanations, such as a reduced efficiency of matching workers to jobs, for the rise in unemployment since 2007. If that were the case, why would firms now find it so easy to fill positions? Other evidence also points to the dominant role of cyclical forces in the recent rise in unemployment: job losses have been widespread, rather than being concentrated in the construction and financial sectors, and the co-movement of job vacancies and unemployment over the past few years does not appear to be unusual.2 

As I mentioned, I expect several factors to restrain the pace of the recovery and the corresponding improvement in the labor market going forward. The housing sector remains a source of very significant headwinds. Housing has typically been a driver of economic recoveries, and we have seen some modest improvement recently, but continued uncertainties over the direction of house prices, and very restricted mortgage credit availability for all but the most creditworthy buyers, will likely weigh on housing demand for some time to come. When housing demand does pick up more noticeably, the huge overhang of both unoccupied dwellings and homes in the foreclosure pipeline will likely allow a good deal of that demand to be met for a time without a sizeable expansion in homebuilding. Moreover, the enormous toll on household wealth resulting from the collapse of house prices--almost a 35 percent decline from its 2006 peak, according to the Case-Shiller index--imposes ongoing restraint on consumer spending, and the loss of home equity has impaired many households' ability to borrow.

A second headwind that will likely become more important over coming months relates to fiscal policy. At the federal level, stimulus-related policies are scheduled to wind down, while both defense and nondefense purchases are expected to decline in inflation-adjusted terms over the next several years. Toward the end of this year, important decisions regarding the extension of current federal tax and budget policies loom. I will return to the associated uncertainties and their potentially detrimental effects later.

A third factor weighing on the outlook is the likely sluggish pace of economic growth abroad. Strains in global financial markets have resurfaced in recent months, reflecting renewed uncertainty about the resolution of the European situation. Risk premiums on sovereign debt and other securities have risen again in many European countries, while European banks continue to face pressure to shrink their balance sheets. Even without a further intensification of stresses, the slowdown in economic activity in Europe will likely hold back U.S. export growth. Moreover, the perceived risks surrounding the European situation are already having a meaningful effect on financial conditions here in the United States, further weighing on the prospects for U.S. growth.

Given these formidable challenges, most private sector forecasters expect only gradual improvement in the labor market and I share their view. Figure 2 shows the unemployment rate together with the median forecast from last month's Survey of Professional Forecasters (SPF), the dashed blue line.3 The figure also shows the central tendency of the unemployment projections that my FOMC colleagues and I made at our April meeting: Those projections reflect our assessments of the economic outlook given our own individual judgments about the appropriate path of monetary policy. Included in the figure as well is the central tendency of FOMC participants' estimates of the longer-run normal unemployment rate, which ranges from 5.2 percent to 6 percent. Like private forecasters, most FOMC participants expect the unemployment rate to remain well above its longer-run normal value over the next several years.

Of course, considerable uncertainty attends this outlook: The shaded area provides an estimate of the 70 percent confidence interval for the future path of the unemployment rate based on historical experience and model simulations.4 Its width suggests that these projections could be quite far off, in either direction. Nevertheless, the figure shows that labor market slack at present is so large that even a very large and favorable forecast error would not change the conclusion that slack will likely remain substantial for quite some time.

Turning to inflation, figure 3 summarizes private and FOMC forecasts. Overall consumer price inflation has fluctuated quite a bit in recent years, largely reflecting movements in prices for oil and other commodities. In early 2011 and again earlier this year, prices of crude oil, and thus of gasoline, rose noticeably. Smoothing through these fluctuations, inflation as measured by the price index for personal consumption expenditures (PCE) averaged near 2 percent over the past two years. In recent weeks, however, oil and gasoline prices have moderated and are now showing through to the headline inflation figures. Looking ahead, most FOMC participants at the time of our April meeting expected inflation to be at, or a bit below, our long-run objective of 2 percent through 2014; private forecasters on average also expect inflation to be close to 2 percent. As with unemployment, uncertainty around the inflation projection is substantial.

In the view of some observers, the stability of inflation in the face of high unemployment in recent years constitutes evidence that much of the remaining unemployment is structural and not cyclical. They reason that if there were truly substantial slack in the labor market, simple accelerationist "Phillips curve" models would predict more noticeable downward pressure on inflation. However, substantial cross-country evidence suggests that, in low-inflation environments, inflation is notably less responsive to downward pressure from labor market slack than it is when inflation is elevated. In other words, the short-run Phillips curve may flatten out.5 One important reason for this non-linearity, in my view, is downward nominal wage rigidity--that is, the reluctance or inability of many firms to cut nominal wages.

The solid blue bars in figure 4 present a snapshot of the distribution of nominal wage changes for individual jobs during the depth of the current labor market slump, based on data collected by the Bureau of Labor Statistics.6 For comparison, the dashed red line presents a hypothetical distribution of wage changes, using a normal distribution that approximates the actual distribution of wage changes greater than zero. The distribution of actual wage changes shows that a relatively high percentage of workers saw no change in their nominal wage, and relatively few experienced modest wage cuts. This pile-up phenomenon at zero suggests that, even when the unemployment rate was around 10 percent, many firms were reluctant to cut nominal wage rates. In the absence of this barrier, nominal gains in wages and unit labor costs would have likely been even more subdued given the severity of the economic downturn, with the result that inflation would probably now be running at a lower rate.

Anchored inflation expectations are another reason why inflation has remained close to 2 percent in the face of very low resource utilization. As shown in figure 5, survey measures of longer-horizon inflation expectations have remained nearly constant since the mid-1990s even as actual inflation has fluctuated. As a result, the current slump has not generated the downward spiral of falling expected and actual inflation that a simple accelerationist model of inflation might have predicted. Indeed, keeping inflation expectations from declining has been an important success of monetary policy over the past few years. At the same time, the fact that longer-term inflation expectations have not risen above 2 percent has also proved extremely valuable, for it has freed the FOMC to take strong actions to support the economic recovery without greatly worrying that higher energy and commodity prices would become ingrained in inflation and inflation expectations, as they did in the 1970s.

While my modal outlook calls for only a gradual reduction in labor market slack and a stable pace of inflation near the FOMC's longer-run objective of 2 percent, I see substantial risks to this outlook, particularly to the downside. As I mentioned before, even without any political gridlock, fiscal policy is bound to become substantially less accommodative from early 2013 on. However, federal fiscal policy could turn even more restrictive if the Congress does not reach agreement on several important tax and budget policy issues before the end of this year; in fact, the CBO recently warned that the potential hit to gross domestic product (GDP) growth could be sufficient to push the economy into recession in 2013.7 The deterioration of financial conditions in Europe of late, coupled with notable declines in global equity markets, also serve as a reminder that highly destabilizing outcomes cannot be ruled out. Finally, besides these clearly identifiable sources of risk, there remains the broader issue that economic forecasters have repeatedly overestimated the strength of the recovery and so still may be too optimistic about the prospects that growth will strengthen.

Although I view the bulk of the increase in unemployment since 2007 as cyclical, I am concerned that it could become a permanent problem if the recovery were to stall. In this economic downturn, the fraction of the workforce unemployed for six months or more has climbed much more than in previous recessions, and remains at a remarkably high level. Continued high unemployment could wreak long-term damage by eroding the skills and labor force attachment of workers suffering long-term unemployment, thereby turning what was initially cyclical into structural unemployment. This risk provides another important reason to support the recovery by maintaining a highly accommodative stance of monetary policy.

The Conduct of Policy with Unconventional Tools
Now turning to monetary policy, I will begin by discussing the FOMC's reliance on unconventional tools to address the disappointing pace of recovery. I will then elaborate my rationale for supporting a highly accommodative policy stance.

As you know, since late 2008, the FOMC's standard policy tool, the target federal funds rate, has been maintained at the zero lower bound. To provide further accommodation, we have employed two unconventional tools to support the recovery--extended forward guidance about the future path of the federal funds rate, and large-scale asset purchases and other balance sheet actions that have greatly increased the size and duration of the Federal Reserve's portfolio.

These two tools have become increasingly important because the recovery from the recession has turned out to be persistently slower than either the FOMC or private forecasters anticipated. Figure 6 illustrates the magnitude of the disappointment by comparing Blue Chip forecasts for real GDP growth made two years ago with ones made earlier this year. As shown by the dashed blue line, private forecasters in early 2010 anticipated that real GDP would expand at an average annual rate of just over 3 percent from 2010 through 2014. However, actual growth in 2011 and early 2012 has turned out to be much weaker than expected, and, as indicated by the dotted red line, private forecasters now anticipate only a modest acceleration in real activity over the next few years.

In response to the evolving outlook, the FOMC has progressively added policy accommodation using both of its unconventional tools. For example, since the federal funds rate target was brought down to a range of 0 to 1/4 percent in December 2008, the FOMC has gradually adjusted its forward guidance about the anticipated future path of the federal funds rate. In each meeting statement from March 2009 through June 2011, the Committee indicated its expectation that economic conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period."8 At the August 2011 meeting, the Committee decided to provide more specific information about the likely time horizon by substituting the phrase "at least through mid-2013" for the phrase "for an extended period"; at the January 2012 meeting, this horizon was extended to "at least through late 2014."9 Has this guidance worked? Figure 7 illustrates how dramatically forecasters' expectations of future short-term interest rates have changed. As the dashed blue line indicates, the Blue Chip consensus forecast made in early 2010 anticipated that the Treasury-bill rate would now stand at close to 3-1/2 percent; today, in contrast, private forecasters expect short-term interest rates to remain very low in 2014.

Of course, much of this revision in interest rate projections would likely have occurred in the absence of explicit forward guidance; given the deterioration in projections of real activity due to the unanticipated persistence of headwinds, and the continued subdued outlook for inflation, forecasters would naturally have anticipated a greater need for the FOMC to provide continued monetary accommodation. However, I believe the changes over time in the language of the FOMC statement, coupled with information provided by Chairman Bernanke and others in speeches and congressional testimony, helped the public understand better the Committee's likely policy response given the slower-than-expected economic recovery. As a result, forecasters and market participants appear to have marked down their expectations for future short-term interest rates by more than they otherwise would have, thereby putting additional downward pressure on long-term interest rates, improving broader financial conditions, and lending support to aggregate demand.

The FOMC has also provided further monetary accommodation over time by altering the size and composition of the Federal Reserve's securities holdings, shown in figure 8. The expansion in the volume of securities held by the Federal Reserve is shown in the left panel of the figure. During 2009 and early 2010, the Federal Reserve purchased about $1.4 trillion in agency mortgage-backed securities and agency debt securities and about $300 billion in longer-term Treasury securities. In November 2010, the Committee initiated an additional $600 billion in purchases of longer-term Treasury securities, which were completed at the end of June of last year. Last September, the FOMC decided to implement the "Maturity Extension Program," which affected the maturity composition of our Treasury holdings as shown in the right panel. Through this program, the FOMC is extending the average maturity of its securities holdings by selling $400 billion of Treasury securities with remaining maturities of 3 years or less and purchasing an equivalent amount of Treasury securities with remaining maturities of 6 to 30 years. These transactions are currently scheduled to be completed at the end of this month.

Research by Federal Reserve staff and others suggests that our balance sheet operations have had substantial effects on longer-term Treasury yields, principally by reducing term premiums on longer-dated Treasury securities.10 Figure 9 provides an estimate, based on Federal Reserve Board staff calculations, of the cumulative reduction of the term premium on 10-year Treasury securities from the three balance sheet programs. These results suggest that our portfolio actions are currently keeping 10-year Treasury yields roughly 60 basis points lower than they otherwise would be.11 Other evidence suggests that this downward pressure has had favorable spillover effects on other financial markets, leading to lower long-term borrowing costs for households and firms, higher equity valuations, and other improvements in financial conditions that in turn have supported consumption, investment, and net exports. Because the term premium effect depends on both the Federal Reserve's current and expected future asset holdings, most of this effect--without further actions--will likely wane over the next few years as the effect depends less and less on the current elevated level of the balance sheet and increasingly on the level of holdings during and after the normalization of our portfolio.12 

The Rationale for Highly Accommodative Policy

I have already noted that, in my view, an extended period of highly accommodative policy is necessary to combat the persistent headwinds to recovery. I will next explain how I've reached this policy judgment. In evaluating the stance of policy, I find the prescriptions from simple policy rules a logical starting point. A wide range of such rules has been examined in the academic literature, the most famous of which is that proposed by John Taylor in his 1993 study.13 Rules of the general sort proposed by Taylor (1993) capture well our statutory mandate to promote maximum employment and price stability by prescribing that the federal funds rate should respond to the deviation of inflation from its longer-run goal and to the output gap, given that the economy should be at or close to full employment when the output gap--the difference between actual GDP and an estimate of potential output--is closed. Moreover, research suggests that such simple rules can be reasonably robust to uncertainty about the true structure of the economy, as they perform well in a variety of models.14 Today, I will consider the prescriptions of two such benchmark rules--Taylor's 1993 rule, and a variant that is twice as responsive to economic slack. In my view, this latter rule is more consistent with the FOMC's commitment to follow a balanced approach to promoting our dual mandate, and so I will refer to it as the "balanced-approach" rule.15 

To show the prescriptions these rules would have called for at the April FOMC meeting, I start with an illustrative baseline outlook constructed using the projections for unemployment, inflation, and the federal funds rate that FOMC participants reported in April.16 I then employ the dynamics of one of the Federal Reserve's economic models, the FRB/US model, to solve for the joint paths of these three variables if the short-term interest rate had instead been set according to the Taylor (1993) rule or the balanced-approach rule, subject, in both cases, to the zero lower bound constraint on the federal funds rate. The dashed red line in figure 10 shows the resulting path for the federal funds rate under Taylor (1993) and the solid blue line with open circles illustrates the corresponding path using the balanced-approach rule.17 In both simulations, the private sector fully understands that monetary policy follows the particular rule in force.18 Figure 10 shows that the Taylor rule calls for monetary policy to tighten immediately, while the balanced-approach rule prescribes raising the federal funds rate in the fourth quarter of 2014--the earliest date consistent with the FOMC's current forward guidance of "exceptionally low levels for the federal funds rate at least through late 2014."

Although simple rules provide a useful starting point in determining appropriate policy, they by no means deserve the "last word"--especially in current circumstances. An alternative approach, also illustrated in figure 10, is to compute an "optimal control" path for the federal funds rate using an economic model--FRB/US, in this case. Such a path is chosen to minimize the value of a specific "loss function" conditional on a baseline forecast of economic conditions. The loss function attempts to quantify the social costs resulting from deviations of inflation from the Committee's longer-run goal and from deviations of unemployment from its longer-run normal rate.19 The solid green line with dots in figure 10 shows the "optimal control" path for the federal funds rate, again conditioned on the illustrative baseline outlook.20 This policy involves keeping the federal funds rate close to zero until late 2015, four quarters longer than the balanced-approach rule prescription and several years longer than the Taylor rule. Importantly, optimal control calls for a later lift-off date even though this benchmark--unlike the simple policy rules--implicitly takes full account of the additional stimulus to real activity and inflation being provided over time by the Federal Reserve's other policy tool, the past and projected changes to the size and maturity of its securities holdings.21 

Figure 11 shows that, by keeping the federal funds rate at its current level for longer, monetary policy under the balanced-approach rule achieves a more rapid reduction of the unemployment rate than monetary policy under the Taylor (1993) rule does, while nonetheless keeping inflation near 2 percent. But the improvement in labor market conditions is even more notable under the optimal control path, even as inflation remains close to the FOMC's long-run inflation objective.

As I noted, simple rules have the advantage of delivering good policy outcomes across a broad range of models, and are thereby relatively robust to our limited understanding of the precise working of the economy--in contrast to optimal-control policies, whose prescriptions are sensitive to the specification of the particular model used in the analysis. However, simple rules also have their shortcomings, leading them to significantly understate the case for keeping policy persistently accommodative in current circumstances.

One of these shortcomings is that the rules do not adjust for the constraints that the zero lower bound has placed on conventional monetary policy since late 2008. A second is that they do not fully take account of the protracted nature of the forces that have been restraining aggregate demand in the aftermath of the housing bust. As I've emphasized, the pace of the current recovery has turned out to be persistently slower than most observers expected, and forecasters expect it to remain quite moderate by historical standards. The headwinds that explain this disappointing performance represent a substantial departure from normal cyclical dynamics. As a result, the economy's equilibrium real federal funds rate--that is, the rate that would be consistent with full employment over the medium run--is probably well below its historical average, which the intercept of simple policy rules is supposed to approximate. By failing to fully adjust for this decline, the prescriptions of simple policy rules--which provide a useful benchmark under normal circumstances--could be significantly too restrictive now and could remain so for some time to come. In this regard, I think it is informative that the Blue Chip consensus forecast released in March showed the real three-month Treasury bill rate settling down at only 1-1/4 percent late in the decade, down 120 basis points from the long-run projections made prior to the recession. 22 

Looking Ahead
Recent labor market reports and financial developments serve as a reminder that the economy remains vulnerable to setbacks. Indeed, the simulations I described above did not take into account this new information. In our policy deliberations at the upcoming FOMC meeting we will assess the effects of these developments on the economic forecast. If the Committee were to judge that the recovery is unlikely to proceed at a satisfactory pace (for example, that the forecast entails little or no improvement in the labor market over the next few years), or that the downside risks to the outlook had become sufficiently great, or that inflation appeared to be in danger of declining notably below its 2 percent objective, I am convinced that scope remains for the FOMC to provide further policy accommodation either through its forward guidance or through additional balance-sheet actions. In taking these decisions, however, we would need to balance two considerations.

On the one hand, our unconventional tools have some limitations and costs. For example, the effects of forward guidance are likely to be weaker the longer the horizon of the guidance, implying that it may be difficult to provide much more stimulus through this channel. As for our balance sheet operations, although we have now acquired some experience with this tool, there is still considerable uncertainty about its likely economic effects. Moreover, some have expressed concern that a substantial further expansion of the balance sheet could interfere with the Fed's ability to execute a smooth exit from its accommodative policies at the appropriate time. I disagree with this view: The FOMC has tested a variety of tools to ensure that we will be able to raise short-term interest rates when needed while gradually returning the portfolio to a more normal size and composition. But even if unjustified, such concerns could in theory reduce confidence in the Federal Reserve and so lead to an undesired increase in inflation expectations.

On the other hand, risk management considerations arising from today's unusual circumstances strengthen the case for additional accommodation beyond that called for by simple policy rules and optimal control under the modal outlook. In particular, as I have noted, there are a number of significant downside risks to the economic outlook, and hence it may well be appropriate to insure against adverse shocks that could push the economy into territory where a self-reinforcing downward spiral of economic weakness would be difficult to arrest.

Conclusion
In my remarks this evening I have sought to explain why, in my view, a highly accommodative monetary policy will remain appropriate for some time to come. My views concerning the stance of monetary policy reflect the FOMC's firm commitment to the goals of maximum employment and stable prices, my appraisal of the medium term outlook (which is importantly shaped by the persistent legacy of the housing bust and ensuing financial crisis), and by my assessment of the balance of risks facing the economy. Of course, as I've emphasized, the outlook is uncertain and the Committee will need to adjust policy as appropriate as actual conditions unfold. For this reason, the FOMC's forward guidance is explicitly conditioned on its anticipation of "low rates of resource utilization and a subdued outlook for inflation over the medium run."23  If the recovery were to proceed faster than expected or if inflation pressures were to pick up materially, the FOMC could adjust policy by bringing forward the expected date of tightening. In contrast, if the Committee judges that the recovery is proceeding at an insufficient pace, we could undertake portfolio actions such as additional asset purchases or a further maturity extension program. It is for this reason that the FOMC emphasized, in its statement following the April meeting, that it would "regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability."24 

 

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Wed, 06/06/2012 - 20:09 | 2501539 fuu
fuu's picture

But but Fisher?

Wed, 06/06/2012 - 20:22 | 2501585 slewie the pi-rat
slewie the pi-rat's picture

L0L!!!

The Federal Reserve Cartel: The Eight Families

and this is just part 1 [of 4]!

ty, johnnySB & DH~!

Wed, 06/06/2012 - 20:24 | 2501595 Colombian Gringo
Colombian Gringo's picture

QE to infinity, Bitchez.

Wed, 06/06/2012 - 20:30 | 2501609 SHEEPFUKKER
SHEEPFUKKER's picture

So the Fed babble-heads can just continue to spew gibberish incessantly about how they stand ready to act if needed and never actually do anything? Just fucking do it already clowns or STFU. 

Wed, 06/06/2012 - 20:41 | 2501638 Paul Atreides
Paul Atreides's picture

Quantitative Derping

Wed, 06/06/2012 - 21:04 | 2501725 SilverTree
SilverTree's picture

PRINT MOTHER FUCKER PRINT

Wed, 06/06/2012 - 21:16 | 2501767 malikai
malikai's picture

Print or GTFO.

Wed, 06/06/2012 - 22:46 | 2502012 The Monkey
The Monkey's picture

Man - she went all out. When the timbre started to remind me of a third rate graduate student (midway through the 2nd paragraph), I started to nod off.

It's pretty clear who Janet is voting for this fall. Bernanke has an interesting choice. Afterall, it is not just his own name that is on the line.

Wed, 06/06/2012 - 22:49 | 2502021 The Monkey
The Monkey's picture

It is also the credibility of the Fed itself (to finish my thought).

Wed, 06/06/2012 - 21:56 | 2501883 UBIGDummy
UBIGDummy's picture

ZH POLL.

DOWN ARROW if you think QE is going to be announced tommorow.

Up arrow if you do not believe it.

Stock Donkeys, PAPER CARROT OR NOT

Wed, 06/06/2012 - 22:57 | 2502010 Cursive
Cursive's picture

@UBIDDummy

Not tomorrow.  Highly unlikely.  The earliest would be the June 20th meeting and even then it would probably be be just Twist 2 and I don't even think that is likely.

 

ETA:  Yellen's comments are entirely compatible with OT2.

Wed, 06/06/2012 - 23:45 | 2502126 chump666
chump666's picture

I agree

Thu, 06/07/2012 - 00:54 | 2502313 The Monkey
The Monkey's picture

I didn't read the whole pile of doo, but OT1 was balance sheet neutral, which is not implied by the headline.

Thu, 06/07/2012 - 08:56 | 2503077 Cursive
Cursive's picture

@The Monkey

I entirely see your point.  Twist is B/S neutral; however, it is a still a "balance-sheet actions," so I could take her comments to be compatible with a Twist action.  And she did say this

Last September, the FOMC decided to implement the "Maturity Extension Program," which affected the maturity composition of our Treasury holdings as shown in the right panel. Through this program, the FOMC is extending the average maturity of its securities holdings by selling $400 billion of Treasury securities with remaining maturities of 3 years or less and purchasing an equivalent amount of Treasury securities with remaining maturities of 6 to 30 years. These transactions are currently scheduled to be completed at the end of this month.

These results suggest that our portfolio actions are currently keeping 10-year Treasury yields roughly 60 basis points lower than they otherwise would be.11 Other evidence suggests that this downward pressure has had favorable spillover effects on other financial markets, leading to lower long-term borrowing costs for households and firms, higher equity valuations, and other improvements in financial conditions that in turn have supported consumption, investment, and net exports.


Thu, 06/07/2012 - 08:23 | 2502976 UBIGDummy
UBIGDummy's picture

I thought so as well. Was curius why metals were doing well the past few days.

Wed, 06/06/2012 - 23:02 | 2502053 Freewheelin Franklin
Freewheelin Franklin's picture

Hell, I'd be happy with Plosser. I oppose the Fed and central banking, but if I had to choose a Chairman for the Fed, it would be Charles Plosser; the last true inflation hawk. But, I think, as of late, the doves have been getting to him.

Wed, 06/06/2012 - 20:12 | 2501546 StrictlyNumbers
StrictlyNumbers's picture

QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ- EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE 4 Lyfe 

Wed, 06/06/2012 - 21:28 | 2501804 max2205
max2205's picture

4 letters, CUNT

Wed, 06/06/2012 - 22:01 | 2501895 Peter Pan
Peter Pan's picture

All of these themes and variations of QE will utlimately noy work but what they will achieve is the genetic mutation of the financial and banking systems to the point that the society that emerges at the other end from the collpase will be uglier than the situation as it currently stands.

It would not surprise me if the USA and some of its allies end up becoming a quasi North Korean style state where everyone and everything is at the mercy of the state.

Wed, 06/06/2012 - 22:54 | 2502035 Cursive
Cursive's picture

@Peter Pan

It would not surprise me if the USA and some of its allies end up becoming a quasi North Korean style state where everyone and everything is at the mercy of the state.

Exceptionally good analysis.  You can already see this with 1 out of 7 unemployed/underemployed and the same ratio participating in SNAP.  Obama's presidency, like all presidents since at lest Hoover, will hinge on the economy.  The vast majority of the American electorate is looking to Washington to solve their problems.  We have fallen far down the rabbit hole.

Wed, 06/06/2012 - 20:40 | 2501549 EhKnowKneeMass
EhKnowKneeMass's picture

If you are Yellen, you're not gellin'..... beach!!

I wonder if we should all contribute to buy her this:
http://www.cafepress.com/zerohedge.419236014

Would look good on her, no?

Wed, 06/06/2012 - 21:30 | 2501810 Quisat_Sadarak
Quisat_Sadarak's picture

Are you tryin' to say bee-atch?
It hurts my ears the way you say it. So don't do it!

Wed, 06/06/2012 - 20:16 | 2501551 DormRoom
DormRoom's picture

wtf.. Trillions of USD are on corporate balance sheet not being deployed to hire workers.  Is more QE going to suddenly make CEOs hire, if they haven't been doing so over the last 4 years?

 

QE is a giant vaccuum where wealth is absorbed up to the 1%.  The 99% gets nothing but inflation, or the possibility of stagflation.

 

Print.. And watch Japan implode.

Wed, 06/06/2012 - 21:16 | 2501763 CClarity
CClarity's picture

You learned well during your dorm time . . . the vacuum of QE is truly only helping the elite.  Savers, people who played by the rules with debt and credit, and the old folks who built this once great country have been getting  "f"ed for a decade now.  No end in sight that there will be any constructive change.  For shame on TPTB.  

But now the idle, educated and angry young are grumbling and grousing and that is when and where revolutions can fire up, especially if the older crowd, wise and with little left to loose are also formenting disenfranchisement feelings.  When they unite in rage watch out!  Won't be pitchforks and burning sticks in this day and age.   

Wed, 06/06/2012 - 21:59 | 2501891 adr
adr's picture

There isn't trillions of dollars sitting in corporate accounts. There is trillions in accounting fudge waiting to be found during an audit putting every major corporation out of business overnight.

Or do you really believe a company whose average daily retail store take is about $200 can somehow pull in a few billion dollars in sales?

Corporate annual reports make the greatest works of fiction look like dry technical manuals.

Wed, 06/06/2012 - 20:15 | 2501555 vmromk
vmromk's picture

Fuck you Yellen, and FUCK the head print master even more !

The only thing more QE will achieve is anger the masses who are already struggling. Trying to conjure inflation to save the banks will lead to the downfall of the Fed and all of the criminal crony bankers.

Wed, 06/06/2012 - 20:33 | 2501617 Bear
Bear's picture

Nice thought, but how will this happen? ... TPTB control most everything and they are sure as hell not going to upset he pig trough and if the sheep class start shooting, they're only shoot the wrong bastards as the banksters skip out of Dodge

Wed, 06/06/2012 - 20:38 | 2501637 vmromk
vmromk's picture

How do revolutions begin ?

Things will have to be so unbearable that people will have nothing left to lose. Once that happens, there will be no stopping it.

The Nazi's & Fascists once controlled everything as well (for a while), but look what happened to them.

Wed, 06/06/2012 - 20:56 | 2501697 Chupacabra-322
Chupacabra-322's picture

@ vmromk, "The Nazi's & Fascists once controlled everything as well (for a while), but look what happened to them."

Wake up, they still do.  Prescott Bush aided and funded the Nazi's then, imported them via "Operation Paperclip".

 

Wed, 06/06/2012 - 23:07 | 2502076 The Monkey
The Monkey's picture

The Fed has never explicity said,, "the current conditions are similiar to those that have accompanied our nation's most severe economic depressions. By measure of indebtedness, the nation's circumstances are in some ways worse than they were leading up to the Great Depression. Given the deleveraging dynamics inherent in a highly indebted post-bubble economy, we see deflation as the nominal case and will very likely pursue monetary remedies that are unusual, and often, experimental. We hope this works, because it is our only option to avoid liquidation on a scale unprecedented in our nation's history (and all that entails).

Ben - everyone is looking for candor. It is risky business sometimes to tell it like it is, but as Ron Paul put it, "someone owes the American people the truth".

Wed, 06/06/2012 - 20:38 | 2501636 lakecity55
lakecity55's picture

go long on CS and batons.

Wed, 06/06/2012 - 21:18 | 2501776 BeetleBailey
BeetleBailey's picture

What are we smellin?

Why...it's Janet Yellen...with her whirly-bird butt-buddy, Benny Shalom.

Janet - nice speech. All bullshit - and you know it 0 which makes you a smellin FELON!

Wed, 06/06/2012 - 20:15 | 2501560 fonzannoon
fonzannoon's picture

Moreover, some have expressed concern that a substantial further expansion of the balance sheet could interfere with the Fed's ability to execute a smooth exit from its accommodative policies at the appropriate time. I disagree with this view: The FOMC has tested a variety of tools to ensure that we will be able to raise short-term interest rates when needed while gradually returning the portfolio to a more normal size and composition. But even if unjustified, such concerns could in theory reduce confidence in the Federal Reserve and so lead to an undesired increase in inflation expectations.

This blatant stupidity will be remembered for generations to come.

Wed, 06/06/2012 - 20:57 | 2501699 machineh
machineh's picture

Yellen's still promising to 'shrink the balance sheet'? HA HA HA. Nice horn, unicorn! 

Here's her Creed of the Central Planner, in malevolent full bloom:

'Our portfolio actions are currently keeping 10-year Treasury yields roughly 60 basis points lower than they otherwise would be ... leading to lower long-term borrowing costs for households and firms, higher equity valuations, and other improvements in financial conditions.'

Translation: 'We suckered investors and pension funds into buying stocks at jacked-up prices ... meaning they'll be plagued with weak returns for years to come.'

One really needs a PhD to be this incredibly fucking stupid. RICO the bitch!

Wed, 06/06/2012 - 21:31 | 2501811 max2205
max2205's picture

Party like its march 2009. HeeeeHaw

Wed, 06/06/2012 - 21:43 | 2501858 max2205
max2205's picture

Party like its march 2009. HeeeeHaw

Wed, 06/06/2012 - 21:43 | 2501859 max2205
max2205's picture

Party like its march 2009. HeeeeHaw

Wed, 06/06/2012 - 21:26 | 2501800 Nid
Nid's picture

“He knows nothing; and he thinks he knows everything. That points clearly to a political career.”
? George Bernard Shaw

Thu, 06/07/2012 - 01:59 | 2502431 Assetman
Assetman's picture

I agree.  This Fed has tested its balance sheet approach to an exit strategy on a very small scale from that what might be actually required.

While they don't yet fully know the unintended consequences of behind their current "ultra-easy" policies, why would be American public feel any more confident on an exit strategy that hasn't come anywhere close to being fully stress tested?

There's a whole heaping pile of potential FAIL in those comments.

This doesn't even scratch the surface in terms of what Fed policy SHOULD accomplish (higher employment/FAIL) versus what QE is actually accomplishing (higher stock prices, lower borrowing costs, and bloated bank balance sheets.

If the Fed really wanted to spark employment (as opposed to enrich the banks) they could target policies that boost the velocity of money.  There is huge sea of liquidity out there on bank balance sheets-- it just isn't being effectively put to use because the Fed refeuses to provide the incentives for banks to circulate that credit.

Otherwise we are still spinning our wheels, sealing the fate of a growing structurally unemployed.

John Taylor is right about the pitfalls of constant Fed intervention-- and Yellen should be shining his shoes and not attaching his name to flawed policy prescriptions.

 

Wed, 06/06/2012 - 20:15 | 2501561 LetThemEatRand
LetThemEatRand's picture

Head fake.

Wed, 06/06/2012 - 20:16 | 2501567 midgetrannyporn
midgetrannyporn's picture

zirp4evah + qe3 + qe$3k4me

 

 

Wed, 06/06/2012 - 20:37 | 2501633 dwdollar
dwdollar's picture

=moreAg4me

Wed, 06/06/2012 - 20:17 | 2501570 Cognitive Dissonance
Cognitive Dissonance's picture

Thank God I don't speed read or I would have been tempted to actually read this propaganda.

Wed, 06/06/2012 - 21:13 | 2501606 Bear
Bear's picture

Not reading the whole article!!! I think your Dissonance is quite Cognitive

Wed, 06/06/2012 - 21:25 | 2501795 Quisat_Sadarak
Quisat_Sadarak's picture

I just babelfished Yellens speech
FED-Speak->to->English

And the translation was this:

The banks will be screwed if the deflation happens, so we have no choice but to bail them out again with more QE. Your FRNs will be worth a bit less momentarily. We don't really give a crap about employment -- haha suckers. Gotta go.

Wed, 06/06/2012 - 21:48 | 2501871 Quisat_Sadarak
Quisat_Sadarak's picture

For snicks, Babelfished Yellens speech with
FED-Speak->to->Palin-English

And the translation was:

Pump-baby-pump!

Wed, 06/06/2012 - 20:19 | 2501578 Squid Vicious
Squid Vicious's picture

Print away bitchez... we are suddenly losing the race to the bottom, so the dollar needs a swift kick in the nuts soon anyway...

Wed, 06/06/2012 - 20:21 | 2501580 CreativeDestructor
CreativeDestructor's picture

Rhetoric volume dialed up, action barometer dialed down. it'll be amazing to take a nap and wake up 1 year later. S&P at 661.36, etc....

Wed, 06/06/2012 - 20:24 | 2501597 midgetrannyporn
midgetrannyporn's picture

the fed has been talking out both sides of their moyl for years.

 

beige book = pack of lies

yellen = jawbone of an ass

Wed, 06/06/2012 - 20:23 | 2501592 Hedgetard55
Hedgetard55's picture

She has been a demented skank from day one. I can't say what I would like to see happen to this skeezer. OK, I will. 20 years in an all girl prison, or two deployments on the new all female crew sub the Navy is planning.

Wed, 06/06/2012 - 20:26 | 2501600 midgetrannyporn
midgetrannyporn's picture

she would like that. who wouldn't?

Wed, 06/06/2012 - 20:23 | 2501593 SwingForce
SwingForce's picture

+20pts ES

Wed, 06/06/2012 - 20:25 | 2501596 Bear
Bear's picture

"bringing forward the expected date of tightening" ... Maybe to 2021

Wed, 06/06/2012 - 20:27 | 2501602 Catflappo
Catflappo's picture

"A critical question for monetary policy is the extent to which these numbers reflect a shortfall from full employment versus a rise in structural unemployment. While the magnitude of structural unemployment is uncertain, I read the evidence as suggesting that the bulk of the rise during the recession was cyclical, not structural in nature"

 

It really is depressing that somebody so fucking stupid has so much power.

Wed, 06/06/2012 - 21:00 | 2501709 zorba THE GREEK
zorba THE GREEK's picture

"It is depressing that somebody that stupid has so much power"

 

That pretty much describes 99% of politicians too.

Wed, 06/06/2012 - 20:28 | 2501603 chump666
chump666's picture

Oversold markets are rallying, can roll with that.  But, Gov stat fudges and the Fed with their QE3 meltups...good for x2 100 points on the Dow, take it just under 13000.  If mad Mario joins the print party, Asia will freak on inflation again and buy USDs, hence setting off a new correction. 

Forget Europe, it's all Asia, they start and end the short squeezes now, not Europe or America. Add the sell on indust commodities.  Swing trades to oblivion.

Oblivion slightly priced in on bonds...3-6mths max.

Oh yeah Marketwatch writers are on drugs

Wed, 06/06/2012 - 20:44 | 2501653 Conman
Conman's picture

Can markets really be oversold if they were overbought in the first place??

Wed, 06/06/2012 - 22:17 | 2501948 chump666
chump666's picture

That is a good point.

The rally from last years lows was ridicules. This "rally" aint going to be that spectacular at all, despite the Central banks bullsh*t.  Overall, they will lose control of the situation...everywhere.  So a major panic will hit.

Any value investors deserve to be fleeced sideways.

Wed, 06/06/2012 - 20:32 | 2501615 Catflappo
Catflappo's picture

"if there were truly substantial slack in the labor market, simple accelerationist "Phillips curve" models would predict more noticeable downward pressure on inflation"

 

The reason there is not as much downward pressure on inflation as you otherwise might expect Janet is that you are printing money.  What part of that extraordinarily basic cause and effect do you not get?


Wed, 06/06/2012 - 21:12 | 2501754 Global Hunter
Global Hunter's picture

I find it frightening that as this stage of the game they can have such a strict and forthright confidence in their models such as 'simple accelerationist "Phillips curve" models'.

These people seem to be void of any kind of sense of imagination whatsoever.

Wed, 06/06/2012 - 20:36 | 2501630 Bunga Bunga
Bunga Bunga's picture

Is the FED a schoziphrenic 12-headed monster? This morning it said, economy would do so well, but now it wants to take the opposite action.

Wed, 06/06/2012 - 20:37 | 2501635 JamesBond
JamesBond's picture

More QE =  Rise in GS and JPM stocks....

 

 

Wed, 06/06/2012 - 20:50 | 2501670 fuu
fuu's picture

"We've got staying power and we're willing to use it." - Jamie Dimon

Wed, 06/06/2012 - 20:39 | 2501639 fonzannoon
fonzannoon's picture

Paging Sean Egan

Wed, 06/06/2012 - 20:42 | 2501648 Squid Vicious
Squid Vicious's picture

she's a nice down-to-earth jewish girl from brooklyn, I'm sure she has the best interests of all her USA compatriots at heart... ??

Wed, 06/06/2012 - 20:46 | 2501656 Sutton
Sutton's picture

"Bringing forward the expected date of tightening."  From Never Ever to never.

Wed, 06/06/2012 - 20:46 | 2501657 Catflappo
Catflappo's picture

"the average pace of job creation for the year to date, as well as recent unemployment benefit claims data and other indicators, appear to be consistent with an economy expanding at only a moderate rate, close to its potential".

 

So remind me of the reason for more QE again please?

Wed, 06/06/2012 - 20:52 | 2501679 MFL8240
MFL8240's picture

The clowns are back!

Wed, 06/06/2012 - 20:53 | 2501684 zorba THE GREEK
zorba THE GREEK's picture

" A highly accomadative monetary policy will remain appropriate for some time

to come",( at least until the world financial collapse )

It looks like it's peddle to the metal either to the cliff

or to the wall, so time for ZH readers to make 'appropriate'

plans, for survival, that is.

Wed, 06/06/2012 - 20:54 | 2501687 Boilermaker
Boilermaker's picture

Fuck yea!

Let's fucking go ape shit! The entire fate of humanity rides on equities.

Wed, 06/06/2012 - 20:54 | 2501689 nmewn
nmewn's picture

What does it say that our best & brightest are so predictable?

Wed, 06/06/2012 - 20:54 | 2501691 MrBoompi
MrBoompi's picture

The Fed's been devaluing the USD for amost 100 years.  They ought to know every way of accomplishing that by now.

Wed, 06/06/2012 - 20:57 | 2501700 Snakeeyes
Snakeeyes's picture

The Fed released their Beige Book saying moderate growth. Obama sends  a letter asking Americans to refinance their mortgages (as fiscal stimulus). Then Yellin' Yellen hints at QE3.

http://confoundedinterest.wordpress.com/2012/06/06/fed-says-moderate-economic-growth-and-housing-market-improvement-white-houses-mortgage-refi-for-dummies/

Wed, 06/06/2012 - 21:22 | 2501784 Bunga Bunga
Bunga Bunga's picture

Great, Obamas plan means 3 ounces of gold per year for every homeowner, for FREE!

Wed, 06/06/2012 - 20:58 | 2501701 tony bonn
tony bonn's picture

janet yellin is a financial whore....

Wed, 06/06/2012 - 21:01 | 2501708 Bear
Bear's picture

Someone actually pays her? ... you've got to be kidding!

Wed, 06/06/2012 - 21:09 | 2501743 khakuda
khakuda's picture

US taxpayers do. And we can't fire her.

Thu, 06/07/2012 - 01:05 | 2502339 The Monkey
The Monkey's picture

Actually, the Fed simply prints the money for their operations out of thin air.  I'm not making this stuff up.

Wed, 06/06/2012 - 20:58 | 2501704 Bear
Bear's picture

New star in the making .... her next movie ... "Dumber and Dumbest"

Wed, 06/06/2012 - 21:06 | 2501732 khakuda
khakuda's picture

I've always found the most compelling investments and/or ideas to be able to be expressed in a few sentences or paragraphs. When one has to BS for pages on end to prove a point or sell an idea, they typically have no clue or a bad case.

Wed, 06/06/2012 - 21:18 | 2501775 Global Hunter
Global Hunter's picture

Reminds me of undergrad unie stuff, gotta write loads of stuff with some decent references to get the prof to give you a B, B+ perhaps

Wed, 06/06/2012 - 21:06 | 2501734 dolph9
dolph9's picture

Who did this Jewess blow to get to where she is?

Wed, 06/06/2012 - 21:15 | 2501764 midgetrannyporn
midgetrannyporn's picture

joo bankers don't blow they suck.

Wed, 06/06/2012 - 21:13 | 2501740 bigwavedave
bigwavedave's picture

So.. Lets get this straight.

Fed expands balance sheet by buying MBS

Fed is now the 'owner of first resort' of x% of US housing stock

TBTF banks own the Fed

All your base are belong to us

Thu, 06/07/2012 - 13:29 | 2504529 Quisat_Sadarak
Quisat_Sadarak's picture

Seems about right....

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

--Thomas Jefferson

Wed, 06/06/2012 - 21:17 | 2501769 slewie-the-pi-rat
Thu, 06/07/2012 - 13:28 | 2504515 Quisat_Sadarak
Quisat_Sadarak's picture

x

Wed, 06/06/2012 - 21:24 | 2501779 pauhana
pauhana's picture

Hmmmmm . . .What would Guy Fawkes do?  Interesting that the 5th of November is just one day before election day.

Wed, 06/06/2012 - 21:20 | 2501782 Boilermaker
Boilermaker's picture

When does the ES start it's run up?

PPT waiting until after the Spurs game? I assume this BS is worth a 15 handle open tomorrow, minimum.

Wed, 06/06/2012 - 21:22 | 2501790 earleflorida
earleflorida's picture

Janet at the 'FED', has a syndrome called "Female Estrogen Deficiency", whilst, desperately seeking batteries for her MIA`Woody' having grown a few Bark`Wart's while being sidelined at the reserve for 'Hoof and Mouth Disease'! Question is,... can the good Dr. Bernank cure her?

Stay tuned for jellin' with the yellin ...

Wed, 06/06/2012 - 21:23 | 2501793 pmm009
pmm009's picture

Noooo, Did Janet really say that?   Come on.  They are so desperate to manipulate equity markets without having to pull a lever that they have essentially killed the market.  Even retail investors know not to be in equities and why would they.  Anyone who sat in the market for the last five months made zero, while anyone trading the obvious technical levels and the FED's defense of the 200 day moving averages could have easily made the equivalent of 80% on an annualized basis.  No wonder we have structural unemployment.  Anyone with a significant IRA-401k-403b should retire and trade the hell out of it.   The mutual fund business is scared to death of this.  They cannot even make a dime on money market funds without the fees causing a breaking of a buck, and the swaping back and forth...how could they even tell somone with a straight face not to do it, but, but be in for the long term.

Wed, 06/06/2012 - 21:25 | 2501794 GernB
GernB's picture

What happens when the deflationary pressures of a Euro-zone breakup and bank meltdowns hits the inflationary forces of fed easing? Who will win, and for how long.

Wed, 06/06/2012 - 21:25 | 2501798 HD
HD's picture

If anything it will be a few MBS - Feds hands are tied with anything else. Notice how all the central banks are suddenly keeping their powder dry - only working around the edges? I think for the first time these people are afraid they are losing their grip on the situation and preparing for much darker days ahead.

Wed, 06/06/2012 - 21:32 | 2501802 junkyardjack
junkyardjack's picture

Bullish, BTFD

Market is being manipulated, it will push up to run out some shorts.  Once they are out there isn't really much to be bullish on so the market wil crash again.  We're in a pretty clear sideways pattern

 

“I never buy at the bottom and I always sell too soon" - Jesse Livermore

Wed, 06/06/2012 - 21:33 | 2501826 besnook
besnook's picture

c'mon, print, baby, print! a 50% haircut is what the dollar needs.

Wed, 06/06/2012 - 21:33 | 2501829 SmoothCoolSmoke
SmoothCoolSmoke's picture

$4 gas just in time for the 4th of July?   In an election year? I can't see it.   They're just jaw-bone'n up the markets.  Jack-Ass-Holes.

Wed, 06/06/2012 - 21:37 | 2501837 djsmps
djsmps's picture

I know that I know nothing, but how can the Fed pursue the same policy over and over again, when it hasn't worked?

Wed, 06/06/2012 - 21:45 | 2501865 Cabreado
Cabreado's picture

Consider the source...

For more fun, consider intent.

It's working just fine for some persons.

 

Wed, 06/06/2012 - 21:37 | 2501839 Cabreado
Cabreado's picture

I believe all the yellin should be at the 535.

See how far down We are, that We've forgotten?

Wed, 06/06/2012 - 21:38 | 2501843 JR
JR's picture

The SYMPTOMS of our problem are unemployment, budget deficits, foreclosures, bank fraud, poverty, inflation, erosion of the middle class, to name just a few, says Rudy Avizius on Market Oracle. “The disease is our monetary system.”

Wed, 06/06/2012 - 21:51 | 2501876 adr
adr's picture

Janet Yellen, you are a fucking moron. Here's a nice SAT verbal test question:

Albert Einstein is to one of history's most itelligent people, as …… is to the least intelligent human that ever lived.

Answer: Janet Yellen

Other acceptable answers : Ben Bernanke, Barry Sottero (The Obamanator), Timothy Geitner, 99% of elected government officials.

Wed, 06/06/2012 - 22:13 | 2501940 Hedgetard55
Hedgetard55's picture

Krugman, Cramer, Biggs, Liesman, all would be acceptable answers, and I could go own and own.

Wed, 06/06/2012 - 22:19 | 2501953 Atomizer
Atomizer's picture

 

 

Janet Yellen exclaims.. We must present our case so all focal points can understand the dire reactive need, understanding and collectively support in financing our next crisis. 

Let me begin by reinstating my key points and underscoring possible repercussions if monetary stimulus action is not taken immediately. 

Our short term projections indicate blah, blah, blah.. 

Our long term planning goals has presided on our Obama Care excel spreadsheets, though developing new revenue cash infusions based on healthcare mandates. As you’re aware, cash inflows have been at an all-time low. If the Supreme Court of the United States deems our program as unconstitutional, long term planning goals will not generate the needed funds to support new 2013/2014 spending plan provisions.  

Closing Statement from Yellen: Tonight, we ask everyone in this audience to either Twitter or Facebook ideas on how to execute the course of program implementation. Too quit now will jeopardize our 30 year span of operations.  The charter asks for your assistance achieve the collective mission.

Wed, 06/06/2012 - 22:23 | 2501960 Everybodys All ...
Everybodys All American's picture

Want to know who Janet Yellen reminds me of ... Nancy Pelosi. Can you imagine her being the Fed chairman someday? This country is truly in trouble.

Wed, 06/06/2012 - 22:24 | 2501967 Bansters-in-my-...
Bansters-in-my- feces's picture

Delusional FuckTard......

That about covers it.

Wed, 06/06/2012 - 22:43 | 2502008 Downtoolong
Downtoolong's picture

"scope remains for the FOMC to provide further policy accommodation either through its forward guidance or through additional balance-sheet actions"

This is the impressive sounding mumbo jumbo they tell us. Meanwhile, their email to Goldman tells it stratight; "QE3 is on, get long now!"

 

Wed, 06/06/2012 - 22:50 | 2502029 JR
JR's picture

"When the Federal Reserve act was passed, the people of the United States did not perceive that... the United States were to be lowered to the position of a coolie country which has nothing but raw materials and heavy goods for export; that Russia [China, India...] was destined to supply the man power and that this country was to supply financial power to an international superstate -- a superstate controlled by international bankers and international industrialists acting together to enslave the world for their own pleasure."

Rep. Louis T. McFadden, June 10, 1932.

Wed, 06/06/2012 - 22:59 | 2502043 Let The Wurlitz...
Let The Wurlitzer Play's picture

It doesnt surprise me that janet yellen is advocating an easy policy since she is the biggest ho on the federal reserve.

 

Wed, 06/06/2012 - 23:06 | 2502070 Freewheelin Franklin
Freewheelin Franklin's picture

Anybody have a spare telephone pole to shove up this bitch's ass?

Wed, 06/06/2012 - 23:24 | 2502098 AurorusBorealus
AurorusBorealus's picture

Oh look, she has models and statistics and everything... must be science... just like physics even.

Wed, 06/06/2012 - 23:38 | 2502119 TheObsoleteMan
TheObsoleteMan's picture

What moron didn't see this coming? What else can they do besides print {or, expand their balance sheet}? More of the same is all they have left in their playbook.  The decision was a no-brainer for them back in 2007. They had a simple choice: Save the banks, or save the currency. They chose the former of course. What else would you expect a banker to do? The rest of us do not matter in their world. Currency be damned. I have a sickening feeling they are about to go all in by next year.Just like a junkie, bigger and bigger "fixes" will be required to get the same high, and more often too. Again I ask, WHO DIDN'T SEE THIS COMING? If your not into gold/silver by now, when?

Thu, 06/07/2012 - 07:03 | 2502685 Soul Train
Soul Train's picture

Central planning - the federal system in the USA is repugnant. ie - it sucks.

Do NOT follow this link or you will be banned from the site!