Yellen: "I Don't Believe We Will See Another Crisis In Our Lifetime"

If there was any confusion why the Fed intends to keep hiking rates, even in the face of negative economic data and disappearing inflation, it was put to rest over the past 2 days when not one, not two , not three, but four Fed speakers, including the three most important ones, made it clear that the Fed's only intention at this point is to burst the asset bubble.

First there was SF Fed president John Williams who said that "there seems to be a priced-to-perfection attitude out there” and that the stock market rally "still seems to be running very much on fumes." Speaking to Australian TV, Williams added that "we are seeing some reach for yield, and some, maybe, excess risk-taking in the financial system with very low rates. As we move interest rates back to more-normal, I think that that will, people will pull back on that,

Then it was Fed vice chairman Stan Fischer's turn, who while somewhat more diplomatic, delivered the same message: "the increase in prices of risky assets in most asset markets over the past six months points to a notable uptick in risk appetites.... Measures of earnings strength, such as the return on assets, continue to approach pre-crisis levels at most banks, although with interest rates being so low, the return on assets might be expected to have declined relative to their pre-crisis levels--and that fact is also a cause for concern."

Fischer then also said that the corporate sector is "notably leveraged", that it would be foolish to think that all risks have been eliminated, and called for "close monitoring" of rising risk appetites.

All this followed the statement by Bill Dudley, who many perceive as the Fed's shadow chairman, who yesterday warned that rates will keep rising as long as financial conditions remain loose: "when financial conditions tighten sharply, this may mean that monetary policy may need to be tightened by less or even loosened.  On the other hand, when financial conditions ease—as has been the case recently—this can provide additional impetus for the decision to continue to remove monetary policy accommodation."

And finally, it was Yellen herself, who speaking in London acknowledged that some asset prices had become “somewhat rich" although like Fischer, she hedged that prices are fine... if only assumes record low rates in perpetuity:

Asset valuations are somewhat rich if you use some traditional metrics like price earnings ratios, but I wouldn’t try to comment on appropriate valuations, and those ratios ought to depend on long-term interest rates,” she said.

It was not all doom and gloom.

Responding to a question on financial system stability, Yellen said post-crisis regulations (and $2.5 trillion in excess reserves which just happen to be fungible and give the banks the impression that they are safe) had made financial institutions much “safer and sounder.”

"Will I say there will never, ever be another financial crisis? No, probably that would be going too far. But I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will."

Some were quick to compare this statement to Neville Chamberlain infamous - and very, very wrong - 1938 prediction of "peace in our time."

Others drew comparisons to a similar bold prediction by Ben Bernanke, who in 2014 predicted during one of his $250,000/hour speeches that "rates would not normalize during my lifetime."

Yet others, who noted Janet Yellen's 70 years of age, asked her to "define our lifetime." But perhaps the most actionable question, if indeed valuations at 2420 on the S&P are somewhat rich, would the Fed be so kind as to disclose what level in the index does the central bank consider no longer rich.

As for Yellen tempting fate, today's LOD market close may just be the beginning of how much more Janet Yellen has to live.


GUS100CORRINA consider me gone Tue, 06/27/2017 - 18:38 Permalink

Yellen: "I Don't Believe We Will See Another Crisis In Our Lifetime"My response; I am without words!!! This LADY is NOT GOD although she thinks she is the goddess of finance. The FED has created a MESS OF EPIC PROPORTIONS because of their utter and absolute incompetence.Proverbs 16:18(KJV)Pride goeth before destruction, and an haughty spirit before a fall.=====Observation: Let's think outside the BOX for a moment. i want to ask a question. Why can't the US Government just seize the FED nationwide and transfer all FED assets to the US Treasury effective immediately? Yes, that is right. The FEDs entire balance sheet can be transferred to the US Treasury. The US has the weapons and the fighting force to pull it off.  All federal reserve employees are detained and computer equipment seized. It is key that the US Government be ready to step in with people to take control of all accounts, technology and monetary actions of the FED. All accounts are managed by US Treasury personnel.  BANKS now under control of US Government as well. Money creation authority now given to the US Treasury just like JFK's executive order 11110. The FED is finished in a little under 24 hours. US Government now has control of all FED assets. All non-essential FED personnel are fired. Those who protest will be arrested and detained. Those who get violent, will be dealt with in the appropriate manner.THE FED IS DEAD!!

In reply to by consider me gone

Endgame Napoleon GUS100CORRINA Wed, 06/28/2017 - 08:10 Permalink

The Fed works for the top 1% of business owners and the non job-creator investors in the economies of foreign countries, in addition to the top 20% of dual-earner families and not for the bottom 80% of households in the USA, the majority of whom have zero stock investments and modest or few assets.

Some have negligible stock investments that do not compare in any way with the Social Security they receive after age 65. With the small amount that ordinary Americans have in 401Ks, they could never retire. It would last no time. Due to our corrupt Unemployment Compensation system, I have seen multiple people in temp jobs, saying they were living on 401K money between low-wage gigs. Yet, those who "work the system" stay on UC over long periods of time and with multiple streams of other unearned income.

Invariably, those living on 401K money between churn jobs were the hard workers, not the slacker, back-watching moms with their spousal incomes or their layers of welfare and Child Taxfare Credits up to $6,269 for reproducing while single, taking off from work all the time in absenteeism cliques for good ole moms.

Those girls know how to "work the system." Momma-clique managers often prefer them due to 1) the fact that they can afford to work for low pay because of their unearned income for womb productivity, and 2) momma manager takes turns taking off from work with her momma-clique staff.

If the Fed and other arms of government work for any group in the bottom 80%, it is the womb-based, fake feminists who are required to work 20 hours per week in exchange for free rent, food, energy and other major household bills compliments of Uncle Sam, in addition to their taxfare reproduction rewards from the US Treasury Department. This group is not among those with high voter turnout.

The bottom 80%ers that government and private--but government-affiliated groups--put last in every single action turn out to vote far more, like the single, childless citizens over 40 years of age who constitute 28% of the US population. But elections have little bearing on this group of 80%ers and others, particularly when they are not wealthy or in so-called "working families." Unless you are affluent or poor with high womb productivity, you are always voting 100% in the economic interests of others.

In reply to by GUS100CORRINA

merizobeach GUS100CORRINA Wed, 06/28/2017 - 08:07 Permalink

"Money creation authority now given to the US Treasury just like JFK's executive order 11110."How many folks have actually read that order?It was issued before my time, and I can't say with certainty that history hasn't been scrubbed, but here is the official version of EO11110 as it exists today:Executive Order 11110—Amendment of Executive Order No. 10289 as Amended, Relating to the Performance of Certain Functions Affecting the Department of the TreasuryJune 4, 1963 By virtue of the authority vested in me by section 301 of title 3 of the United States Code, it is ordered as follows:SECTION 1. Executive Order No. 10289 of September 19, 1951, as amended, is hereby further amended --(a) By adding at the end of paragraph 1 thereof the following subparagraph (j):"(j) The authority vested in the President by paragraph (b) of section 43 of the Act of May 12, 1933, as amended (31 U.S.C. 821 (b)), to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates, to prescribe the denominations of such silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption," and(b) By revoking subparagraphs (b) and (c) of paragraph 2 thereof.SEC. 2. The amendment made by this Order shall not affect any act done, or any right accruing or accrued or any suit or proceeding had or commenced in any civil or criminal cause prior to the date of this Order but all such liabilities shall continue and may be enforced as if said amendments had not been made.JOHN F. KENNEDYTHE WHITE HOUSE,June 4, 1963 Source

In reply to by GUS100CORRINA

MagicHandPuppet Jim Sampson (not verified) Tue, 06/27/2017 - 17:35 Permalink

The hubris with regard to their complete control over the ecomony is breathtakingly shocking.Sure, they probably have their Plunge Protection Team robots all dialed in with algorithms that make self-driving cars envious.  But one day, possibly in the near future, when a gaggle of black swans decide to cross the road, faced with only collisions as the outcome possibilities, they will not hesitate when having to choose who to sacrifice for their "greater good".  (Hint: They will stop at nothing to protect themselves and their most wealthy allies)

In reply to by Jim Sampson (not verified)

yogibear Arnold Wed, 06/28/2017 - 07:48 Permalink

After Bernanke realized how he messed everything up, he wanted out. Watch out when central banks get so arrogant. Their blinded by their power. Disortions can only cause more damage somewhere else. The fed put all of it's hopes on the 20% while crushing the 80%. A high price to pay as the 20% start feeling the trickle-up poverty.

In reply to by Arnold