Yellen Admits The Fed Depends on Stock Prices When Determining Rate Hikes

A few short years ago, it was considered tinfoil hat conspiracy theory to say that the goals of the Fed and their QE programs were to boost stock prices, real estate prices, and basically almost every other asset class.

Then slowly, years later, the MSM and others began to realize that it was the truth. You even had the likes of former Fed Governors saying so, Richard Fischer, Thomas Hoenig, Charles Plosser, and Jeremy Stein. So fast forward to today, where during the FOMC press conference, Yellen said "Fed is taking into account movements in asset prices in deciding rate hikes." Wait what?

As a reminder, in June of 2016, Yellen said that the Fed does not target stock prices, and 1 year later is saying that they do. This is not the first time, nor will it be the last, in which the Fed has lied to the American people and backtracked on previous statements. Yet no journalist in the room dared to ask her about such a statement. 

But, that wasn't the most insane thing that happened during today's presser. Yellen earlier in the presser had said that weak inflation was a mystery to her and the Fed, and that they do not fully understand inflation. To put the stupidity of such a statement into perspective, the Fed, which employs thousands of Ph.D economists and dictates monetary policy, just openly admitted they literally have ZERO clue about economics.  

Another small bit that caught my attention, was that as Yellen was concluding her prepared remarks, in which she talked about the wind-down of stimulus and the balance sheet and how great the economy was, her final statement in her prepared remarks was "as we stated in June, the committee would be prepared to resume reinvestment's if a material deterioration in the economic outlook were to warrant a sizable reduction in the federal funds rate." Pure comedy once again.

But no worries, stocks  finished the day higher, back at fresh record highs, with a fresh new high print for the Shiller PE at 30.70, and the VIX below 10 at 9.78. All is well. 


onthedeschutes Wed, 09/20/2017 - 16:43 Permalink

Bernanke said it long before Yellen admitted it.  Bernanke said "There is no better means of boosting the overall economy than by a rising stock market".  So Yellen's admission should come as no surprise. 

philipat onthedeschutes Wed, 09/20/2017 - 23:09 Permalink

So what she is saying is essentially that if after manipulating all "markets" and eliminating true price discovery, the Fed still cannot make the "markets" do what it wants, it will then change monetary policy. Both aspects of that are not only wrong but are also not part of the Fed'd mandate and are, in many respects, either of questionable legality or completely illegal.

In reply to by onthedeschutes

onthedeschutes philipat Thu, 09/21/2017 - 07:05 Permalink

Agreed.  Our broken congress (spineless, self-serving, and ignorant) allotted unprecedented power to the FED in the wake of the 2008 crisis.  Since then, despite being barred from participating in the markets directly, the Fed now has the means to use foreign central banks to do their bidding.If you have not already done so, I recommend reading The Creature From Jekyll Island.  All this BS you hear, see, and read in the news will all start to make sense.

In reply to by philipat

Kidbuck Wed, 09/20/2017 - 18:37 Permalink

Fine, if that is the way the bitch sees it. Let the CPI be solely determined by stock prices. I want a true COLA that means something.

Herdee Wed, 09/20/2017 - 19:00 Permalink

Inflation = printing currency. The flaw in the current system is that it cannot tolerate deflation. It must have exponential growth of debt endlessly to survive. Government deficits depend on unlimited abuse of the environment and growth of American Corporations. The Fed will succeed eventually at creating not just inflation but hyperinflation. The U.S. must do what Japan has done but on a far greater scale so that government debts look small once again and asset prices go to unimagineable levels. There's no choice except to go bust.

slightlyskeptical Herdee Wed, 09/20/2017 - 22:02 Permalink

No choice if you want to continue under the current paradigm. Plenty of choices if you are willing to endure drastic change in the money system and put the current beneficies off the gravy train. Go to a non debt based system backed by gold, Use a floating fix for the price of gold so when the currency expands the price of gold goes up and when it shrinks the price goes down.  Calculate using a simple formula currency face value / oz of gold = price of gold. Eliminate taxes. Print money instead. 

In reply to by Herdee

Clowns on Acid Wed, 09/20/2017 - 19:24 Permalink

NOT one "journalist" asked Yellen a real interest rate question. When Bernanake took a question form Tyler D. years ago.... the Fed learned...Do NOt Take questions from anyone except the financial sheep dressed as journalists.Even Faux News will not ask trhe Fed real interest rate questions. But I bet that Russia and China will. 

. . . _ _ _ . . . Wed, 09/20/2017 - 20:32 Permalink

Then yield thee, coward,And live to be the show and gaze o' the time:We'll have thee, as our rarer monsters are,Painted on a pole, and underwrit,'Here may you see the tyrant.'Macbeth - Act 5, Scene 8

Davidduke2000 saldulilem Thu, 09/21/2017 - 01:08 Permalink

not american stocks, central banks buy other country's stocks except japan where they print money in unlimited amount like all western central banks but they can buy the stocks from their own country. remember the us central bank bought crap from the mortgage fiasco and this is the bulk of their assets, now old yeller says she was to thin out the portfolio by $2 billion, she may get $200,000 for it, but it does not matter, she will prints $ billions more, it's free unlimited money.

In reply to by saldulilem

ilovetexas Thu, 09/21/2017 - 00:44 Permalink

The best job without a college degree is politician. In that way, you can earn almost unlimited income without anybody knowing it. It's out of that chart!

Davidduke2000 Thu, 09/21/2017 - 01:03 Permalink

interest rates are supposed to be decided by the market not by fraudulent bankers, it is now obvious that the free market principle is dead and prices are dictated by the politburo in washington and  the fraudsters on wall street and the central banks.I miss the old west days when you can challenge anybody to a shootout, I would have brought back the free market quickly as I am excellent and very quick  on the draw.  

Hugh Mann Thu, 09/21/2017 - 05:06 Permalink

 The Fed Depends on Stock Prices When Determining Rate Hikes Layman's Terms: The Federal Reserve manipulates all of the markets. They can do pretty much whatever they want since they create money from thin air. It's one huge counterfeiting operation.

Son of Captain Nemo Thu, 09/21/2017 - 08:01 Permalink

"Yellen Admits The Fed Depends on Stock Prices When Determining Rate Hikes"

But that's NEVER supposed to happen because we have rules that separate speculators from "other"... Oh wait a minute?!!!

surf@jm Thu, 09/21/2017 - 09:46 Permalink

The FED is nothing more than a political animal......If they cared one iota about economic conditions, then they would not do the things they do......Devaluing the fiat currency to provide a backdoor tax on citizens, and pumping up the stock market to try an prop up government pensions, are all political tools......