On The Subject Of Inflation, Janet Yellen Always Brings The Comedy

Forbes ^ | Jun 12, 2016 | John Tamny

[expat_panama]

“Don’t be afraid to say to anything because no matter what you say, no matter how idiotic it is, it has already been said by some eminent economist.” – Ludwig von Mises...

...the first laser printer (Xerox Star 8010) set consumers back $17,000 in 1981...

...the norm in a free economy... ...the very rich serve as “venture buyers” since only they have the means to purchase what is both expensive and unproven... ...luxury items down to prices that we can all afford.

The first ball-point pen cost over $12, the first mobile phone nearly $4,000, while the first...

...logical and historically proven seemingly has no influence inside the Federal Reserve. Consider the recent comments of Janet Yellen, Chairman of the Fed... ...reiterated her belief that economic growth is the source of rising prices.

Explaining her rationale for raising the interest rate at which banks lend to one another, “If incoming data are consistent with labor market conditions and inflation making progress... ...I expect, further gradual increases...

...To understand why Yellen is wrong, we need only get back to basic economics. First off, what drives demand in an economy? Production is the obvious answer. The rich can buy more precisely because they’ve produced a lot more of economic value...

...easy to see why Yellen’s demand-side view of the economy is so blindingly incorrect. Production comes first, demand second.... ...What about supposed labor shortages that have Yellen transfixed? ...

...Janet Yellen thinks economic growth is the cause of inflation. Yet by her very own somewhat confused definition of inflation, economic growth is plainly its biggest enemy. Yellen gets things backwards, but is funny in her confusion. She’s not alone at the Fed with these views... ...rather than flatter the incompetent by hanging on their every word, we should instead just laugh.

[expat_panama]

 

A happy Monday morning to all!  Last week ended w/ major stock indexes falling a % in rising trade and this morning's futures traders see price trends worsening today another percent. Likewise for metals but they've been inching back up, gold/silver now at $1,285.55/$17.40.

--and:

Robots Will Be More Polite Than Humans - G. Clay Whittaker, Daily Beast
Hedge Funders Work to Stanch Loss of Clients - Alexandra Stevenson, NYT
The Stupid Party Keeps Getting Stupider - Steve Moore, Washington Times
Trump vs. Clinton Taking Its Toll On the Economy - Daniel Gross, Fortune
Without China, There's No Christmas In the U.S. - Justin Fox, Bloomberg

That 'Trump vs." really needs posting, they're blaming the horrible econ on Trump --already!

[Starboard]

Is the Fed ever right about anything?

[expat_panama]

imho it’s not the Fed, it’s Yellen. Looking strictly in terms of hard numbers we’ve been a lot better off w/ the Fed doing monetary policy. Yellen’s problem is she’s (keeping it polite) an underachiever...

[Starboard]

If you care to look into it, the Fed has an amazing track record of being wrong.

Yellen is very political. But then again, virtually everything in Washington DC is.

[CodeToad]

Yellen is a coward. She is afraid to change anything or make a decision. She talks a good game but it is a game of doing nothing and that is easy.

[Mase]

Yellen’s rise to Fed Chair is a testament to the power of affirmative action and the truth of the Peter Principle.

[palmer]

First off, what drives demand in an economy? Production is the obvious answer. The rich can buy more precisely because they've produced a lot more of economic value

Common sense. Some people still think demand is driven by "confidence" or ease or ability to borrow. Those can accelerate or decelerate demand but only in the bubble sense. Attempts to artificially spur demand, i.e. from anything other than savings or production, are doomed.

[expat_panama]

...care to look into it, the Fed has an amazing track record of being wrong....

Reality is what it is and prices are what they are regardless of whoever looks or doesn't look into it.  It's always possible to come up w/ reasons to justify a cherished belief, but when it comes to money we're forced back into reality. 

What we got is that the Fed cannot control the U.S. economy, that's pure political fantasy and most folks who know what they're doing understand it.  What the fed was created for and what it does well is it acts as a lender of last resort to prevent bank failures and it carries out monetary policy ("coin money and regulate the value"). 

What happened in 1913 when the FR laws were passed was that a process began w/ a lot of changes.  As far as inflation goes dumping the precious metals certificates in the 1930's, the FOMC, and having a Fed run monetary policy altogether put paid to the wild price swings of decades past.

Beyond all the gold bug nonsense most people prefer stable prices, and while Yellen will probably go, the Fed will probably stay.

[expat_panama]

Those are my thots too, My hope is that PC poison’s first set back will be Hillary’s conviction and the second will be Yellen’s retirement.

We’re in sore need of competence.

[expat_panama]

...afraid to change anything or make a decision.

That may not be cowardice as much as simple lack of ability.  Her leadership failures are is in severe contrast to previous chairmen who always seemed to be willing and able to get everyone focused on the the same goals in working through the same reality.  Yellen seems to like allowing goals and opinions to be more, well, diverse...

[Pelham]

As you say the Fed’s primary reason for being created was as lender of last resort and to control monetary policy- a ‘flexible’ monetary policy was a bigger deal when agriculture was a larger part of the economy, and the demand for money and credit moved with the planting cycle.

I’d like to see the Fed using some sort of peg to gold. I believe that Volcker may have been doing that during the Reagan years.