Janet Yellen’s Fed Has The Makings Of A Potential Disaster

Forbes ^ | 11/06/2013 @ 8:00AM | Keith Weiner

[Olog-hai]

President Obama has nominated Janet Yellen to be the next Federal Reserve Chairman. We need to know what she stands for if we want to predict what the central bank will do to us next. Clearly, Yellen will continue Bernanke’s Quantitative Easing, but her papers and speeches show that she is quite different from her predecessor. …

… Yellen is all central planner. She gets her ideas, not from Friedman, but from John Maynard Keynes. Keynes did not trust markets, preferring government intervention. His prescribed solution to recession and unemployment is for the government to increase spending and the central bank to reduce interest. Today, we call this form of governance “cronyism,” but it once had another name. “Fascist economics” is how Italian dictator Mussolini approvingly characterized Keynes’ work.

Yellen is even more radical than Keynes, and believes intervention isn’t just for downturns. …

[Cowboy Bob]

If you like ObamaCare, you’ll love YellenCare! Just what the economy needs...

With ObamaCare, I would hope that someone in the Senate step in and blocks the nomination - just to rub Obama’s face in it.

[MestaMachine]

Everything about this administration has the potential for disaster. That is AFTER the disasters they have already caused.
oscama is now out to finish us off. The damage he has already caused is incalculable.

[willywill]

she pretty much said qe forever. and why not, it transfers wealth from the Christian middle class to new York.

[pepsionice]

Let’s put this in the right prospective.

Ben Bernanke couldn’t get another term with the fed because he saw the low fed rate “experiment” as a failure. The nation wasn’t returning to a viable success.

The low fed rates supported the failed banks of the US. If you adjusted the rate...most would be in serious trouble and start an eventual collapse trend. The truth is...since 2008, we haven’t really turned the corner. We just marginally solved enough of the issue to pretend good times are just inches away.

So enters Yellen. She knows the script. Easy and low fed rates will prevail. Banks will continue on...marginally surviving and wondering how they will ever exit the mess created (and still as chaotic as 2008).

At no time in US history...have rates stood this low, for so long, and there’s virtually no data to say when or how they’d ever go back to “normal”. In fact, if you questioned any of the brilliant dimwits who appear nightly on the business networks....they are mostly amazed that we are still locked into this and no one will dare suggest a plan “B” in public.

Like it or not....through 2017...Yellen is around and running this plan. When someone finally demands that rates return to normal....you might as well pull your investment funds for a couple of years and expect another financial mess to occur. Bank failures are just a breathe away.

[genghis]

potential??
wow
the last time a democrat ran the fed inflation was 17% and going thru the roof.

[Vince Ferrer]

If interest rates are low, it benefits some people, but hurts others. It benefits people taking out loans, but hurts the ones making loans. This especially hurts pension plans, because they like to invest conservatively with a known rate of return. Many pensions are underfunded and require 8% or more to be solvent. There is almost no way to get that return without taking gigantic risks, which they are probably prevented from taking.

The end result of this is that a lot of pension funds, especially public workers, will go bust. This is not inflationary, it is deflationary.

The inflationary effects of an increasing money supply depend upon the money circulating. The velocity of money is crashing, and so the increase in the money printing has not been felt. This is because people are hoarding money. Having pension funds go broke will do nothing to increase the velocity of money. It will cause more hoarding to make up for the expected losses.

[RobbyS]

Don’t blame it all on Carter. Nixon cut loose entirely from gold and Ford was already talking about Whip Inflation Now.

[bicyclerepair]

This “fundamental transformation” has been happening for decades.

0 just kicked in the turbo.

[pepsionice]

During the 1980s....my dad and other older gentlemen from that era....made great off the CD rates of the day....near almost six percent.

Today? You can barely get one percent. None of these older guys are making anything off CD’s....which were the prime method of saving money prior to the 1990s.

An older gentleman from this rural community where I grew up....was a carpenter for the school system. He’d lived a decent life....one wife. The house was what he personally built in the early 1960s. Over his entire life, he and the wife ate primarily off the garden and his small farm. He owned a total of five pick-ups over a eighty-year life-span. When he passed away five years ago....the relatives were shocked to find that he had over a million in his assets. All of that....came from a simple lifestyle, and six-percent CDs.

Today? It will never happen ever again....at least as the dynamics of the Fed are in play as they are.

[RobbyS]

Some people—the 1%— aregetting richer and richer. Otherwise it would not be happening. They control governments.

[wiggen]

the other day CSCO reported earnings and the stock went lower. What to do? A few billion stock buyback of course. Where does that money go? Calpers? Big funds running money mostly for the wealthy. Illinois pension. (didn’t look up specific holders but it needn’t be CSCO). So the money is essentially transferred from the balance sheet of some huge corporation to either the already wealthy or to plug up holes in some battered underfunded pension plan. It never closes those holes mind you but it does give politicians cover to grant even more raises. The money then is locked up. It’s a loop. When they speak of the velocity of money we have none. Thats why jobs remain so scarce.
The govt needs to change tax codes so these companies hire and not just transfer the money into a rather closed system. Give tax credits for middle class salaries. No credit under 40k. Escalate up to 100k. Drop it off again up to 150k. Discourage the 5mm and above payouts.
Get the money into the citizens hands. They’ll spend. The nation will grow. Does the government lose anything? No, the pay gets taxed but the natural benefit is getting people off of the governments teat. This is win win and so painfully obvious that one almost has to consider the government likes things just as they are.

[Caipirabob]

Does anyone doubt that this is the reason why she’s there?

[4Liberty]