Looser for longer at the new Fed

At Quadrant Online I have some analysis and some true life adventure about my meeting with Janet Yellen at an OECD meeting back when I represented Australian employers at meetings in Paris. It’s called, On Planet Janet the spending never ends about the nominee to replace Ben Bernanke. Still, it is this quote about Yellen that is probably most telling and accurate and therefore ought to be all the more disturbing for that:

The Fed will be looser for longer. The FOMC will continue to print money until the US economy creates enough jobs to reignite wage pressures and inflation, regardless of asset bubbles, or collateral damage along the way.

If you’re the sort to be cheered up by that, then it’s all good news. If on the other hand you have a less sanguine view, there is this, also quoted but from another source:

As the perfect storm approaches, the regime will address it the only way it knows how — as a revenue, rather than a spending, problem.”

“…as the regime becomes more desperate, unwilling to make cuts to anything other than the military, it will look for opportunities to increase revenue, all the while being indifferent to, or ignorant of, the negative economic impact of taking more money out of the private sector and transferring it to the government. Like throwing gas on a fire to put it out, it has the opposite effect.

The perfect storm indeed.

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5 Responses to Looser for longer at the new Fed

  1. wal1957

    Will they ever learn….. I think not!

  2. Sirocco

    Decades ago, way back in the last century, there was a common expression “Rich Western Nations”. You don’t hear that phrase anymore. They have all been bankrupted by the socialists.

  3. Karek

    Good article. I was interested in the list you provided of measures the government migth take. I would have thought the first one was 401Ks.

    Dangerous times indeed. Just remember, it’s America not here. Push the people far enough and they’ll vote from the rooftops.

  4. Jim Rose

    She is an old keynesian as before.

  5. Zatara

    Karek the reason why IRAs but not 401Ks is that Federal Law requires IRA to have ‘Custodians” or financial institution who hold and execute actual control over the funds. Therefor if the government wants those funds they just put a gun to the head of those institutions and tell them to hand them over. 401Ks are a completely different animal.

    401Ks are essentially company sponsored retirement plans. They execute total control over those funds and may, or may not, have them or some portion of them in an account with a bank, broker, etc. It is more likely that the money is invested in real estate, tax liens, micro-loans, etc. If the government wants that cash they better bring lots of accountants, lawyers, and a bag lunch because they are going to have to go to court over each one of them…. after they somehow manage to prove what’s in them (If the 401K is worth less than $250,000 there is no reporting requirement, and if it is over that who is to say what they are worth? What accounting methods are to be used? Depreciation?) in all, a total bucket of worms.

    How is that so you ask. Simple. IRAs are created and controlled via tax law and the IRS. 401Ks are created by labor law and nobody in Washington has the political clout to cross the union by screwing with them.

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