Awareness of Fed Credibility Problems Going Mainstream

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By Clint Siegner

The nation’s pre-eminent central planners just held their annual gathering at an exclusive resort just outside Jackson Hole, Wyoming and discussed how to interfere even more deeply in markets. In a speech entitled “The Federal Reserve’s Monetary Policy Toolkit: Past, Present and Future,” Fed chair Janet Yellen outlined why zero interest rate policy (ZIRP), purchases of toxic mortgage securities, and monetization of Treasury debt just aren’t adequate. Officials must add negative interest rates (NIRP) and purchases of even more sketchy assets to their “toolkit.”

Yellen has spent more than a year floating the idea of negative rates, so it is no surprise she is hustling the ludicrous policy once again. In fact, very little of what she said Friday is new. It was the usual mess of contradictions.

She started with a familiar trope about the economy being close to escape velocity. The Fed chair said she expects to wind down stimulus soon. She then followed by admitting the Fed is currently in a lousy position for handling the next crisis or downturn. Given interest rates are already near zero, officials would need to push them into negative territory. And they should consider buying other types of assets.

We also know from prior statements that Yellen views “helicopter money” is a legitimate tool, an extreme measure which entails printing money and dropping it directly into the hands of consumers.

Many question whether the arrogant and “enterprising” bankers at the Fed actually recognize some limit on what they can do. Regardless, Yellen didn’t specify what she had in mind so we are left to speculate. Maybe she thinks they should buy stocks. Or perhaps she wants to throw another life preserver to Wall Street by sopping up failing subprime car loans or bad oilfield debt.

If there was anything new and interesting last week it was an article by Jon Hilsenrath, who covers the Fed for the Wall Street Journal. It is safe to say he represents the establishment view. At long last, there are signs that disdain for the Fed is moving beyond the community of precious metals investors and free marketeers and into the mainstream.

Hilsenrath suggests the “Once-revered central bank failed to foresee the crisis and has struggled in its aftermath, fostering the rise of populism and distrust of institutions.”

He runs through just how badly and how often Fed officials have missed the mark with regards to forecasts. He talks about flawed models which overlooked important variables. And he quotes Fed officials expressing self-doubt, for example wondering if today’s low interest rates may actually be encouraging people to save more instead of borrowing more as hoped.

It’s a long way from being a thorough critique of a more complete list of Fed sins listed here:

  • The cozy revolving door with Wall Street banks.
  • Paying triple-A prices to bulk buy train loads of these banks’ worst kind of garbage mortgage securities.
  • Steering trillions of dollars worth of Treasury purchases through the banks and paying them huge fees instead of buying direct from the Treasury.
  • The complete failure of the Fed, as the chief banking regulator, to hold any senior bank executive accountable for pervasive fraud and cheating their own customers.
  • Waging a war on savers with zero interest rates, which impoverish seniors, blow up pension plans and distort capital markets – all to stimulate borrowing.

But Hilsenrath’s critique is also a long way from the religious reverence the mainstream and the financial press lavished on the Fed in years past. So that’s a start!

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The bottom line is Yellen is clearly ready to implement even more destructive and bizarre policy tools. Her ideas for restoring prosperity include forcing savers to pay their banks to hold their savings and printing up money to buy an even wider array of whatever junk Wall Street would like to sell.

Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals‘ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

  • per sigurd hansen

    wow they are crazy,nutjobs all of them.

  • cellaphaneman

    I do not question their idiocracy. The unholy baphomet crowd has stolen the health ( bogus medicine, vaccines and gmo ) and the wealth of the world. Their pump and dump 7 year plan is a failed policy.
    JFK got it right and so did ‘ol Hickory.
    USURY is unChristian.
    TAXATION is THEFT.
    ICELAND the Bankers.

  • nimbii

    I support an audit of the Fed, truly ‘federalizing” it and moving it under the Treasury Department.

    BUT, who would run the show at Treasury?

    HOW would they run it and would they be any better than the brigands and scoundrels at the Fed now?

    Need some imput.

    Thanks.

    • per sigurd hansen

      your system is broken and needs to be changed.
      start over again on “level one” and try to let the people whos land it is have a say,but first you must stop the genocide on your First Nation Tribes of course.
      then write your bill of rights again or use the old one as the law.
      but first you got to show that you are a country were the law is for everyone and punish those who sold their soul and country for power and money.
      this is called a revolution,as your founders stated,protect from enemies foreign and domestic.

      • nimbii

        The Founders were able to arrive at a Constitution and later a Bill of Rights without the duress of other countries exerting their will directly or indirectly over them. That would come a bit later during the War of 1812.

        Yes, this is going to take some housecleaning after over a century of globalist influence and all the vested interest that has overtaken Washington. I don’t think we have much chance of rewriting our foundational docs without duress.

        The key is probably to shrink the size of government and the taxes it exacts on us to make the pie so small that it is of little interest.

        We will also have to repurpose what agencies would remain to focus on the general benefits to the nation and not to special interests.

        US Code should be shrunk down to a few hundred pages, from tens of thousands of pages.

        Waxing poetic now.

        Thanks for your comments.

        • per sigurd hansen

          good answer:)

  • larson

    The TPP completely destroys the sovereignty of Nations and turns them into slaves of the Central Bankers, who stole the Power to Create the Currency from We The People, and now use it to bribe all the politicians. The TPP is 100% One World Government. It MUST be STOPPED NOW !!!

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