Tuesday, January 31, 2012

Whoa Baby, NY Fed President Owned $1.4 Million Treasury Securities that Would Protect Him Against Inflation

File this under: Watch what they do not what they say.

William Dudley, the New York Fed president who famously pooh, poohed the possibility of significant price inflation, actually owned Treasury securities that protect investors against price inflation.

In March of last year, Dudley played down the threat of price inflation to an audience  enraged about increasing food prices, by telling the audience that not all prices were going up, and that they should look at the prices of iPads. Reuters, at the time, explained how that went down:
In Queens, New York, on Friday, New York Fed President William Dudley did just that. He got an earful.

After being bombarded with questions about food inflation, Dudley attempted to reassure his audience by putting rising commodity prices into a broader economic context -- but that only made matters worse.

"When was the last time, sir, that you went grocery shopping?" one audience member asked.

Dudley tried to explain how the Fed sees things: Yes, food and energy prices may be rising, but at the same time, other prices are declining.

He then stretched for a real world example. The only problem was he chose the Apple's latest tablet computer that hit stores on Friday, which may be more popular at the New York Fed's headquarters near Wall Street than it is on the gritty streets of Queens. 
"Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said."You have to look at the prices of all things."

This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment "tone deaf."
"I can't eat an iPad," another said.
In a Fed branch bank data dump late today, the Federal Reserve released the financial holdings of the presidents of its 12 regional banks. The disclosures covered 2008 to 2010. The disclosure came after a Freedom of Information request from Bloomberg News.

Guess what, Mr. Chill on inflation, Dudley held in his portfolio? $1.45 million in Treasury inflation-protected securities (aka TIPS). These as the Treasury points out:
...provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index
There is no other reason to hold these unless you expect strong price inflation.

When Dudley joined the Fed, he did not sell the TIPS, instead he went through the trouble of getting a waiver from the Fed to own them. As part of his waiver he has agreed to hold the securities until their maturity, according to the New York Fed.

It was not immediately clear if the securities have matured, or if he still holds them, since the NY Fed has only released data through 2010.


  1. Reminds me of the story of John Law who fled France when his bubble burst.

    He was captured and the carriage in which he was traveling was found to be full of gold and silver coins.

    These characters know what they're doing...they just think (and hope) that the currency destruction will happen on the next guys watch.

  2. Is he self-loathing or have his instincts for self-preservation kicked in?

  3. Why do they all bring up the same one and only one example to "prove" that there is no inflation namely, Ipads.

    Do they think ipads are that big of a deal. Do they really think we live in an ipad economy? I can't eat an ipad, I can't get to work riding an ipad, and I can't heat my home with one either. Next thing you know Biden and Obama are going to start claiming they invented the damn thing.

    1. And... I wish they had pointed out what an iPad would have cost if it was made IN America. As a manufacturer you can beat inflation by moving the production offshore.

      But for those who are politically awake we know that debasing the monetary system (a capital crime under the 1792 Coinage Act) is being conducted to bring about a global financial collapse so they can usher in their New World Order. For those who are spiritually awake we understand that the NWO is the last empire in Daniel ch7 that is ruled by the Antichrist for 7 years until Christ comes back.

      The illuminati are some of the most evil people to ever walk this earth. The desolation they have planned for the US and the world is mind-blowing. You haven't seen anything yet.

    2. from $729 to $1,144.02!


  4. food/water, housing, clothing, energy, these are the thing that should be counted for inflation purposes, the necessities of life. you can't live in a big screen tv box and you can't eat chinese electronics.

  5. I guess this guy didn't know about moore's law... technology gets cheaper in spite of inflation. Funny how he brings the ipad up though, shows a perfect example of what can happen when the government doesn't regulate and control the hell out of a market sector.

  6. If you click on the Fisher Investment advertisement, they get way too much information before you get the guide. I closed the screen (and won't get the guide), but they get your name, address, phone number and e-mail address before they really start asking questions.

  7. Let the people define the CPI, not economists who are just shills for corporations & governments.

  8. All one needs to do to put the LIE to the Feds preposterous pontifications is to look at one of the commercial inflation indexes, such as the CRB.
    If the commercial index producers fail to "get it right" over any statistically significant period of time their customers, and their customers payments, will disappear.
    The Fed is under no such imperative. In point of fact, the worse they screw it up, the better the financial advantage to their plutocrat cronies.

  9. I wonder how many people on $5 per hour can afford Ipads.