Saturday, October 11, 2014

Fed Bank President Calls for Zero Interest Rates Until 2016!

Chicago Fed President Charles Evans during a speech today said that the Federal Reserve shouldn’t raise interest rates until early 2016.

“The U.S. economy is looking stronger than it was a year ago,” he said. However, “there continues to be significant underutilization of labor,” he added. “I don’t think inflation is going to take off any time soon.”

He sees inflation staying below the Fed’s 2% objective “well past 2017.”

Bottom line: There are serious money printers at the Fed, Although I suspect that price inflation may slow over the very near term (SEE: Economists Have Downgraded Estimates for Inflation Due to Falling Oil Prices and a Strengthening Dollar), Fed members are simply projecting current trends out into the future. They have no idea how quickly price inflation can accelerate once it starts a serious upward projection.

Evans' remarks are further evidence of my view, and that of Martin Feldstein, that the Fed is going to raise rates very slowly and that at some point price inflation is going to jump way ahead. (SEE: Price Inflation Propaganda from National Review)

The Fed shouldn't be manipulating money supply and interests at all, but this Fed is exceptionally dangerous. We not only have a drunk teenager behind the wheel of the economy, but a drunk and blind teenager behind the wheel.

1 comment:

  1. Dow 20,000 on Monday??? :-)
    Or how about talking down the dollar vs. Euro/Yen uptick of late?
    Yeah, that has to be it.