Thursday, September 24, 2015

Yellen Talking Interest Rate Smack in Massachusetts

FT reports Yellen remark:

"Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter. But if the economy surprises us, our judgments about appropriate monetary policy will change."

Look, I know there are Fed haters out there who think the Fed will never raise rates.

I have no problem dissing the Fed, even in their building, but there is no sound economic theory that indicates the Fed is never going to raise rates.

Indeed, if there is no significant downside activity in the stock market in the near term(and major downside activity is getting less likely everyday), the Fed will raise rates before the end of the year. If rates aren't raised by the end of the year, pressure from price inflation will eventually force the Fed to raise rates.

Higher rates are coming, regardless of what Janet Yellen thinks now, one way or the other.



Full Yellen speech here.


Shocking Video of Janet Yellen Before She Received Medical Attention


  1. "...But if the economy surprises us, our judgments about appropriate monetary policy will change."

    It would be most difficult to find a more succinct argument against Central Planning than this. The "Surprise" does not even have to occur. Surprise/No Surprise, the Decisions about Buying and Selling are to made by a select few and not by the many. If a catastrophic decision is made, blame will be apportioned to some other Ol' Debbil and not the Source of the Evil, the people who control and use Yellen as a Prop. She thinks SHE'S in control!

    In a related matter, I mourn the passing of a Supply Sider, one Paul Craig Roberts. No, PCR isn't dead but something has died inside PCR and he ain't coming back. Consider this:

    "...Considering the stupidity and immorality of the Tories, Corbyn could become prime minister of Britain. Should this occur, Corbyn would shift the budget priorities away from supporting Washington’s wars toward refurbishing the social welfare state that made life for ordinary Britishers more secure and less stressful..."


    PCR wrote one the great books on the early battles in the Reagan Administration. The Supply Side Revolution provided a Factual Background for the Theory and the Practice, laid out before the usual Leftist Class Revisionism that followed. See also:

    This is the Welfare State that needs "refurbishing"? Reading Yellen is sad. Paul Craig Roberts: sad.
    Not much good news today...


  2. But they never quite get round to raising them, they couldn't do it this month they won't be able to do it in december, you know, winter they won't be able to do it next year election year doncha effectively the next window becomes after the election.

  3. "I have no problem dissing the Fed, even in their building, but there is no sound economic theory that indicates the Fed is never going to raise rates."

    And further to RW's point, if someone is claiming they are an "Austrian economist" or an investment guru making decisions on an Austrian basis, the first question anyone should ask them is what metric they use to determine what is happening to the money supply, given it is a fundamental of ABCT.

    If they can't answer that question or can't at least explain to you money supply trends over a reasonable period of time, how can they be using ABCT?

    Sure, someone can believe in the concept/logic of ABCT, but believing is one thing- prognosticating on future events without even actively finding a way to apply your belief is ridiculous.

    It's not enough to say "huge deficits" or "printing money" or even "artificial interest rates", you have to have some concrete measure of how the money supply, a core metric of ABCT, is moving in response to those things.

    So I'm going to plug RW's "Daily Alert"- it might sound like cheesy commercial to some of you, but I find the regular calculation of money supply growth he does extremely important in trying to get a macro view of what's happening with the economy.

    If anyone who is claiming to be an Austrian authority(versus just a believer, which is what I am) can't at least tell me what metric they are using to track money supply(whether I agree with that metric or not) and what the supply trends have been the last six months I don't think I can rely upon that person from an Austrian perspective.

    1. When the Fed chair needs medical treatment after coughing out some laughable rate hike jawboning, we're in untrammeled territory. I'm curious to see how markets react, starting tomorrow. I don't think anybody, Austrian or not, has got the real data on money supply or anything else related to the economy at this point. That's how fascism rolls...

    2. "...prognosticating on future events..." is not part of Austrian Economics. ABCT explains why there are business cycles it cannot (no one can) predict where we are in the cycle. The economic activity of humans has no constants. It is a never ending stream of varying ratios. We know there will be booms and there will be busts we cannot know when these will occur as RW's own prognostications have shown.

  4. All true lovers of freedom are haters of economic central planning. Set money free!

    ps -- JY's momentary incapacitation is not uncommon among diabetics, and dehydration frequently accompanies hypoglycemic episodes.

  5. The Fed will not raise rates on its own accord. When the financial world is spiraling out of control then the Fed will raise rate, but it will be reactionary.

    With commodities flat, the Fed will not raise rates. There will be not rate increase for another 12-18 months.