Wednesday, September 28, 2016

CNN Goes Into Totally Absurd Full Propaganda Mode to Protect the Federal Reserve

Just listen to the below howler of a propaganda piece from Christine Romans at CNN after Trump, during Monday's debate, accused Janet Yellen of being political.

This Fed "expert" majored in French, journalism and mass communication at Iowa State University.

Her claim is that the Fed isn't influenced by politics. I'm willing to bet she got the talking points for this piece directly from a Fed PR agent because, apparently, they didn't teach Fed history in her French classes at Iowa State. Although she claims the Fed has always been as pure as the virgin snow, she has missed a few things

Here's Burton Abrams in The Journal of Economic PerspectivesVolume 20, Number 4—Fall 2006:
The fact that President Nixon pressured [Federal Resrve chairman] Arthur Burns to run an expansionary monetary policy in the run-up to the 1972 election is well-known (for example, Tufte, 1978, pp. 45–50). As another example, John Ehrlichman (1982, pp. 248 – 49) describes a meeting between Nixon and Burns on October 23, 1969, just after Burns’s nomination to the Fed had been announced.
Kevin Phillips, a political and economic commentator for more than three decades and onetime Nixon strategist, reports that President Richard Nixon asked his Federal Reserve chairman, Arthur Burns, to concoct a new inflation number that would be split off from traditional headline CPI, dubbed “core” inflation—and thus make inflation look less threatening.

Writes Phillips:
Richard Nixon, besides continuing the unified budget, developed his own taste for statistical improvement. He proposed albeit unsuccessfully—that the Labor Department, which prepared both seasonally adjusted and non-adjusted unemployment numbers, should just publish whichever number was lower. In a more consequential move, he asked his second Federal Reserve chairman, Arthur Burns,to develop what became an ultimately famous division between "core" inflation and headline inflation. It the Consumer Price Index was calculated by tracking a bundle of prices, so-called core inflation would simply exclude, because of "volatility," categories that happened to he troublesome: at that time, food and energy. Core inflation could he spotlighted when the headline number was embarrassing, as it was in 1973 and 1974. (The economic commentator Barry Ritholtz has joked that core inflation is better called "inflation ex-inflation"—i.e., inflation after the inflation has been excluded.)
 In his memoir, Arthur Burns tells us what he once told President Nixon:
I informed the President as follows : (1) that his friendship was one of the three that has counted most in my life and that I wanted to keep it if I possibly could; (2) that I took the present post [Fed chairman] to repay the debt of an immigrant boy to a nation that had given him the opportunity to develop and use his brain constructively; (3) that there was never the slightest conflict between my doing what was right for the economy and my doing what served the political interests of RN.


Via The FinancialTimes:

Janet Yellen was forced to fend off new questions about the Federal Reserve’s political independence on Tuesday as a Republican lawmaker asked her if one of the central bank’s governors was too close to Hillary Clinton’s campaign.

The Fed chair was challenged by Scott Garrett, a Republican from New Jersey, over donations that Fed governor Lael Brainard has made to the Clinton campaign and over unconfirmed media reports that Ms Brainard is a contender for a senior job in a potential Clinton administration.

The exchanges came only two days after Donald Trump, the Republican presidential candidate, claimed in his debate with Mrs Clinton that the Fed has been keeping short-term interest rates low to help the Obama administration and was sustaining a “big, fat, ugly bubble” in the stock market....

After a false start and cross talk between lawmakers seeking to end Mr Garrett’s questioning, the Fed chair said: “I would have to consult my counsel. I’m not aware that that’s a conflict, but I would …” Then she was herself cut off by the committee chair.

Shortly beforehand Ms Yellen said she had “absolutely no awareness” of Ms Brainard being in touch with the Clinton camp about a job.

Pressed on $2,700 in donations that Ms Brainard has made to Mrs Clinton’s campaign, the maximum permitted for individual contributions in a primary election cycle, Ms Yellen noted that the Hatch Act does not prohibit political contributions by Fed governors...

Mr Garrett told the Fed chair: “As the saying goes, perception is reality. Whether you like it or not, the public increasingly believes that Fed independence is nothing more than a myth. The Fed has an unacceptable cosy relationship with the Obama administration and with higher ups in the Democratic party.”

Asked if she had ever asked Ms Brainard to recuse herself from monetary policymaking due to her “close involvement” with the campaign, Ms Yellen said: “She’s acting in a way that is permitted by the rules we are subject to. Each one of us has to decide for ourselves.”


  1. Hahahaahahahaha.... Oh wait, she wasn't joking? I thought this was a 'Funny or Die' skit.

    CNN gets closer to the Onion everyday!

  2. is there anyone out there who still watch this communist network, really wonder

  3. I'm not a TRUMP guy, but just the fact that Trump has brought a little bit of pressure to the FED is huge and bumps him up slightly in my book. Especially since he has so many loyal followers who may actually do some research now and find out the real history of the FED.

  4. Burns once said that he had to increase the money supply as Nixon demanded or: "The Fed would lose its independence."

  5. Wow what a shock the PRIVATE CENTRAL BANK that prints money out of thin air and then lends it to the people of the UNITED STATES with interest, might favor one political party. Is this the same private for profit Central BANK that, with the help of Bush and Obama, distributed 27 Trillion Dollars of free money in 2009 to Insolvent Banks and Businesses all over the world. Why would they do anything political when the can buy every politician in Washington.

  6. Didn't Brainerd (is that really her last name or some cheeky nom de Fed?) give a "dovish" speech just before the "quiet period" or whatever before the Sept Fed meeting with no hike? Where there's smoke, there's fire. Trump (I'm not a supporter) or his surrogates should run with this.

  7. Watch her hands while she-pledges allegiance to her puppet handlers flashing first OK sign ,then the upside down pyramid .

  8. wtf What did I just watch? Was that news?

  9. What did I just watch?
    Was that news?

  10. Now that's a Comedy Central moment!!

  11. Daniel Kuehn, in a paper approved by Krugman, inadvertently proved that the 1920 recession/depression was caused by the monetary shenanigans of the Fed which was the admitted agent of the treasury in funding the war.

    Kuehn first demonstrates that it was the Fed's funding of WWI that caused an artificial boom and inflation. The problem was not caused by any failure of "the free market".

    2. The austerity depression of 1920–21

    During World War I federal expenditures ballooned and although the new income tax was able to partially finance the war effort, most of the financing was done through federal borrowing and by the highly accommodating monetary policy of the Federal Reserve. The role of the Federal Reserve at this time was expressed unambiguously by the New York Federal Reserve Bank Governor Benjamin Strong, who told a Congressional committee in 1921 that ‘I feel that I, or the bank at least, was their [the Treasury’s] agent and servant in those matters’ and further added that the wartime inflation caused by the low interest rates maintained by the bank were ‘inevitable, unescapable, and necessary’ for prosecuting the war (Strong, 1930)

    This is the pure Rothbardian explanation.

  12. A central point of Kuehn’s paper was that it was the spending cuts and “austerity” that occurred under Wilson that caused the depression. I see no reason to dispute that. He also claimed that the Austrians do not seem to understand the timing and attribute everything to Harding. That claim, however, is due to a short article Tom Woods wrote about it the American Conservative which apparently did not mention Wilson. What I remember about Tom Woods and the 1920 depression is “THE STROKE OF LUCK” which he described in the following video at the 2:45 mark. Wilson’s wife ran the country in the last year of his term because of a series of strokes he suffered and it was his wife who did nothing to fix the depression. Wilson’s term did not end until March of 1921.

    So then we have Krugman preening about because the Austrian/Austerians have their timing all wrong. Just ask Daniel Kuehn!

    More Than You Want To Know About Warren Harding
    JANUARY 23, 2012
    Yesterday I mentioned that they’re still flogging the old line that Warren Harding proved that austerity works. I linked to my old demonstration that the 1921 economy was nowhere near the liquidity trap, and that there was substantial monetary easing, making comparisons to the current situation nonsense.

    Daniel Kuehn has more. it turns out that the Austrians/Austerians have their timing all wrong:

    Austerity proponents depend on the argument that substantial cuts to federal spending moved the economy to a recovery in 1921, but this understanding fails on multiple counts. The bulk of both fiscal and monetary austerity occurred immediately prior to the onset of the depression. Any austerity in policy decisions by the Wilson administration, the Harding administration or the Federal Reserve Board after the depression began were moderate compared with the considerable austerity measures taken by the Wilson administration and the Federal Reserve before the downturn. The evidence seems to suggest, even more clearly than in the case of the Great Depression, that postwar austerity may have even helped cause the 1920–21 depression. Subsequent monetary easing by the Federal Reserve occurred concurrently with the economic recovery, which itself was underway by the time Warren Harding took the oath of office.


    I am quite sure, however, that none of this will stop the Harding thing from being rolled out again repeatedly.