‘Blames World’ "...the Fed is the author of its own failures..."

New York Sun ^ | February 11, 2016 | Editorial of The New York Sun

[expat_panama]

If Ben Bernanke's epitaph is going to be "We could raise interest in 11 minutes if we have to," what will be written on his successor's tombstone? How about "Blames World." That is the headline up today on the Drudge Report. It links to a dispatch of the Agence France Press on Janet Yellen's growing concerns over a worsening financial situation less than two months after she raised interest rates as a sign of confidence in the improving economy. What an opportunity for Senator Ted Cruz...

The story, pegged to Mrs. Yellen's semi-annual testimony yesterday to the House Financial Services Committee...

...AFP reported that analysts reckon "her concerns lowered the possibility of an increase in its next policy meeting in March."

Blah. Blah. Blah. What Mr. Cruz can mark here is that the Congress is way ahead of Mrs. Yellen...

This, in our opinion, needs to be explained in a major speech, and who better than Mr. Cruz to do it? ...

...The Senate is getting set to decide whether to back a far-reaching and ongoing audit of the Federal Reserve, to repeal Humphrey Hawkins, which gives the Fed authority to focus on the unemployment rate...

The New York Sun has no interest in letting the rest of the world off the hook. It has its own responsibilities for its own fate, and America's fate will always be entwined with other lands. Someone needs to say, though, that the Fed is the author of its own failures. Someone needs to say what a sorry spectacle it is for Mrs. Yellen to make a move on interest rates in December and blame the rest of the world in February. Mr. Cruz is the man to mark this point.

[expat_panama]

Sounds like the Sun likes both Cruz and gold and hates the Fed...

[SteveH]

what is the prior economic theory of QE? does any prior economic theory of QE exist?

I am not convinced that any FR economist knows what is going on economically, much less can figure a way to fix it if it needs fixing.

[expat_panama]

 

A good Friday morning to all!  Stocks closed lower in heavy trade yeseterday after setting new lows as both gold and silver soared.   [Didn't I just say that yesterday?]  However, today's futures are  pointing to a reversal w/ stock indexes at +.40% and metals -0.46%.

Reports:

8:30 AM Export Prices ex-ag.
8:30 AM Import Prices ex-oil
8:30 AM Retail Sales
8:30 AM Retail Sales ex-auto
10:00 AM Business Inventories
10:00 AM Mich Sentiment
 

Elsewhere:

• European banks doing worse than in 2008 crisis Salt Lake Tribune - 2:18am It's been a bad seven weeks for European banks -- worse even than during the 2008 financial crisis, by one measure. Societe Generale was the latest on Thursday to report earnings that missed estimates, tumbling the most since 2011 and dragging the ...
• As U.S. refinery cuts quicken, crude market faces next threat
• Uber to pay $28.5M to settle safety ad lawsuits
• 'Star Wars' Producers Charged Over Harrison Ford Accident LONDON (AP) -- British health authorities announced Thursday they have issued criminal charges against the producers of Star Wars: The Force Awakens over an on-set accident in which Harrison Ford broke his leg.  Associated Press

[expat_panama]

...does any prior economic theory of QE exist?

Buzz words come and go but easing interest rates in quantitative increments goes back almost a hundred years, and while they're not to hard to comprehend, it's well, boring.   The thing is that we live in the sound bite age and thinking/understanding markets has been largely replaced by just talking about them.

[Jumper]

Quantitative Easing (QE) has been tried under different conditions in world history. The Italian Lira was a complete joke -- that experiment was due to government spending money it created to pay their socialist/communist planning bills for the public good.

What makes the QE of today different or gives it cover, is that the American experiment was complex in that it took over GM and bought the Unions... it created new companies that gave profits where none existed by to the DNC in donations... the Fed bought stocks and securities and propped up companies by financing them with stock purchases.... No economic activity was required - the government just dolled out monies where ever they could spend or give it away. This was done at a 3% clip or 60-75B per month! The next effect of 6+ years of Obama's printing presses have essentially doubled government obligations, and created an economy where economic activity plays no roll whatsoever, beyond EBT cards propping up major name brands at Walmart, or Taco Bell/McDonald's diners. The only thing QE did was to make on a globally coordinated scale, the watering down of everyone's money.

[Buckeye McFrog]

Mister we could use a man like
Andrew Jackson again.....

[palmer]

does any prior economic theory of QE exist?

Good question but can't really be a steady state of an economy. At best QE gets prpvides a Keynesian stimulus and then it ends. At worst it turns into a spiral of debt bubble, bubble deflation, more QE, new debt bubble, etc. Right now we are at the point that China requires a new debt bubble. Will Yellen provide that? Answer seems to be yes. More than last time, the new QE will be a direct transfer of printed dollars to China by purchasing sone of their 1.3T in treasuries at inflated prices. You could call it Chinesian stimulus.

[citizen]

"easing interest rates in quantitative increments"

---

Hunh? Rates went to zero PDQ and sat there for years.
This QE is consists of buying bonds and mortgages w/ non-existent money. I'd much prefer the FED to only be adjusting interest rates.

[SteveH]

OK I personally in my ignorance am not convinced that QE is an old thing.

If QE is an old thing, then where are the pre-2008 economic papers discussing its merits? web links? anyone?

wiki seems to indicate that it is relatively new to the US Fed:

https://en.wikipedia.org/wiki/Quantitative_easing#Precedents

(I am discounting the vague stories about having been done in the 1930s and so forth as just stories, unless there is some hard evidence to the contrary.)

Anyone actually called the Fed and asked them point blank? If so what were the results?

I cannot personally recall nor can I imagine an economist sitting around before 2008 arguing in favor of QE. What would the guy say? “We anticipate unexpected conditions that will cause us to print money if conditions C1, C2, ... CN occur”)? Anyone ever read an economic paper or book like that, before 2008?

Now, if there are no such papers or books before 2008, what does that tell us about the science of economics, circa 2008? If there were none, could economics even be called a science? Or would a more apt description be professors paid by shadowy quasi-government entities to perform the academic equivalent of pissing in the wind?

[GOPJ]

Thanks for the ping.

[Sequoyah101]

I am willing to hope this turns into a mess and hurts but only for the sake of maybe showing the sheeple just what bumbling bunch of fools these people are and on the outside chance that someone is smart enough to explain how insidious and evil the Fed is.

I doubt that any good would come of it though.

Yellin is a first class putz but a putz hired her.

[Sequoyah101]

AMEN! The American Lion. Not perfect but at least he had sense enough to know who the enemy is and he cut their throats!

[AllAmericanGirl44]

bkmk

[expat_panama]

...QE is consists of buying bonds...

Must be past my bed time 'cause I'm having a hard time understanding what folks are posting at me.