Janet Whiffs Again——Take Cover Now!
by David Stockman
DavidStockmansContraCorner.com
June 15, 2016
If Donald Trump has even a partial clue about the nation’s monumental economic mess one of his first acts will be to demand Janet Yellen’s resignation. And for sheer incompetence among countless other failings.
She was out there again today talking in completely incoherent circles. On the one hand, Yellen robotically insisted that the U.S. economy is moving steadily toward the Keynesian nirvana of full employment.
At the same time, she struck a profile in cowardice that was downright pathetic. Yep, after 90 months of ZIRP the Fed has decided to wait for further confirmation from the “incoming data” before concluding that even one more baby step toward interest rate normalization is warranted.
Needless to say, our paint-by-the numbers school marm has no clue that a money market rate at 0.38 bps has nothing to do with the Fed’s so-called dual mandate. It’s sole impact has been to flood the canyons of Wall Street with zero cost carry trades and endless cheap debt for corporate financial engineering and other leveraged speculations.
So the Fed kicked the can again for one simple, pathetic reason. It is petrified of a Wall Street hissy fit. Effectively, it has seconded monetary policy to day traders and robo-machines.
By contrast, the Fed’s massive spree of money pumping never got anywhere near to main street. It couldn’t deliver honest full employment through cheap money inducements to borrow and spend because households are still stranded at Peak Debt.
Based on the most recent flow-of-fund report for Q1, households now have record debt of $14.3 trillion. Anyone who can scratch an application signature has been given a student loan and all who can fog a rearview mirror have been loaned 120% of the cost of a new car. And, of course, the castles of main street families are still mortgaged to the hilt.
The Rest…HERE
