Stanley Fischer is in the pipeline for the vice chairmanship of the Federal Reserve Board of Governors. In this capacity, he would bang heads to gather FOMC votes for (Presumptive) Fed Chairman Janet Yellen. According to the New York Times, Fischer would “exert a moderating influence on Ms. Yellen,” (” For No. 2 at Fed, White House Favors Central Banker in the Bernanke Mold.”)
“The Economist’s Sell Signal,” (November 30, 2013) critiqued the “The Perils of Falling Inflation,” in the magazine’s November 9, 2013, issue. “The Perils” attempted to erase history, an effort to protect the central-banking version of history from criticism.
The disintegration of central banking shifted to overdrive in November. The Senate Banking Committee’s listless accreditation of Janet Yellen as next Fed chairman was not a surprise, but it was notable that vigorous critics of Chairman Bernanke, such as Senator Bob Corker, dozed through the hearing. When the bubble of all bubbles bursts, and the Senate and Congressional oversight committees fulminate at central bankers, it will be those politicians who should sit in the dock. They could have acted. Instead, the Senate is whisking Bernanke-Squared to the throne, as quickly and quietly as possible.
Following is an expanded version of a speech delivered for With Integrity Financial: “Securities and Advisory Services offered through Commonwealth Financial Network, a Member FINRA/SIPC, a Registered Investment Adviser.”The Federal Reserve’s Expanding…
It is possible neither Janet Yellen nor another pretender will fill Bernanke’s shoes in January. The odds of such a surprise may be once-in-a-history-of-the-universe, but those keep coming at a faster rate the longer we splurge. Simple Ben has been walking both his bank and the world’s financial institutions closer to the cliff. Here, we will look at the precarious position of the Federal Reserve and the far-out financial securities entering the pipeline at an increasing rate.
My ticket to the seventh game of the 1967 World Series between the Boston Red Sox and St. Louis Cardinals cost $8.00. That was in the grandstand. The price of the same seat, for the 2013 World Series between the Boston Red Sox and St. Louis Cardinals (at Fenway Park in Boston), is $300.00. The inflation of words is bound to the inflation of prices. The grandstand is now called the “right field boxes.” It looks as though box seats, which were front-and-center, not extending far beyond the home and visiting team dugouts, now run to the right-field, bull pen.
In May 2013, the U.S. Treasury had spent up to its statutory debt limit. Treasury Secretary Jack Lew wrote House Speaker Boehner that the Treasury would “begin implementing the standard set of extraordinary measures that allows the Treasury to continue to borrow and spend even after it has hit the legal debt limit.”
President Obama’s nomination of Janet Yellen is not unexpected. Nevertheless, it is greeted here with unrequited abjection. Unless the world’s financial hocus-pocus comes unglued between now and then, she will inflate electronic money accounts without compunction. By doing so, Yellen will make matters worse (a sampling: real incomes will fall further, the gap between the rich and the poor will increase). She will redefine an acceptable inflation rate at 4.0%. Currently, the Fed is gunning for 2.0% inflation. This will be part and parcel to Yellen’s attempt to drive interest rates down at all maturities. The objective will grow harder so require larger electronic deposits. She will beget looser money and a more destructive policy than Ben Bernanke’s: a -4.0% real rate of interest.
Refreshing was the questioning of Federal Reserve Chairman Ben S. Bernanke by Congressman Scott Garrett from New Jersey in “Shooting Stars.” We can hope his influence may spread.
Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009) and “The Coming Collapse of the Municipal Bond Market” (Aucontrarian.com, 2009…