This is a syndicated repost published with the permission of Confounded Interest. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.
Federal Reserve Chair Janet Yellen will give testimony in the US Congress on Wednesday and Thursday. Dunstan Prial from Fox Business says it will be “lively.”
I assume that the questioning will be lively, not Yellen. Yellen will be her pleasant, monotone self.
Suppression of savers has been asked before of both Bernanke and Yellen. The response has been the response of “you have to break a few eggs to make an omelet.” Or victims of friendly fire.
Since 2007, real median household income has fallen despite all the intervention by The Fed. On the other hand, the S&P 500 has soared post intervention.
Yellen is likely to say the following: the employment market is strong (9.9% U-6 is strong?), but there are headwinds in China and Europe. So only 2 rate hikes this year.
I would like one Congressman to ask Yellen about the French experience with ECB rate policy. She will likely respond that France has structural economic problems that the ECB can’t fix. Just like the USA.
I would also ask her why small firm optimism is still below any prior to 2008 (self-employed workers still below pre-recession levels). She will answer “That is a structural problem.”
How about the meltdown of Italian banks? Why hasn’t Draghi’s low interest rate policies helped the Italian banks? Say it with me: its structural.
Then we have the US Treasury yield curve, at the lowest level (flattest) since January 2008 while credit risk indicators are rising.
And the global economy has $7 trillion in bonds with negative yields.
So what does all this mean, Chairman Yellen? Likely response: “We are going to have to raise interest rates.”