Economy | timiacono.com - Part 5

Fed Now Completely Tone Deaf

Well, this isn’t a good sign…

Philadelphia Federal Reserve President Charles Plosser (one of the more hawkish members of the central bank) says they were all a bit surprised by the market reaction to last week’s comments by Fed Chair Janet Yellen that moved up the timetable for the start of interest rate hikes to as soon as next spring, rather than next summer or fall.

Says Plosser:

There was a lot of evidence and a lot of surveys that suggest six months wasn’t a wildly unexpected timeframe. But it is better to get away from talking about timeframes. Talking about economic conditions is a much better way to think about it. I was surprised the market reacted as much as it did.

Wow. With things as dicey as they could be with the Fed attempting to extricate itself from the greatest monetary policy experiment in human history and with the central bank making it up as it goes regarding what “economic conditions” it’s looking at (i.e., the fallen jobless rate target), Plosser thinks saying  something that “wasn’t wildly unexpected” is just fine.

Confidence Across the Country

More intriguing data about the outlook of the American public is available in this survey from Gallup where it is clear that the bigger the boom, the better the mood.

The Washington D.C. area has been booming for some time as money continues to gush out of the Federal Reserve and Treasury Department and, of course, there are all sorts of bubbles of varying sizes in the Bay Area that, with each passing day, looks more like 1999.

Rising confidence in Seattle may have something to do with their recent Super Bowl win…

As for the the bottom five, there should be no surprise about the rust-belt states (just don’t tell Ohio Governor John Kasich who made the talk show rounds yesterday morning), but it’s not at all clear why Jacksonville Florida should be the gloomiest area of them all.

According to this report, it is the poor economy in general and an ongoing housing crisis that is dragging them down, down south.

Via Sovereign Man comes this series of clips of former Rep. Ron Paul (R-TX) and billionaire investor Jim Rogers on subjects such as Federal Reserve policy, money, and inflation.

I don’t recall ever seeing these two together on the same stage before, so, for that reason alone this is kind of neat as they both rail against the status quo regarding economics and monetary policy, taking Ben Bernanke to task for his misdeeds.

This is from a conference late last year, so, some of the data is a bit old.

Nonetheless, I think Paul has it right when he says “There’s going to be a lot more chaos yet to come”, due primarily to the many gross distortions around the world in financial markets, economic data, currencies, etc. caused by monetary and fiscal policy of recent years.

Rogers again questions whether Ben Bernanke is a liar or a fool and concludes it’s the latter.

Toward the end they talk about U.S. government confiscation of private assets (mostly retirement accounts) when the SHTF – that doesn’t sound good.

Here they are over at CNBC late yesterday afternoon talking about how Federal Reserve Chair Janet Yellen, in her inaugural press conference,  threw a cat amongst the pigeons by suggesting that interest rates might rise sooner than expected while offering no hint at dialing back on the central bank’s tapering of their money printing effort.

By nearly all accounts, Ms Yellen acquitted herself quite well, that is, up until the time that she began talking about the “considerable period” of time between the end of tapering and beginning of hikes to the Fed’s short term interest rates.

With about a half hour to go before trading begins in New York, stock futures are solidly down after a sell-off in Asia and some pretty big share declines in Europe. The central bank has probably already launched damage control plans that will appear in the form of modified speeches by Fed officials to downplay the clear impression that there’s no stopping the taper and that Fed rate increases will begin as soon as a year from now.

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