I am building a case of wide spread mental instability amongst our current and former Federal Reserve members. It’s one thing to have made a mistake and live up to it. It’s entirely another thing to say you were wrong and then continue the same path, knowing you’re making matters worse.
Enter former Fed Governor, Robert Heller–born in Germany.
With his own mouth, he says things are fucked up and how GDP will only grow at 1%. Yet, in the very same breath, he’s calling for 3 rate hikes in 2016.
Why?
Heller is only the first of many Fed heads to make a media appearance, post Yellen meeting. Prepare to have your minds boggled over the days and weeks to come, as one Fed head after the next discusses the virtues of tightening into the teeth of a world ending deflationary vortex.
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What if all they got is lowering rates. They must raise them first or we are Japan. Right? The game is the vig. No vig no game. Unless money is not the vig anymore. Gonna need a new way of pricing money.
Could be a survival move of the fittest and smartest. America always has been. Screw the world suffer thru King Dollar for awhile then do it all over again.
Heller says 2 or 3 hikes this year but probably none after Aug/Sep due to Nov election (beware Nov & Dec Fed meetings, FYI). Clip then ends with Heller saying plenty of cash in banks but no one wants to invest due to “uncertainty”…uncertainty over what? Could it be that business is actually quite certain conditions are deteriorating while the Fed is embarking on engineering a rising rate environment and contraction of the money supply? That’s not really “uncertainty” as much as its a fear that they’re fucked….
Would you rather they tightened November 2014? March 2015? Would growth be any different or radically on fire for fall 2016? I don’t get the whining -there never would have been a good time to tighten- -hello?- -get it?-
The Fed is, in fact, fucked. Many people on the ZH side of the web (and some reasonable people like Fleckenstein) have been saying this for almost a decade, but this month proves it. It is absolutely true that without rate rises the Fed cannot replenish its supply of silver bullets. The Fed understands that Congress is full of idiots that will make bailing out the economy through federal spending impossible or nearly so, because they are way too stupid to grasp MMT and still think the federal budget is comparable to that of a family of four in Cleveland. They have no idea how what they are in charge of actually works. Faced with this, the Fed MUST raise rates in order to have any ability to deal with another crisis independently. But the first baby step they take…destroys everything. You can argue it’s bad timing, that they blew their chance, that the oil market should have told them not to do it now, etc. But a Fed with no silver bullets and a Congress too stupid to act means absolute, total disaster is just one too big to fail away.
ZH sauce is superb. Try their salad dressing.
What the fuck Congress has to do with it? People vote for free shit on both sides. Lunatics are lunatics. Without pricing money the game ceases to exist. There must be a vig. But who knows the game can change. No rules against it.
In the very same “breath.” Freudian slip, no worries. We’re all going to die.
excellent. do four this year and four in 2017. OMFG NOT TWO PERCENT! HELP!!
@Showtime…yeah there was a good time…but they chickened out in 2013 thru 2015. Now that the US and global economies is are showing weakness is not the time. But I get it, 0 forever is Japan. But that die has already been cast.