The smartest person on the Federal Reserve Board, the man cherry picked from Goldman’s ranks to lead the TARP program during the darkest days of the financial crisis, Neel Kashkari, explained today why he dissented from Yellen — voting against the Fed rate hike.
His explanation borders on the comically insane, frankly. He wants the Fed to issue a report on how they intend to draw down its $4.5t balance sheet before enacting hikes. In other words, he wants to Fed to sell all of the bonds they bought in order to prop up markets since 2008.
LOL. Good luck with that Neel.
“The announcement of our balance sheet plan could trigger somewhat tighter monetary conditions,” Kashkari said, resulting in the equivalent of a rate hike of unknown size. “After it has been published and the market response is understood, we can return to using the federal funds rate as our primary policy tool, with the balance sheet normalization under way in the background.”
“If we are surprised by higher inflation than we currently expect, we might need to raise rates more aggressively,” he said. “Some argue that gradual rate increases are better than waiting and having to move aggressively. It isn’t clear to me that one path is obviously better than the other.”
The Fed isn’t going to do that because they don’t have to. They can do as they like, without ever having to answer to anyone. Bear in mind, what Neel is asking for is 100% logical and should be done. But they don’t want to do it and the fact that Neel is saying this publicly leads me to believe he’s trying to redpill the world on the fuckery taking place at the Fed.
There’s no other logical explanation for it.
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