Ticks on a Dog

A brief comment on Fed chief Janet Yellen’s revealing speech at the University of Michigan. Bloomberg:

 

“Before, we had to press down on the gas pedal trying to give the economy all of the oomph that we possibly could,” Yellen said Monday in Ann Arbor, Michigan. The Fed is now trying to “give it some gas, but not so much that we’re pushing down hard on the accelerator.” […]

“The appropriate stance of policy now is closer to, let me call it neutral,” Yellen said in response to questions during an event at the Gerald R. Ford School of Public Policy at the University of Michigan. Yellen said she expected the economy to continue to grow at a moderate pace and that gradual interest rate increases “can get us where we need to be.”

 

Central planners groping in the dark…

 

Every society is ruled by an elite. They prey upon the common folks like ticks on a dog. They work their way into positions of power and influence, using a combination of brains, connections, and claptrap.

The mob generally looks up to them, impressed by the hocus pocus. And then, eventually, the ticks grow too many and too fat. The poor dog weakens… and the magic fails.

Where exactly we are in the process, we can’t be sure. But surely, we took another step toward the eventual catastrophe when Ms. Yellen spoke.

Everything she said was preposterous.

 

No Oomph

The economy is not growing at a “moderate speed.” If it is growing at all – it depends on how you calculate consumer price inflation – it is doing so only at stall speed.

Officially, per capita growth is less than 1% a year. What kind of “oomph” is that?

Nor is the Fed neutral. How can you call a federal funds rate that is more than 100 basis points below the inflation rate “neutral”?

 

No oomph in sight, but it’s beginning to smell a bit funny

 

It is nothing of the sort. Ms. Yellen says she is “pressing down on the gas pedal.” There’s nothing “neutral” about that.

People who don’t respect the logic of their own metaphors are sometimes lazy thinkers. Sometimes they are mixed up. And sometimes they are just blah-blah-blahing for the fake news media and the yahoos who believe it.

Ms. Yellen thinks the economy runs like a machine. If it is sluggish, it is up to her and other Fed engineers to press down on the accelerator. If it is running too fast, they ease off.

This metaphor is clearly absurd. If she and the Fed could increase the speed of the economy simply by pressing down on the gas pedal, what are they waiting for? There are 66 million working age Americans without jobs.

Hey, why not give them a little gas?

 

Please pull the right lever…

 

Wealth Destroyers

Also, Ms. Yellen says she aims to get the economy “where it needs to be.” But how does she know where it needs to be? An economy is not a machine. And it never needs to be anywhere. It simply is where it is.

The authorities can slow it down with silly rules and regulations. Or they can mislead it with phony interest rates and fake money.

 

Is the economy a machine? No, it isn’t.

 

They can also force people into win-lose deals that waste capital, retard wealth building, or in some cases – the Soviet Union from 1917 to 1989, Germany from 1937 to 1945, China from 1949 to 1979, Venezuela from 2001 to 2017 – they even send the whole economy into reverse.

Self-respecting witch doctors and fortune tellers look at Ms. Yellen with contempt. She can make the economy worse. She can’t make it better.

 

Image captions by PT

 

The above article originally appeared as “Charged by an Enraged Bullat the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • How Beijing Uses Fake Money to Cannibalize the U.S. Transit Market
      A Distorted Landscape One of the more remarkable achievements of fake money creation is that it distorts and disfigures the world in odd and uncanny ways.  Dow (not quite) 27,000.  Million dollar shacks.  Over $13 trillion in subzero-yielding debt. You name it.  Any and every disfiguration is possible with enough fake money.   The global stock of outstanding government bonds with negative yields-to-maturity reaches a new record high of more than $13 trillion – this is...
  • Gold, the Safe Haven - Precious Metals Supply and Demand
      Investments vs. Money Last week the price of gold went up another $11, but the price of silver dropped 4 cents. The gold-silver ratio hit another new high, up another point, though down from Tuesday’s high water mark. This obviously was not the week that wage-earners increased their money holdings or that institutions expressed a preference for the bargain of silver.   Prosperity is just around the corner... and so is the trade deal. [PT]   This coming week...
  • Independence Day in America Circa 2019
      Freedom and Apple Pie The days are long and hot in the Northern Hemisphere when real American patriots raise the stars and stripes. Today the free and brave, with duty and self-sacrifice, begrudgingly accept federal holiday pay to stand tall upon their own two feet. Rugged individualism and uncompromising independence are essential to their character.   Independence day festivities...   With purpose and intent, they assemble as merry mobs along the shoreline to...
  • The Strange Behavior of the US Dollar in the Wake of Fed Rate Cuts
      A Change in Interest Rate Expectations In the last issue of Seasonal Insights I discussed the typical pattern of stock prices when the Federal Reserve cuts interest rates.  As one would expect, the stock market tends to stabilize after cuts in the federal funds rate. The issue is topical, as many investors and analysts expect rate cuts to be implemented soon given that signs of an economic slowdown are beginning to proliferate.   Market expectations about the direction of...
  • The Four Dimensions of the Fake Money Order
      A Good Story with Minor Imperfections “If you don’t know where you are going, any road will get you there,” is a quote that’s oft misattributed to Lewis Carrol. The fact that there is ambiguity about who is behind this quote on ambiguity seems fitting. For our purposes today, the spirit of the quote is what we are after. We think it may help elucidate the strange and confusing world of fake money in which we all travel.   Consumer price index, y/y rate of change...
  • Wall of Worry M.I.A. -  Precious Metals Supply and Demand
      Too Much Excitement? The prices of the metals fell last week, with that of gold -$9 and silver -$0.32. Of course, it was a week of stock market exuberance. Why would anyone want to own money, or seek safety when the Fed can seemingly push interest down / assets up indefinitely? As the old TV ad for Lotto proclaimed “you gotta be in it, to win it!”   “Stablecoin” Tether is used as a dollar stand-in on cryptocurrency exchanges that offer no fiat currency pairs. There has...
  • Resistance Created by Long-Suffering “Hodlers” - Precious Metals Supply and Demand
      Gold vs Other Assets The prices of the metals went up +$15 and +$0.23. We will be brief this week, as Keith just got off a 17-hour flight from Perth to London. Stocks continue their march upwards. And hence the gold price seems stalled—or is it? It may seem like gold goes up, when stocks go down and vice versa. That’s been the recent pattern. Why should people own money without return, when stocks are where the action is?   Gold-SPX ratio: in long-term gold bull markets,...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!