Atlanta Fedhead Lockhart: We'll Pop the Next One, We Swear
O RLY?! That's not what I heard.
Fed's Lockhart: may have to pop future asset bubbles (via Reuters):
Asset bubbles are hard to spot and even harder to tackle but recent lessons about the damage they can do may force policy-makers to pop them in the future, a top Federal Reserve official said on Wednesday.
"I am sympathetic to the view that policy-makers should consider intervention in certain circumstances. That may simply be by speaking against the practices ... as opposed to taking action with interest rates," Federal Reserve Bank of Atlanta President Dennis Lockhart told a panel discussion hosted by Emory University.
"There are a range of things that policy-makers could do to in effect step on the brakes a little bit and keep the economy more stable," said Lockhart, a voting member of the Fed's policy-setting committee this year.
Yeah right. If the Fed wants to start popping bubbles, why are they in the process of trying to reinflate one?
Nice try, Lockhart. You can do better.
While implying the Fed would pull out its magical monetary bubble-popper next time might be a bold statement for a Fedhead, Lockhart kept to the script for a speech last week to the Chattanooga Chamber of Commerce (isn't it cute when the Fedheads seem to go on a World Economic Outlook Tour at the same time?)
The FOMC has stated its intention to keep the policy interest rate low for an extended period. I agree that this approach is needed. This policy stance should encourage more business activity and facilitate more hiring.
No policy is certain to improve outcomes, and no policy is without risks. The challenge my colleagues and I face is navigating between the risk that early removal of monetary stimulus snuffs out the recovery and the risk that protracted monetary accommodation stokes inflation expectations that could ultimately fuel unwelcome inflationary pressures.
The Fed must deal with this tension, particularly in coming quarters, as we pursue our dual mandate of price stability and maximum employment. I believe the overriding concern should be the quality of recovery as opposed to the speed of recovery. The best answer to unemployment is restoration of a healthy, balanced, and growing economy capable of producing sustainable employment. This objective will require structural adjustment in the economy and personal adjustment for many workers.
I believe the economic outlook—including the employment picture—calls for continuing efforts to remove obstacles to the rebuilding of economic strength on solid foundations. Chief among such obstacles is the still-constricted bank and securitization credit system, especially those segments that finance small business and households.
I do not expect quick fixes for the unemployment challenge ahead, but I am convinced the right policy objective is sustainable employment growing out of a recovery that is grounded in durable and resilient fundamentals.
Let me know if you find those "fundamentals", Lockhart, because I've tried to figure out where they are hiding and have thus far come up empty handed every time.
When homicidal maniac Alan Greenspan speaks of the housing bubble he barely acknowledges, he implies that were the Fed to have intervened when they first noticed a swell, the economy would have instantly seized up and nosedived into 10% unemployment almost overnight. Lockhart seems to disagree with this outcome but does make a pretty ominous statement.
Perhaps my Fedbashing tin foil hat is strapped on too tightly but "I am sympathetic to the view that policy-makers should consider intervention in certain circumstances. That may simply be by speaking against the practices ... as opposed to taking action with interest rates" sounds to me like a threat. Any time I consider the implications of intervention I can't help feel a chill of doom spread across my spine.
Please, no, anything but that.
Meanwhile, who wants to put money on them missing the next 50 bubbles? Pop pop pop? More like fap fap fap. I'm unimpressed.