A Peek at the Fed's Monetary Policy Year Ahead

Janet, of course, is to the right
of the gentleman in the orange foam gun hat.

It's going to be a long boring year with the new 2010 FOMC voting member line up (as I said earlier) so we might as well get to know them now.

Daily Reckoning seems to believe 2010 will be a rough year for Treasurys and looking at who will be deciding monetary policy in the year ahead, I am forced to agree (oh hell, I would anyway):

OK… I know that many of you think I belong on the loony farm for saying that the next bubble to pop will be the US Treasuries… But, before you send me away, you might want to know that 2009 has been the worst year for Treasuries (performance wise) since 1978! And why, you might ask, is this happening? Ahhh grasshopper… Supply and demand… We have the supply, and the foreigners who are required to continue to step up and buy more Treasuries to finance our deficit spending… Are demanding that they get higher yields!

And if you think we auctioned off some crazy, unbelievable, steroid-induced, Treasury amounts in 2009, you haven’t seen nothin’ yet! Just wait till our lovable (NOT!) lawmakers see the results of this latest auction – which saw $44 billion of 2-year notes, and $42 billion of 5-year notes get bought up… And they believe that no matter how much they spend, foreigners will buy our debt! OH NO! Because I know, that you know, that I know, that you know, that once lawmakers in this country see that they can spend more without ramifications, the spending spigot will get turned on BIG TIME!

So… Treasuries will have to deal with this in 2010… And beyond… It’s not like the deficit spending is going to stop in 2010! 2011? Now that’s a different story, if… That is, voters throw all the deficit spending dolts out on their ears, when it comes time for elections!

So? Who are they?

First of all, my dear friend Pam B. totally would do St Louis Fed President James Bullard, in fact, I'm pretty sure a lot of people would if given the chance. Maria Bartiromo is probably getting excited at the idea of sitting down with our Mayan prophesy-believing friend though we all know who yours truly gets her FRNs in a knot for. I have my Money Honeys and it's not this dude but I'm sure at least Pam would hit that. Two times. Bullard also shares his name with an art.porn film "star" so that should make for some funny and completely juvenile jokes when he starts acting like an ass on policy. Come to think of it, Pam would probably do both of them.

Policy-wise, don't expect much out of the guy. St Louis Fed, however, gets some excellent information and has an above-average research team (helllllo, San Francisco Fed, I'm capping on you some more) so hopefully he actually uses that instead of relying on the Fed's trusty grope in the dark and hope for the best method. I'm sick of that one. I vote early he's our only hope this year. I know, that sounds really sad but it is.

Which brings us to #2. I'm intentionally ignoring New York, you know a Goldman rat has a permanent seat on the FOMC. Naturally. No need to reintroduce that.

Kansas City Fed's Thomas Hoenig is voting this year and he's 50/50 75% of the time (I'm in accounting, I can make up numbers like that if I want to, suckers, this is my list). Alright, I'm only going to say this once; you're going to have to come up with better shit than "The Fed as Payment Processor" speeches to convince me you are the guy that isn't going to bumble an "exit strategy" that you guys still don't have. I'm not kidding.

Hoenig can go either way at this point. I'm hoping it's the "grow a pair" direction.

#3 is basically Janet Yellen's mini-me so don't expect impressive things from Boston Fed's Eric Rosengren. In fact, it's going to be hilarious to watch him parrot Janet's tendency to suggest and favor blind, misguided policy. Go on, Eric, suggest the Fed issue F-bills. Come on, you know you want to.

To whomever will be effectively replacing Jeffrey Lacker (I can't call that one yet), the offer still stands: one slap upside the head for $25,000. Or was it $50,000? Whatever. Since Janet and Jeff are both off this year, at least in a voting sense, someone step up and *wap!* the guy in the head if he goes there, please.

See? New year, same shit.

Cleveland is like the 6th man on a basketball team so we'll ignore them for now. Do something stunning and maybe I'll pay attention.

"...it's the perfect place if you are a douchebag... Cleveland!"

I'd say strap in but there's really nothing to strap in for. You already know what's about to happen, no need to beat a dead horse.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.