JDA's Worst Nightmare Comes True: Obama Taps SF Fed's Janet Yellen as Fed Vice Chair?

yellen fed
Pic credit: married to the sea

First the official stuff and let me just tell you, I had to step outside and get a breath of fresh air after I read this just to make sure I wasn't suffering from some kind of paranoid delusion. Was I sleeping? Someone fucking pinch me and really hard, that maniac Obama has just offered San Francisco Fed's Janet Yellen (arch-nemesis of both JDA and a handful of pretty sharp Fedheads) Don Kohn's vacated position as Fed Vice Chair.


President Barack Obama plans to nominate Janet Yellen as vice chairman of the Federal Reserve Board, a person familiar with the matter said.

Ms. Yellen, president of the Federal Reserve Bank of San Francisco since 2004, has been a strong supporter of Fed Chairman Ben Bernanke's policies to fight the deep economic downturn.

This sends a clear signal from the administration: we're ready to do whatever it takes to keep the Dirty Fed money coming. Well how in the hell did that happen? The Fed is entirely politicized at this point so let's just stop arguing about the independence bullshit because if this doesn't make obvious what is going on, I personally volunteer to come to your house and bitch slap you myself, just send me your address.

And if somehow I can get through the metal detectors, I'm not against slapping the Fed for letting this happen either. Jeffrey Lacker is over there whining about the Fed being scapegoat for misplaced bailout anger and meanwhile his most clueless System colleague just got "promoted" to Jr Supreme Ruler of Dirty Fed Money. It'll be a pay cut but she won't have to pay San Francisco prices anymore, I'm sure she'll do just fine. Besides, she'll get back to her salary in no time if she lives up to her SF Fed legacy at the Board of Governors as Ben Bernanke's bottom bitch and fantasizes about 4% inflation targets.

Don't mention that number to Dallas Fed's Richard Fisher, he'll get pissed.

OK wait for it.


President Barack Obama plans to nominate San Francisco Federal Reserve Bank President Janet Yellen, a respected policy dove, to be vice chairman of the central bank, a source familiar with the process said on Thursday.

Yellen would replace Donald Kohn, a 40-year veteran of the Fed who announced earlier this month that he would retire on June 23. The nomination for the four-year term as the Fed's No. 2 would be subject to Senate approval.

She is considered one of the most "dovish" members of the central bank's policymakers, meaning she is seen to lean toward policies that will boost growth and promote employment rather than those aimed at keeping inflation at bay.

Yellen, reached by telephone, declined to comment, as did the Treasury Department. The White House did not respond to requests for comment.

"The FOMC top brass is starting to look like the dream team," said Chris Rupkey of the Bank of Tokyo-Mitsubishi, referring to the Fed's interest rate-setting panel.

WHOSE DREAM ARE WE TALKING ABOUT?! This is the sort of shit that makes me jump out of bed at 3a in a cold sweat. The dream team? Please, if we're talking the Dream Team, Janet Yellen would be Christian Laettner and would have been traded 16 times already by now.

Janet, seriously, how can I talk you out of this? It's too late to get to Obama but from one San Franciscan to another, please just say no.

Reuters gives us five fun facts about Janet Yellen for those of you that aren't hip to our esteemed local Fedhead (don't worry, I'll catch you up in a minute):

* Yellen was a governor on the Fed's Washington-based Board of Governors from August 1994 to February 1997.

* She chaired the White House Council of Economic Advisers from 1997 through August 1999 under President Bill Clinton.

* She has been president of the San Francisco Federal Reserve Bank, one of 12 regional Fed banks, since June 2004.

* Yellen, 62, is a native of Brooklyn, New York, and received a PhD in economics from Yale University in 1971.

* She is considered one of the most "dovish" members of the central bank's policymakers, meaning she is seen to lean toward policies that will lift growth and promote employment rather than those aimed at keeping inflation at bay.

Rad but um frightening and not all that useful. I have 5 better ones (naturally):

  • Janet Yellen once suggested the Fed issue its own debt (F-bills). I believe she has misread the playbook and probably embarrassed more than one of her colleagues by even suggesting this.
  • "If it were possible to take interest rates into negative territory I would be voting for that," she told reporters after the speech" (Reuters February 22 ) How easy would Janet like the Dirty Fed money to go? I think that statement pretty much sums up her attitude. Miraculously, the woman who endorses these horrible easy money policies does not care about inflation.
  • She's one of the worst monetary enablers I've ever seen. Check out SF Fedhead Yellen: If Her Husband Were a Crack Addict, He'd Be Turning Tricks as We Speak
  • She's a mini Bernanke - obsessing over the Great Depression - focusing too much on unemployment and not enough on the consequences of this stupid ass easy money addiction. Do we really need two of them at the Board?!
  • She lacks the ability to see the long-term effects of her desired policy actions. And sometimes gets snippy with System colleagues who don't share her completely asinine view. They may not be able to say as much to her face but I'm happy to. See Yellen Takes a Big Swing at Inflation Hawks (WSJ's Real Time Economics)

And then we have this from Zero Hedge September 14, reminding me (and hopefully Janet's cheerleaders at the SF Fed) that I'm not the only one who thinks she's a tad... off:

Grandma Janet sounds like an insane and/or senile bureaucrat who does not want to admit that she was one of the select cabal of monetary druids whose mistakes essentially destroyed the financial world a year ago... and their reaction to this destruction has made sure that the US economic system is now promptly heading either toward hyperdeflation or hyperinflation (likely both).

Nonetheless, some interesting quotes:

* On negative fund rates:

"[QE] is stimulating the flow of credit, but [it is] simply not as powerful levers as large rate cuts."

In other words, if Bernanke could charge savers 10% for keeping money in the bank, he would be first in line to do so.

Surely Obama knew all these facts and then some when he made his decision. And the Fed is independent hahahahaha.

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.


Economicon said...

Holy fuck! John Williams is right. Hyperinflation train to crazytown here we come... Stand clear of the closing doors!

Seriously, E. Like they ACTUALLY think this is a good idea. THE DREAM TEAM! LMFAO!!!! The dream team of WHAT?! This is the shit I have nightmares about!!

I was worried our homie Obama was completely ignorant when it comes to economics - now I'm certain he is not only ignorant but malicious. Ouch.

Anonymous said...

A silver lining to your dark cloud...

If failure and hyperinflation do come to pass, you may witness the death of Keynesian economic thought within your lifetime...

See...it isn't all bad. This is why I'm known as "Mr. Sunshine" within my office.


Andy said...

Janet Yellen was a trending topic on Twitter today. I covered it on my show http://bit.ly/cZ2Ji4

Economicon said...

Nassim Taleb is now in the Hyperinflation camp. It seems we're in good company:


That has really scary implications for the future. I'd rather not relive history through a french revolution in our own lifetimes.

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