Richmond Fed's Lacker: It Would Take More Than Deflation Worries To Warrant Further Easing
pic credit: Elephantitis of the Mind
My once first but now second favorite Fedhead has redeemed himself slightly by suggesting that any further easing on the part of the Fed at the first sign of deflation would be a dumb move. Duh. That gives us two out of 12 Fedheads who see things this way though neither of them have an FOMC vote this year and definitely don't have much of a chance against the Bernanke/Yellen Stimulus Team that will take over once Congress gets around to getting Janet in as Fed Vice Chair. It's like trying to take on a fire hose with a squirt gun at this point.
Call me crazy but I'm of the thought that it's too late for the helicopter drop at this point, even if things do take a deflationary turn for the worst. It's as if all the cogs and gears of the perpetual debt machine called our economy have rusted tight to each other and the Fed doesn't have enough grease to get them moving again. That means the jig is up, you bastards, now it's time to admit as much.
WSJ's Real Time Economics:
If inflation fell in material way that suggested a risk of sustained declines in the price level, I would be willing to seriously consider further quantitative easing. But we seem fairly far from that threshold right now … For me if the growth numbers come in about where the consensus forecast is and we continue to get inflation between 1% and 2%, I don’t believe I would see a need for further stimulus. Others may disagree but that’s how I see it.
The best part, as always, is the comments however. Like this winner calling Lacker out for forgetting where he came from and giving in to "The Man", which he now of course totally is. Knowing just a little about the place from which JL comes, I'd have to say I agree with this assessment.
o 11:18 am September 15, 2010
o Midwest lib wrote:
Jeffrey, Jeffrey, Jeffrey,
It’s been a long time since your days on the picket line. Now you’re a fat cat seemingly indifferent to the suffering that arises from your failed economy. Nine plus percent unemployment and you can’ be budged from a 1.5 percent inlfation guideline? Tell, me Jeffrey, have you bought into the Minn Fed nonsense that construction workers don’t have the skills to become manufacturing workers? That unemployment is structural? That’s not what the evidence shows. Where has your education failed you?
Let me tell you, Midwest lib, Lacker has bought into the whole thing hook, line and sinker because he has to. Were he to deviate too far from the consensus (keeping in mind that he is merely doing his duty to the Federal Reserve System by inserting a contrary view into the mix when appropriate), he'd be out of a job and preaching his breed of mega macro econ to college students instead of his colleagues at the FOMC.
His education hasn't failed him at all, it's accomplished exactly what it was supposed to. A PhD from the School of Hard Knocks would have certainly disqualified him from a position as Chief Executive Talking Head as it would have given him a real-world perspective on how things work instead of the textbook view that everything can be easily defined by data and projections. Poor thing, he doesn't even know he doesn't get it and probably never will.
The Lacker I fell in love with nearly two years ago has long since cowered off and been replaced with this version who sticks close to what's safe and follows the protocol instead of shaking up the status quo.
Should I pass the Vaseline now or just wait?