Richmond Fed's Lacker Says the Right Thing But For the Wrong Reason
pic credit: heavylift via Flickr
For about the last year and a half or so, I suspect someone has been dosing Lacker's coffee with Xanax and unicorn piss. Either that or he just stopped giving a fuck (read: gave up to his handlers) and his words reflect as much. Whatever happened in that brain of his I hate it and wish his kidnapper would finally release him and send this bad clone back to the lab where they created him.
In October of last year, he said QE 2 would be a hard case to make but as we all know, the easy money whores won and didn't even bother making the case when they decided to do it.
That being said, the outlook is bleak. Though unemployment is magically down, surely Lacker has access to the real data and knows that the only reason it looks better is due to the fact that this thing has dragged on so long that tens of thousands are giving up on finding work each month, therefore dropping out of the government's fantastical unemployment number. Duh.
The Federal Reserve should seriously consider pulling back on its $600 billion stimulus program given stronger growth and a brighter jobs picture, Richmond Fed President Jeffrey Lacker said on Tuesday.
Despite a report last week showing only 36,000 jobs were created in January, Lacker said other measures were pointing to a firmer economic recovery and better employment prospects.
"An array of forward-looking indicators of employment trends point to continued labor market improvement," Lacker, a known inflation hawk, told a business gathering at the University of Delaware.
But wait, is our 2nd favorite Fedhead letting his inner emo peek out from under the rosy brim of his Boy Scout hat and acknowledging that the shit will hit the fan as scheduled?
Be clear: there is no uncertainty about whether the long-run federal budget imbalance will be corrected. Continual increases in debt relative to the size of our economy are simply not feasible and will not happen. The real question is how a sustainable path will be achieved. In advance, by deliberately adopting and following a credible strategy, or in extremis, forced by investor retreat and collapsing market confidence to adopt drastic emergency measures?
Too bad that's already happening and he's simply viewing it as inflation expectations getting a little overworked:
Still, recent increases in commodity prices are showing up in consumer price measures and will put upward pressure on overall inflation numbers in the months ahead. Just how much is hard to say. The effect on overall inflation could be transitory, or could persist if firms, encouraged by accelerating demand growth, pass input prices on to their customers. Such pickups in inflation are common at this point in business cycle upturns, and would be consistent with the expected inflation rates implied by prices of inflation-indexed U.S. Treasury debt, which show market participants now expecting inflation to average 2 percent over the next five years, and as much as 3 percent over the following five years.
Sigh. Can someone talk to his psychiatrist and ask for them to please for the love of sweet baby Jesus cut down his dose? I want the old Lacker back.