Fed's Yellen: Defending the Fed (Again)
pic credit: Married to the Sea
It gets old, quick, and this shtick of Janet's has been old for several months if not years. It's obvious that the empirical evidence she refers to is nothing more than the FOMC Ouija board pointing to "no" when they ask it "is inflation going to kick our asses?"
Check out her comments last Monday to the Economic Club of New York:
Increases in energy and food prices are, without doubt, creating significant hardships for many people, both here in the United States and abroad. However, the implications of these increases for how the Federal Reserve should respond in terms of monetary policy must be considered very carefully. In my remarks today, I will make the case that recent developments in commodity prices can be explained largely by rising global demand and disruptions to global supply rather than by Federal Reserve policy. Moreover, empirical analysis suggests that these developments, at least thus far, are unlikely to have persistent effects on consumer inflation or to derail the recovery. Critically, so long as longer-run inflation expectations remain stable, the increases seen thus far in commodity prices and headline consumer inflation are not likely, in my view, to become embedded in the wage and price setting process and therefore are not likely to warrant any substantial shift in the stance of monetary policy. An accommodative monetary policy continues to be appropriate because unemployment remains elevated, and, even now, measures of underlying inflation are somewhat below the levels that FOMC participants judge to be consistent, over the longer run, with our statutory mandate to promote maximum employment and price stability.
While I continue to anticipate a gradual economic recovery in the context of price stability, I do recognize that further large and persistent increases in commodity prices could pose significant risks to both inflation and real activity that could necessitate a policy response. The FOMC is determined to ensure that we never again repeat the experience of the late 1960s and 1970s, when the Federal Reserve did not respond forcefully enough to rising inflation and allowed longer-term inflation expectations to drift upward. Consequently, we are paying close attention to the evolution of inflation and inflation expectations.
Instead of trying to defend a destructive position that is putting a lot of Americans in an even more uncomfortable situation than before (you know, when they lost their jobs, their homes and their self-respect), perhaps Janet should spend some time shaking hands with the dirty populace so she can somehow reconnect with reality. I had big hopes for her move to DC since we all know the magnetic field in San Francisco is a bit off but I guess it's the field in her brain that's fucked up, not that of wherever she lays her head.
Here's the great part, she then defends core inflation, offending us further by implying that they don't mean to make it appear that they don't care:
I want to emphasize that this focus on core and other inflation measures that may exclude recent increases in the cost of gasoline and other household essentials is not intended to downplay the importance of these items in the cost of living or to lower the bar on the definition of price stability. The Federal Reserve aims to stabilize inflation across the entire basket of goods and services that households purchase, including energy and food. Rather, we pay attention to core inflation and similar measures because, in light of the volatility of food and energy prices, core inflation has been a better forecaster of overall inflation in the medium term than overall inflation itself has been over the past 25 years.
And by volatility I'm sure she means "the inflationary shit storm that is about to hit the fan," since she's such an expert on these things and all.
Just stop, Janet. Please.