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Yellen Served a Heaping Plate of Waffles and Syrup at the FED’s Annual Jackson Hole Junket

Written by Gary North on August 25, 2014

If Janet Yellen had not earned her Ph.D. in economics, she could have been a great short-order cook at Waffle House.

Yellen is as long-winded as Bernanke. She lards her speeches with footnotes, just as he did. She is as evasive as Greenspan, but she uses academic jargon and peripheral statistics to do her work.

Her first Jackson Hole speech shows how adept she is.

First, some background. The FED said in December 2012 that an unemployment rate of 6.5% was one of the two benchmarks to use as a way to evaluate when to raise interest rates. The other was CPI growth at 2%.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. The Committee views these thresholds as consistent with its earlier date-based guidance. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

The CPI increase, July 2013 to July 2014, was 2%.

In short, both of the targets have been reached.

So, will the FED raise rates? Which rates? How? The European Central Bank has contracted the monetary base for over a year, and long-term bond rates have fallen. Meanwhile, the short-term ECB rate has dropped like a stone since October 2013.

To avoid dealing with this problem — the #1 policy problem facing the FED — Yellen is waffling. Her speech was pure waffles and syrup.


She began with good news on the job front. This was syrup.

Job gains in 2014 have averaged 230,000 a month, up from the 190,000 a month pace during the preceding two years. The unemployment rate, at 6.2 percent in July, has declined nearly 4 percentage points from its late 2009 peak. Over the past year, the unemployment rate has fallen considerably, and at a surprisingly rapid pace. These developments are encouraging, but it speaks to the depth of the damage that, five years after the end of the recession, the labor market has yet to fully recover.

(For the rest of my analysis of her exercise in “catch me if you can,” click the link.)

Continue Reading on www.garynorth.com

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4 thoughts on “Yellen Served a Heaping Plate of Waffles and Syrup at the FED’s Annual Jackson Hole Junket

  1. Of course Ms. Yellen can't understand what is happening to the economy. She view the economy through a Keynesian window that distorts reality. It is simple really. The economy is falling apart. Where visible gains are being made, there is always a subtext. We are growing jobs. Yes, but most of them are either low paying or part time. In any case we are not adding jobs fast enough to keep up with population growth, never mind Obama's illegals. Business are sitting on money because the future is so uncertain. Corporate profits are gained by cutbacks. It is not good times in which we live. See my blog at http://cranky-conservative.blogspot.com

  2. When we had a gold and silver backed currency, prospectors and miners helped increase our money supply by producing more of the necessary ore. Under the federal reserves system, there is no way for the common person to increase the money supply, other than borrowing money into our economic system from the banks. New money is borrowed into the system by the taxpayers, or by the federal government borrowing, which the taxpayers are then charged interest for the additional debt. The debt is impossible to pay, since the only way than one person pays his share of interest debt is if another person borrows even more that's put into the economy. The interest debt is than even bigger! The 100 year nightmare of the federal reserve has to go!

  3. You got it! All we need to know is that bankers make money on debt. The bigger the debt and the more people in debt, the better for the bankers. Our Founding Fathers, a group of prosperous land holders and businessmen, didn't have much control of the government, so they rallied some of the middle class to revolt and paid the lower class to serve as soldiers. Now the Bankers have control of the government and their aim is to squeeze as much from the public as they can without fomenting revolt. They do that by keeping people in debt AND employed. The Federal Funds Rate just applies to the banks and has very little effect on what the bankers decide to charge as interest on their loans. Jargon is just glitter (as in all that glitters is not gold) designed to obfuscate and confuse. It is used to obscure transparency.

    There was an observation made that the length of the Fed Head's speech was inversely proportional to the effect on the Market. A long speech meant nothing was changed and the Market continued as usual. A short speech probably meant the Fed was probably unwilling to disclose what was really going on, and the Market got jumpy. I think the cutoff point was about 585 words.

  4. just to look at that piece of slimey stinking rotten garbage makes me sick // just another greedy attention hore