Everyone expects Janet Yellen to be a rolling over, inflationist stooge just like they did Ben Bernanke. Bernanke came on board after Alan Greenspan had taken the Fed Funds rate up to around 5% if I remember correctly. Inflationists and gold bugs thought they had it in the bag when 'Helicopter Ben' assumed control.
Indeed, Bernanke did what he was supposed to do (per the 'Helicopter 'Ben' script) as systemic stresses began to gather in 2007, addressing that pesky Funds rate, culminating in December, 2008's official ZIRP (zero interest rate policy). Here again is the chart showing the S&P 500's 'Hump #3' attended by this most beneficial monetary policy.
As noted again and again, the much trumpeted 'taper' of QE is not only not a negative for the economy, we have made a strong case that its mechanics are actually a positive, in the near term at least. But putting ZIRP on the table would be a whole different ball of wax. Continue reading "ZIRP Up Next?"→
In 2008, as they faced imploding financial markets and a staggering economy, Federal Reserve policymakers occasionally lightened their mood with references to Monty Python, "Desperate Housewives," "Star Wars" villains and plastic surgeons in San Francisco's East Bay.
They also sketched sometimes varying pictures of the financial crisis, with Janet Yellen, now the Fed chair, among those who most accurately grasped the depth of the crisis at hand.
The Fed on Friday released transcripts from its 14 policy meetings during 2008, six of them emergency conference calls. It was a frantic year in which officials rescued investment bank Bear Stearns, bailed out insurer American International Group and mortgage giants Fannie Mae and Freddie Mac and allowed the venerable investment bank Lehman Brothers to fail in the biggest bankruptcy, in American history.