Easy Money Quotes

  • Fed Chair Jerome Powell: In an interview with National Public Radio’s “Morning Edition” program on Thursday, Powell said that even with the economy rebounding faster than expected, any change in monetary policy would happen “very, very gradually over time and with great transparency, when the economy has all but fully recovered.”
  • Fed Vice Chair Richard Clarida: Speaking on Thursday to the Institute of International Finance, Clarida said the central bank will stay in the game until the recovery is “well and truly complete.”
  • Fed Governor Lael Brainard: Before any shift in monetary policy Brainard promised “resolute patience”. 
  • San Francisco Fed President Mary Daly: She said the central bank would show at least “a healthy dose” of patience. ”We are not going to take this punch bowl away,” said Daly.
  • Richmond Fed President Thomas Barkin: In an interview with Reuters on Wednesday Barkin said that the United States may well see economic growth remain above trend for several years given the amount of pent-up demand. Nonetheless, Barkin said “What matters is what outcomes we actually get. I am going to see where we go. I am not trying to overthink the date (of any policy change). I am trying to think about the outcome.”

The above quotes are excerpts from Fed officials press promise of complete recovery.

Short Synopsis

Powell: Monetary Policy will change “very, very gradually over time and with great transparency, when the economy has all but fully recovered.”

Clarida: Monetary Policy will not change until the recovery is “well and truly complete.

Brainard: Promised “resolute patience.

Barkin: Pledged to not "overthink the date." 

Daly: ”We are not going to take this punch bowl away.”

Medal Awards

  • Gold Medal (by a mile):  Mary Daly
  • Silver Medal: Jerome Powell
  • Bronze Medal: Thomas Barkin 

2% Inflation Target

The Fed's 2% inflation target is monetary insanity.

Full speed ahead with the stimulus in search of inflation that would be visible to anyone who was not wearing groupthink blinders.

I have a set of questions for Fed Chair Jerome Powell on inflation. Please read them: Hello Jerome Powell We Have Questions.

He would not recognize inflation if it jumped off the table and spit grapefruit juice in his eyes.

As discussed previously, Inflation is Poised to Soar, 3% by June is "Almost Certain"

Historical Perspective on CPI Deflations

A BIS study of deflations shows the Fed's fear of deflation is foolish. 

"Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive," concluded the study.

For discussion, please see Historical Perspective on CPI Deflations: How Damaging are They?

Japan has tried what the Fed is doing now for over a decade, with no results.

Yet, Powell hell bent on producing more than 2% inflation until the strategy "works".

I discuss numerous ways Powell is on the Bank of Japan's path in Is the Fed Blindly Following Failed Policies of the Bank of Japan?

What Would I Do?

For the answer, please see Reader Question: What Would I do Differently Than the Fed?

Mish

Damn, That's a Lot of Speeches

Seven Fed presidents made speeches this week. Also, Fed Chair Powell and Vice Chair Clarida had dinner with Trump.

How are Gold and Money Supply Related?

M1 and M2 Money Supply numbers are surging. Will gold follow?