Yellen Spooks Markets With Fed-Like Comments "Rates May Have to Rise Somewhat"

Mish

Stocks dipped a bit on Tuesday following comments by Treasury Secretary Janet Yellen on interest rates.

Unofficial Dual Role

Continuing her unofficial dual role as a Fed president as well as Biden's Treasury Secretary, Janet Yellen commented in an Atlantic interview Rate May Have to Rise Somewhat to prevent overheating.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” Ms. Yellen said when asked if the economy could handle the kind of robust spending that the Biden administration is proposing. 

“I think that our economy will grow faster because of them,” Ms. Yellen said of the proposed investments, such as research and development spending.

Tools? Who Has the Tools?

Biden wants to increase spending by $4 trillion with Progressives wanting even more. 

Yesterday, I commented Yellen Discusses Inflation Tools As If She Was Still the Fed Chair

In a fluff interview on Meet the Press (see above link) in Chuck Todd asked Yellen about inflation. 

She said the Fed has tools but twice went on to say "we" as if she was still on the Fed.

"We will monitor that [inflation] very carefully. I don't believe inflation will be an issue but if it becomes an issue we have tools to address it," said Yellen.

In response, I asked "Who is we? What tools does the Treasury Secretary have or is Yellen still on the Fed?"

Meaning of Somewhat

Today, Yellen continued her dual role as a Fed President and Treasury Secretary. 

Now everyone gets to debate the meaning of "somewhat".

Addendum: No Rookie Error

What About the California Board of Education?

A Word About Messy Tapering

Mish

Comments (35)
No. 1-10
Eddie_T
Eddie_T

Who cares.

No sense in borrowing money at any price since the half the ROI on real estate and stocks is now going to be claimed by the government for taxes.

This shit matters to markets. The smart people will be raising cash. Many already are, like Gates, Buffet, and Burry. If I had any sense, it’s what I would do...I’ve called a meeting of my family stakeholders to talk about it.

Yellen and Powell are joined a the hip.” We” is both of them, and all the usual suspects.

FromBrussels
FromBrussels

If rates were to rise to healthy, yet still historically low levels, our beyond proportion debt bloated financial system would 'enjoy' the biggest meltdown ever....No worries though, CBs worldwide will keep rates at 0, even with 50% official inflation... Like Mish asks occasionally : got gold ? Don t know when but at one one point he'll most likely nail it ....

Too much BS
Too much BS

When I heard Yellen yelling this morning, head for the hills, the sky is falling. I sold stocks and ran to the hills. Only to find they were very crowded and everyone was pukin.

RonJ
RonJ

"Unofficial Dual Role"

Back when Yellen was running the FED, she said that savers wear many hats. Now she has two of her own.

Jackula
Jackula

Issues in the Repo market today? Markets have a wobbly feel to me these days..

Captain Ahab
Captain Ahab

The lemmings are lined up for the start. No one really knows what to do because the world hasn't been in a derivative-implosion situation with negative real rates. Stay tuned.

Casual_Observer
Casual_Observer

Yellen can say what she wants but rates will have to stay low for a long time. The problem with low rates is they beget low rates.

Scooot
Scooot

I can’t believe she slipped up. She must have known it contradicts the Fed’s stated stance on inflation to keep rates low so as to overshoot. She must have known the impact it would have on markets. So what’s behind the comments, is it a warning shot to keep markets on their toes? It’s a bit strange.

ccarlo
ccarlo

Yellen has spoken her concern about inflation her comments came out when Gold was trading close to 1800 and that is the line that they want to defend. Conveniently enough the suasion worked for a 25$ drop in the price of gold. But now she has exposed the jugular and inflation fears are for real and there s very little the Fed and Yellen can do about. How much gold can the bullion banks sell short on their fractional reserve system? Every day we see strong demand for physical Gold and Silver. Do not underestimate the markets Yellen!

chamneyce
chamneyce

"Rates need to rise a bit."???

Would the results be so bad if the Fed announced it will raise rates 0.1% each quarter until they reach 1%? 0% nominal and negative real rates send such a bad message.


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