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The Unintended Consequences of ZIRP

by John Mauldin, Gold Seek:

Yellen’s coronation was this week. Art Cashin mused that it was a wonder some senator did not bring her a corsage: it was that type of confirmation hearing. There were a few interesting questions and answers, but by and large we heard what we already knew. And what we know is that monetary policy is going to be aggressively biased to the easy side for years, or at least that is the current plan. Far more revealing than the testimony we heard on Thursday were the two very important papers that were released last week by the two most senior and respected Federal Reserve staff economists. As Jan Hatzius at Goldman Sachs reasoned, it is not credible to believe that these papers and the thinking that went into them were not broadly approved by both Ben Bernanke and Janet Yellen.

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1 comment to The Unintended Consequences of ZIRP

  • rich

    Why Does the Media Ignore Timothy Geithner’s Disastrous Leadership of the NY Fed?

    By William K. Black

    Remember nine months ago when Timothy Geithner assured us that it was “extremely unlikely” he would take a position on Wall Street?

    The IMF and the NY Fed are far more private than public and they both exist primarily to serve banks. They NY Fed is owned by the private banks it supposedly examines and supervises and the banks elect bankers to act as the NY Fed’s directors (including until very recently the supposed “public interest” directors). They are not subject to U.S. government caps on pay, and in the case of the IMF the employees have their pay increased to compensate for the U.S. taxes they are supposed to pay (which Geithner did not pay for many years). Geithner’s disastrous “public service” at the NY Fed and the IMF made him a multi-millionaire at great cost to the public.

    But something else intrigued me as soon as I heard that Geithner was cashing in at Warburg Pincus – I remembered that I had debated a former leader of that firm about Geithner. (Details are here, here, here and here.) “Bo” Cutter was enraged that folks like me were criticizing Treasury Secretary Geithner and Obama’s decision to promote him.

    Warburg Pincus has had Geithner’s back for at least four years. The revolving door is powered by reciprocity, and Geithner had had Wall Street’s back for a decade. Transparency International decries corruption through crude bribes in developing nations, but the “perfectly legal” corruption of “advanced” nations like the U.S. differs largely in mode. Warburg Pincus was patient, but its leadership also recognized that it is never too early to begin sucking up to those in power, particularly if others are criticizing a senior government official for being too subservient to the elite bankers.

    http://neweconomicperspectives.org/2013/11/media-ignore-timothy-geithners-disastrous-leadership-ny-fed.html#more-6924

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