by Louis Cammarosano, Smaulgld:
Politicians, The Media and Fed Members Themselves Begin To Question The Fed, its Policies and Credibility
For years Ron Paul was the lone voice crying in the wilderness against the inanity of Federal Reserve monetary policy and the Fed itself. Congressman’s Paul’s exchanges with Fed Chairman Ben Bernanke were classic. Since Mr. Paul retired from Congress in 2013, Fed policy has been as confused as ever. But until recently has gone unquestioned.
Those in the precious metals and libertarian communities have ridiculed the Fed for years. The rest of the world, however, has treated the Fed and Fed Chair Janet Yellen as some sort of economic and financial oracles. As the U.S. and global economies stagnate, despite massive Fed stimulus and zero and near zero interest rates for nearly a decade, patience is starting to wear thin in mainstream quarters.
Fed Open Mouth Operations
In 2015, the Fed talked all year about raising rates and did it just once at the end of the year. At the beginning of the 2016 the Fed indicated that four rate hikes during the year were “on the table”, then suddenly it was down to two by the spring. By mid April, markets began to interpret the words of Ms. Yellen and Fed Presidents as dispensing with any rate hikes in 2016.
Then the great May Fed Yack Attack began with at least eight Fed officials insisting and repeating that rate hikes were coming, maybe two or three by the end of the year AND that these rate hikes were “on the table” for June which would be a “live meeting”.
It’s Not Impossible!
The Fed’s June meeting came and went without a rate hike. At a press conference after the June meeting, Ms. Yellen said that a rate hike in July was not an impossibility.
Fed’s Bullard Says Fed Credibility Stretched
Late last week, St. Louis Fed President James Bullard (himself known to talk out of both sides of his mouth regarding the timing or efficacy of interest rate hikes) said what was on everyone’s mind.
“This mismatch between what we are saying and what we are doing is arguably causing distortions in global financial markets, causing unnecessary confusion over future Fed policy, and eroding credibility of the Fed.”
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