It’s been nearly a year since Janet Yellen, in her first testimony press conference after a Fed Open Market Committee (FOMC) meeting, told the world just what she was looking for before raising the Fed Funds Rate (and everything that rises along with it). The openness was remarkable for a Fed Chair and a sign of a new era as a woman took control of what is arguably the most power job in the world.
Since that time, we have followed “Yellen’s Dashboard” with periodic updates to just just how we’re doin’. Nearly everyone agrees that interest rates will rise sometime this year, probably around June, as she has told us. But how does that stack up against her very public criteria? It’s worth checking in with some math to see where we are with rates and what we can expect.
Ahead of both the 6th Anniversary of Barataria and my preparations for a book on the economy today, I have been re-reading old posts. This one is from 26 March 2008, before the collapse of Lehman and before many people worried about the economy. It’s important to revisit this point because it explains why many of us were worried back about the last time the DJIA was up where it is now.
This goes to the heart of what makes this a Depression, and why the effects are very long term and big. I hope you enjoy this little trip through history. Thanks for reading!
There has been a lot of good economic news lately, at least compared to the very bad news of a few years ago. But that doesn’t mean that there aren’t bad things worth keeping a close eye on – especially those that predict future action by the Federal Reserve.
The velocity of the US Dollar – the number of times per year that money turns over through the economy – continues to drop without an end in sight. This is a worrying sign because it suggests that most of the economic growth we are seeing comes from money that is being more or less printed by the Fed. It also suggests that there will be another round of quantitative easing, or even more money printed. There has to be a better way – and this wouldn’t be Barataria if we didn’t take a stab at how.
Between the political conventions, the people running for the second most powerful office in the land have to stand down for a moment and let the Big Guy speak. That would be Ben Bernanke, who delivered his annual address at the Jackson Hole conference today. You want real power? If being able to print $1.6T ain’t it, I don’t know what is.
The speech was highly anticipated because in the past the occasion was used to announce rounds of Quantitative Easing. There was hope there would be a third round of it, which is to say more greenbacks flowing out into the economy hot off the Fed presses. It didn’t happen. Bernanke spoke instead about what’s gone wrong and what they’ve done to try to get things to start back up.