Idiot Savant

Idiocy from Janet Yellen, per Bloomberg:

“I am committed to achieving both parts of our dual mandate: helping the economy return to full employment and returning inflation to 2 percent while ensuring that it does not run persistently above or below that level,” Yellen said today.

First of all, the mandate calls for stable prices, not 2% inflation. The Fed decided, all by itself, that 2% was a good inflation target, but that is not its mandate from Congress.

Secondly, there is no reason to believe that these goals are achievable through monetary policy and bank regulation, the Fed’s purview. The Fed has not achieved this in the past, why does anyone believe that it will do so in the future? In my opinion, to assert that this is possible, without evidence, is professional misconduct. Recently transcripts of  Fed meetings in 2008 were released and the discussions show a discouraging picture of incompetence and carelessness.

The Fed has created a wild boom/bust ride as a result of its ill-advised manipulation of the financial markets, with the most devastating consequences now inevitable but yet to be seen. Continuing on its present course is an example of true insanity – doing the same thing over and over again in the hope of a different result.

In my opinion, there are many who pay lip service to the Fed but understand that there is nothing there. I suspect that there is an unspoken conspiracy of silence from those who understand the problem but benefit from the Fed’s handouts. No-one in the investment business, with the exception of a few honest people like John Hussman, is willing to address the Emperor’s nakedness.

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