Janet Yellen approved by Senate Banking Committee, 14 to 8


#1

cnbc.com/id/101217820

Why aren’t the Republicans filibustering this?


#2

What the Yellen vote will tell us about today's Republican Party

Key point

The Fed’s policies fail to make sense even in purely Keynesian terms. Keynes taught that the key to pulling an economy out of recession is to increase demand. Repressing interest rates is supposed to stimulate borrowing and thus stimulate demand. But the Fed’s repression of interest rates has penalized savers. The collapse of demand from savers has in turn more than offset any new demand from borrowers lured by the low interest rates.

More seriously, the Fed’s repression of interest rates and creation of so much new money out of thin air has a tendency, not to create sustainable boom, but rather to blow up artificial and unsustainable economic bubbles.

Not only the savers but (reserves of) insurance companies and pensions are hurt by the Fed policies. Even Bernanke has admitted that.


#3

[quote="ProVobis, post:1, topic:345859"]
cnbc.com/id/101217820

Why aren't the Republicans filibustering this?

[/quote]

Well, the argument gets to a point where the government needs to function and the American people have said in so many words they want a functioning government.

The minority GOP Senators cannot be called upon all the time to bail out the American people who put Barack H. Obama and Joesph R. Biden back in the White House along with even more democrat senators.

I think both houses have done pretty much all they can do.

The American people---especially the the Midwest---half the time I don't know what universe or time period they live in during presidential elections--are just going to have to learn their lesson the hard way.

At some point, you get the government you vote for.


#4

It's worse now. She only needs 51 votes to get confirmed.

usatoday.com/story/news/politics/2013/11/21/harry-reid-nuclear-senate/3662445/


#5

[quote="ProVobis, post:2, topic:345859"]
What the Yellen vote will tell us about today's Republican Party

Key point

Not only the savers but (reserves of) insurance companies and pensions are hurt by the Fed policies. Even Bernanke has admitted that.

[/quote]

Yes, insurance companies try to make some earnings from their liquid assets while not putting them at undue risk. With returns so low, they raise premiums to make up for it.

In an uncertain economy, savers have seen their income from savings literally cut by three or four hundred percent. Where they might have been earning 6% pre-2008, that has been cut to 4%, then 2% to 1% to a half or a quarter percent. With income declining there is no spending and much fear.


#6

She’s not a minority!:thumbsup:


#7

[quote="JimG, post:5, topic:345859"]
Yes, insurance companies try to make some earnings from their liquid assets while not putting them at undue risk. With returns so low, they raise premiums to make up for it.

In an uncertain economy, savers have seen their income from savings literally cut by three or four hundred percent. Where they might have been earning 6% pre-2008, that has been cut to 4%, then 2% to 1% to a half or a quarter percent. With income declining there is no spending and much fear.

[/quote]

The markets conveniently ignore this because they know the Fed will accommodate them first before the savers, who kept the economy going before. No demand means no spending and employment is kept low, but premiums, tuitions, property taxes, and medical costs rise astronomically. Yet the Fed uses the fact of low employment to keep the interest rates low; it's a circular argument and it seems Keynesian economics has reached new lows.


#8

What’s your point?


#9

[quote="stinkcat_14, post:8, topic:345859"]
What's your point?

[/quote]

Money counterfeiting is equal opportunity.


#10

[quote="stinkcat_14, post:8, topic:345859"]
What's your point?

[/quote]

If i have to explain that to you, you may need to re-evaluate this site.:cool:


#11

I think policy needs to return to a more neutral stance, without a handful of men and women picking winners and losers. Janet Yellen is not the problem. Millions of people who think the government can fix everything with a few votes is a much bigger problem.


#12

They said the same thing about Bernanke. But he was the one cheering every move Greenspan made to create the housing bubble and the inevitable bank crash afterwards. Janet Yellen gives no indication that she will try to stop this vicious cycle. Not that Summers would have been much better but the Democrats really picked a loser this time. Move over, Japan!


#13

I guess that she’s not a minority in the ethnic sense?


#14

[quote="ProVobis, post:12, topic:345859"]
They said the same thing about Bernanke. But he was the one cheering every move Greenspan made to create the housing bubble and the inevitable bank crash afterwards. Janet Yellen gives no indication that she will try to stop this vicious cycle. Not that Summers would have been much better but the Democrats really picked a loser this time. Move over, Japan!

[/quote]

I'm not a Bernanke fan, but he actually did try to move interest rates up. But it was too late. The bubble burst and he scrambled back down the hill again.

I have a lot of trouble seeing that we're not on the horns of a dilemma. The national debt is so huge, we're borrowing the interest to pay it. If interest rates rose very much, then what? This government just keeps adding more and more to the cost of government (and I suspect the $2 trillion estimate for Obamacare is highly optimistic) and wants to do even more. Yellen knows she'll tank the "Obama economy" and the stock market as well if she lets interest rates rise. So, will this government pursue full employment knowing for sure it will be inflationary, causing either stagflation or the need to quell it in the face of the massive monetary expansion we've had for years? Or will this government just keep adding more and more people to the rolls of the dependent, requring ever greater expenditures and borrowing?

None of it looks very good to me.


#15

[quote="Ridgerunner, post:14, topic:345859"]
I'm not a Bernanke fan, but he actually did try to move interest rates up. But it was too late. The bubble burst and he scrambled back down the hill again.

I have a lot of trouble seeing that we're not on the horns of a dilemma. The national debt is so huge, we're borrowing the interest to pay it. If interest rates rose very much, then what? This government just keeps adding more and more to the cost of government (and I suspect the $2 trillion estimate for Obamacare is highly optimistic) and wants to do even more. Yellen knows she'll tank the "Obama economy" and the stock market as well if she lets interest rates rise. So, will this government pursue full employment knowing for sure it will be inflationary, causing either stagflation or the need to quell it in the face of the massive monetary expansion we've had for years? Or will this government just keep adding more and more people to the rolls of the dependent, requring ever greater expenditures and borrowing?

None of it looks very good to me.

[/quote]

Ridge, the Fed has to keep increasing on the already $4 trillion in debt they hold just to keep the 10-yr treasuries at 2.7% inter alia. (And the $4 trillion is more than Japan and China combined hold of our debt btw.) And what good is it doing with no demand? If the Fed stops buying bonds they will be seen as raising rates but they have to stop buying bonds at some point to avoid hyperinflation in all sectors. And then Japan and China will take their capital gains and drive up interest rates even more.

It should never have gotten to this point. Even the savers will be hurt by having to sell off their low-interest CD's in quest of higher rates when they do come.


#16

[quote="SuperLuigi, post:13, topic:345859"]
I guess that she's not a minority in the ethnic sense?

[/quote]

I know, but why does that matter one way or another?


#17

[quote="ProVobis, post:1, topic:345859"]
cnbc.com/id/101217820

Why aren't the Republicans filibustering this?

[/quote]

Because the day Fed nominations become subject to the same partisanship that everything else has is the day the ship starts sinking.

But the Fed’s repression of interest rates has penalized savers. The collapse of demand from savers has in turn more than offset any new demand from borrowers lured by the low interest rates.

Did the author think about what they were writing? What happens when you penalize saving? People save less. What happens when they save less? They spend more. Lower interest rates are associated with higher consumption. That is legitimately one of the most economically illiterate statements I've seen published.


#18

[quote="AnimalSpirits, post:17, topic:345859"]
Did the author think about what they were writing?

[/quote]

Suppose one has $100,000 gaining 5%. He can spend $5,000 a year for as long as he lives and has enough for his heirs and they can spend $5,000 a year forever.

If it gains 0%, he can only spend $5,000 a year for 20 years. And then he has to file for govt help or beg Congress to increase social security. He leaves little or nothing for his heirs. Plus the bank has nothing in deposit to lend.

Which does better for the economy?

It is no fun to eat into principle, believe me, especially with inflation taking much of it to boot. The author is spot on. Any Senator who votes against these money-printing fuzzy-language clowns has my full respect.


#19

[quote="ProVobis, post:18, topic:345859"]
Suppose one has $100,000 gaining 5%. He can spend $5,000 a year for as long as he lives and has enough for his heirs and they can spend $5,000 a year forever.

If it gains 0%, he can only spend $5,000 a year for 20 years. And then he has to file for govt help or beg Congress to increase social security. He leaves little or nothing for his heirs. Plus the bank has nothing in deposit to lend.

Which does better for the economy?

It is no fun to eat into principle, believe me, especially with inflation taking much of it to boot. The author is spot on. Any Senator who votes against these money-printing fuzzy-language clowns has my full respect.

[/quote]

Alternatively, are you more likely to buy a house, a car, or anything on your credit card with a higher interest rate or a lower one? Lowering interest rates effectively lowers the price of everything purchased with credit.

Furthermore, the fed's actions don't lower the ROI of all assets. Your guy with 100k would be advised to find somewhere else to put his money.'

Even furthermore, you're scenario only applies to individuals who rely on savings for all of their income, and assuming that the rate would go to 0% from 5% is absurd. This is an exceedingly small portion of the population.


#20

Judge for yourself.

youtube.com/watch?v=3KXs1v7O4iQ

youtube.com/watch?v=VGin4uccwew

youtube.com/watch?v=PoY0ePFfsMQ

youtube.com/watch?v=PTUY16CkS-k


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