This week saw the first Federal Open Market Committee meeting to be presided over by Janet Yellen, the new chairman of the Federal Reserve. And while the Fed's bought and paid for lapdogs on Wall Street, and elsewhere in the financial industry, gave Ms. Yellen high marks for her comments, one would expect nothing less from a coddled industry that has received the benefit of over three trillion created-out-of-of-thin-air dollars from the Federal Reserve in the last four years. But to this realistic viewer of the economy as it is, Chairman Yellen was a worthy successor of the dimly lighted torched passed to her from Ben Bernanke, the previous Fed Chairman.
Proof of Ms. Yellen's firm grasp of the title Glittering Jewel of Colossal Ignorance was exemplified by one statement she made at her press conference after the two day meeting. She said that the Fed would eliminate the trigger of a 6.5% unemployment rate to increase its interest rate from the historic low of zero to a quarter percent it has held since 2008. She said the reason was that the employment situation has improved more rapidly than expected. I do not know what dim bulbs like Janet Yellen had expected, but thank God her expectations were not met, seeing as how after five years into an economic recovery, the nation has a record number of working aged persons unemployed, and the lowest percentage of that population participating in the work force in almost 40 years.
The stated goal of the Fed's Quantitative Easing program was to stimulate the economy and spur job growth. After more than three trillion dollars, neither of these goals has been met, unless one considers record unemployment and sub-two percent GDP growth an acceptable outcome for the money. And while companies stock prices have done very well in the age of easy money from the Federal Reserve, earnings of those companies have only done well to the extent that expectations have been dropped so low they would have to look up just to see mediocrity.
The dirty little secret about the Fed's bond-buying program is that since 2011, the Chinese have been severely curtailing their investment in U.S. bonds, having calculated that they are no longer a good investment. This was about the same time that Standard and Poors downgraded the U.S. credit worthiness for the first time in history. With the Fed's current tapering seeing an end to their bond-buying by this Fall, the Chinese reducing their investment in U.S. debt, the Russians threatening to flood the market with their sizable stash of U.S. bonds, and the threat of hyper-inflation as a result of the Fed's irresponsible monetary policy over the last few years, this country is headed for economic hardship that will make the 1930s seem like an economic boom.
Of course Momma Fed was left an untenable situation by Poppa Fed Bernanke, who will now be paid gobs of money to be a university president and/or give speeches about economic issues after having helped ruin the U.S. economy. And We The People will be left holding the bag of a rapidly deteriorating economy caused by the crony capitalism of the Obama years.