Yellen Goes for Tight Dollar Policies

[JimBowie1958]

Fed kicks off global dollar squeeze as Janet Yellen turns hawkish - Telegraph

The US Federal Reserve has begun to pivot. Monetary tightening is coming sooner than the world expected, with sober implications for overheated bourses, and for those in Asia, eastern Europe and Latin America that drank deepest from the draught of dollar liquidity.

We can expect a blistering dollar rally, perhaps akin to the early 1980s or the mid-1990s. It is fortuitous that the BRICS quintet of Brazil, Russia, India, China and South Africa have just launched their $100bn monetary fund to defend each other's currencies. Some of them may need it. ....

Since Fed chief Janet Yellen targets jobs above all else, this was bound to force capitulation by the Fed before long. It happened this week in her testimony to Congress. "If the labour market continues to improve more quickly than anticipated, then increases in the federal funds rate likely would occur sooner and be more rapid than currently envisioned," she said.

This is a policy shift. Mrs Yellen has admitted that the Fed misjudged the pace of jobs recovery. The staff did not expect unemployment to fall this low until late next year. The inflexion point has come 15 months early...

Mrs Yellen is not as dovish as believed, in any case. Her lodestar is the "non-accelerating inflation rate of unemployment" (NAIRU), the point at which tight labour markets start to drive a wage-price spiral. She thinks this is near 5.4pc.

When the rate is above NAIRU, she is a dove: when below, she is a hawk. She was one of the first to call for pre-emptive rate rises in 1996 to choke inflation, dissenting from the Greenspan Fed. Nobody thought of her as dovish then.

This will cause a huge ripple effect on the federal budget and the deficit.

But it seems that hyperinflation is not a worry; finding and qualifying for low interest loans will be.

 

[JimmieD]

Futures have priced in the first rate hike for Jul-Aug '15. About in line with expectations. The concern is data over the course of the rest of the year and whether or not that incoming data will drive them to act sooner. Personally, I think June is the most likely as that is what's required for them to be able to meet their own rate forecasts. This means increasing the FF rate .25% each meeting beginning in June and lasting possibly a several years.

 

[jwoodie]

Hasn't anyone told Paul Krugman?

 

[oldfart]

So we have yet another article from the inflationista press proclaiming that inflation and interest rates are about to rise. Despite being completely wrong for six straight years and having put forward dozens of entertaining reasons for being wrong (the latest being "miracles") they have the same prediction again, and yes, it includes the BIS.

But go ahead, invest based on these people. They are likely to be right sometime in the next two decades. If you have anything left to invest.

 

[JimBowie1958]

So we have yet another article from the inflationista press proclaiming that inflation and interest rates are about to rise. Despite being completely wrong for six straight years and having put forward dozens of entertaining reasons for being wrong (the latest being "miracles") they have the same prediction again, and yes, it includes the BIS.

But go ahead, invest based on these people. They are likely to be right sometime in the next two decades. If you have anything left to invest.

Generally raising interest rates reduces inflation, but if rates are raised too little too late, you can have both, rising inflation and higher rates as well at the same time.

But I am not sure where you get the 'inflationista press' from. The official rates of inflation have been under 2% but these do not include the price of food or fuel which anyone can see are way up.

So those anticipating inflation have not been wrong in anticipating it, but they have been wrong about hyperinflation resulting, and that is mostly because, from what I see, they do not realize that the USD is backed by petroleum and other global markets using the USD as the world reserve currency.

If the US dollar loses its status as the World Reserve currency, inflation will definitely result unless we have a huge rash of lost capital in the form of various asset 'bubbles' being popped. Yellin even encouraged the popping of said bubbles a few weeks ago when she candidly told the world that it was not the responsibility of the Federal Reserve to pop said bubbles.

With the actions of late by the BRIC nations and the sympathy so many nations now have with their efforts to end the reign of the US dollar as said currency, the end of the USD role as world reserve currency is much more plausible, if not likely.

And while it is plausible to anticipate market conditions for a move in one direction or another, the precise timing of the event is impossible to predict. Many anticipated the real estate bubble bust we had in 2008, but no one called it exactly well before hand. As the events loomed closer, many were able to tell that something was close, and they moved in time to protect their assets, but that caused a panic sell off, as such things tend to cause.

The funny thing is that guys like you, the eternal 'what me worry?' polyanna dumbasses laugh till the shit hits the fan then it's 'Poor me! Who could have known?'

roflmao

 

[SteadyMercury]

The funny thing is that guys like you, the eternal 'what me worry?' polyanna dumbasses laugh till the shit hits the fan then it's 'Poor me! Who could have known?'

You are conflating oldfart being dismissive of predictions of inflation with being a polyanna. It is entirely possible to roll your eyes at the inflation alarmists who have been screaming the same thing for years while also having concerns about the economy and current investment environment.

Besides it works both ways, you missed out on a bull market that is a once in a generation wealth building opportunity by sitting on the sidelines worrying it is too much of a gamble.

 

[JimBowie1958]

The funny thing is that guys like you, the eternal 'what me worry?' polyanna dumbasses laugh till the shit hits the fan then it's 'Poor me! Who could have known?'

You are conflating oldfart being dismissive of predictions of inflation with being a polyanna. It is entirely possible to roll your eyes at the inflation alarmists who have been screaming the same thing for years while also having concerns about the economy and current investment environment.

Besides it works both ways, you missed out on a bull market that is a once in a generation wealth building opportunity by sitting on the sidelines worrying it is too much of a gamble.

Yeah and by that logic you missed out on the last winning lottery ticket it too. You cant win if you don't play the idiot tax game.

The current stock markets are a sham and a rigged game. Until the SEC starts to actually enforce the regs and stop jacking off to porn around the clock, and the Federal Reserve stops pumping the markets with over $60 BILLION a month in money they just *POOF* into existence, and until HFT's are no longer given nearly a second of lead time to react to the markets before everyone else, the markets are RIGGED, a FOOLS GAME.

I missed a huge market expansion? Bullshit, I missed nothing but bait and my money grew well enough without putting it at risk of a bunch of crooked Wall Street banksters stealing it with a their bubble grow and bust schemes.

 

[SteadyMercury]

Yeah and by that logic you missed out on the last winning lottery ticket it too. You cant win if you don't play the idiot tax game.

Investing in something that has ups and downs but has steadily gone up for well over 100 years and makes you money in the overwhelming majority of decade+ timeframes is hardly comparable to a game of chance where odds of winning are tiny.

I guess people not understanding how investing in equities is different from a lottery would be the ones who fear it.

I missed a huge market expansion? Bullshit, I missed nothing but bait and my money grew well enough without putting it at risk of a bunch of crooked Wall Street banksters stealing it with a their bubble grow and bust schemes.

If you were not in equities from 2009 to 2014 then yes you did miss out on a once in a generation buying opportunity. You can try to convince yourself that parking in treasuries or whatever you did was a better move, balance sheets would show otherwise.

 

[JimBowie1958]

Yeah and by that logic you missed out on the last winning lottery ticket it too. You cant win if you don't play the idiot tax game.

Investing in something that has ups and downs but has steadily gone up for well over 100 years and makes you money in the overwhelming majority of decade+ timeframes is hardly comparable to a game of chance where odds of winning are tiny.

Since 2000, adjusted for inflation, you have been losing purchasing value of your asssets if you were fully invested in stocks.

If you were not in equities from 2009 to 2014 then yes you did miss out on a once in a generation buying opportunity. You can try to convince yourself that parking in treasuries or whatever you did was a better move, balance sheets would show otherwise.

Not hardly. Luck of the dice is not a good investment.

 

[SteadyMercury]

Since 2000, adjusted for inflation, you have been losing purchasing value of your asssets if you were fully invested in stocks.

Hah hah welcome to the world of cherry picking dates to try to support an unsupportable argument.

Yes if you had dumped all your money at once into the stock market in 2000 you'd have lost money inflation adjusted over the ensuing ten years. Is that how you usually invest, dump all your money into the stock market on certain date then check back in ten years? Like most people I've accumulated my stock assets over time with regular investing, so most of the shit I held in 2000 I had bought thruout the 90s when the DIJA went from 2600 to 11k, and I continued to invest regularly during the dips.

Since 1937, the market has been up 67 out of 74 ten-year periods. Any given year (or decade) can have negative returns, but clearly it doesn't take "luck" for a by and hold investor to make money since it is the norm not the exception.

Not hardly. Luck of the dice is not a good investment.

Being too risk averse is poor investing. You fear which you don't understand.

What have you been invested in for the last five years?

 

[oldfart]

So we have yet another article from the inflationista press proclaiming that inflation and interest rates are about to rise. Despite being completely wrong for six straight years and having put forward dozens of entertaining reasons for being wrong (the latest being "miracles") they have the same prediction again, and yes, it includes the BIS.

But go ahead, invest based on these people. They are likely to be right sometime in the next two decades. If you have anything left to invest.

Generally raising interest rates reduces inflation, but if rates are raised too little too late, you can have both, rising inflation and higher rates as well at the same time.

You are confusing a policy goal (moderate inflation) with a policy measure (monetary tightening/higher interest rates) that is often used to achieve that goal. There is a lag, usually about six months for monetary policy, but monetary tightening usually results in a decrease in both inflation and the rate of real growth a/k/a Paul Volker. The rise in interest rates is the policy response to the inflation.

But I am not sure where you get the 'inflationista press' from. The official rates of inflation have been under 2% but these do not include the price of food or fuel which anyone can see are way up.

There is a substantial part of the economics community and press that has been shilling for higher interest rates and their original rationale (since abandoned) is that hyperinflation is just around the corner. Virtually all of these commentators are either Austrians, austerity advocates, or financial industry types, and are commonly lumped together under the title "inflationists". Currently the BIS is in the forefront, but virtually every "conservative" economist has been on board for at least part of the ride, and all of them seem impervious in years of predictive failure.

So those anticipating inflation have not been wrong in anticipating it, but they have been wrong about hyperinflation resulting, and that is mostly because, from what I see, they do not realize that the USD is backed by petroleum and other global markets using the USD as the world reserve currency.

Those anticipating inflation have been consistently wrong for six years. What changes is their rationale for why the predicted inflation never has occurred. Noah Smith had a rather good blog on this last week. Noahpinion: Austrianism, wrong? Inconceivable!

If the US dollar loses its status as the World Reserve currency, inflation will definitely result unless we have a huge rash of lost capital in the form of various asset 'bubbles' being popped. Yellin even encouraged the popping of said bubbles a few weeks ago when she candidly told the world that it was not the responsibility of the Federal Reserve to pop said bubbles.

I haven't heard a cogent reason for the dollar losing its reserve status, nor have I heard a cogent reason why that would trigger dollar inflation. I think you have been reading too much financial tripe.

With the actions of late by the BRIC nations and the sympathy so many nations now have with their efforts to end the reign of the US dollar as said currency, the end of the USD role as world reserve currency is much more plausible, if not likely.

You're reaching here.

And while it is plausible to anticipate market conditions for a move in one direction or another, the precise timing of the event is impossible to predict. Many anticipated the real estate bubble bust we had in 2008, but no one called it exactly well before hand. As the events loomed closer, many were able to tell that something was close, and they moved in time to protect their assets, but that caused a panic sell off, as such things tend to cause.

Yes, some people got the timing exactly right. A stopped clock is also correct twice a day. I think a couple of economists who called it were smarter than the average bear, and some others were just lucky. Why don't you apply this line of reasoning to your argument above?
When will these great events happen?

The funny thing is that guys like you, the eternal 'what me worry?' polyanna dumbasses laugh till the shit hits the fan then it's 'Poor me! Who could have known?'

roflmao

Who do you lump together in "guys like you?" And what is your forecasting record? In October 2008 I nailed it better than anyone other than Wharton Econometrics, predicting a top unemployment rate of 10.5%, and was only off the Dow low by 400 points. I also predicted no significant recovery for at least four years. Some of it was luck, but most of it was using a good model. This was when Obama was justifying stimulus as necessary to keep unemployment under 8%. That is "pollyannish"?

 

[JimBowie1958]

Since 2000, adjusted for inflation, you have been losing purchasing value of your asssets if you were fully invested in stocks.

Hah hah welcome to the world of cherry picking dates to try to support an unsupportable argument.

Yes if you had dumped all your money at once into the stock market in 2000 you'd have lost money inflation adjusted over the ensuing ten years. Is that how you usually invest, dump all your money into the stock market on certain date then check back in ten years? Like most people I've accumulated my stock assets over time with regular investing, so most of the shit I held in 2000 I had bought thruout the 90s when the DIJA went from 2600 to 11k, and I continued to invest regularly during the dips.

Since 1937, the market has been up 67 out of 74 ten-year periods. Any given year (or decade) can have negative returns, but clearly it doesn't take "luck" for a by and hold investor to make money since it is the norm not the exception.

Not hardly. Luck of the dice is not a good investment.

Being too risk averse is poor investing. You fear which you don't understand.

What have you been invested in for the last five years?

Putting you money on the roulette wheel table is not investing.

 

[JimBowie1958]

So we have yet another article from the inflationista press proclaiming that inflation and interest rates are about to rise. Despite being completely wrong for six straight years and having put forward dozens of entertaining reasons for being wrong (the latest being "miracles") they have the same prediction again, and yes, it includes the BIS.

But go ahead, invest based on these people. They are likely to be right sometime in the next two decades. If you have anything left to invest.

Generally raising interest rates reduces inflation, but if rates are raised too little too late, you can have both, rising inflation and higher rates as well at the same time.

You are confusing a policy goal (moderate inflation) with a policy measure (monetary tightening/higher interest rates) that is often used to achieve that goal. There is a lag, usually about six months for monetary policy, but monetary tightening usually results in a decrease in both inflation and the rate of real growth a/k/a Paul Volker. The rise in interest rates is the policy response to the inflation.



There is a substantial part of the economics community and press that has been shilling for higher interest rates and their original rationale (since abandoned) is that hyperinflation is just around the corner. Virtually all of these commentators are either Austrians, austerity advocates, or financial industry types, and are commonly lumped together under the title "inflationists". Currently the BIS is in the forefront, but virtually every "conservative" economist has been on board for at least part of the ride, and all of them seem impervious in years of predictive failure.



Those anticipating inflation have been consistently wrong for six years. What changes is their rationale for why the predicted inflation never has occurred. Noah Smith had a rather good blog on this last week. Noahpinion: Austrianism, wrong? Inconceivable!



I haven't heard a cogent reason for the dollar losing its reserve status, nor have I heard a cogent reason why that would trigger dollar inflation. I think you have been reading too much financial tripe.



You're reaching here.

And while it is plausible to anticipate market conditions for a move in one direction or another, the precise timing of the event is impossible to predict. Many anticipated the real estate bubble bust we had in 2008, but no one called it exactly well before hand. As the events loomed closer, many were able to tell that something was close, and they moved in time to protect their assets, but that caused a panic sell off, as such things tend to cause.

Yes, some people got the timing exactly right. A stopped clock is also correct twice a day. I think a couple of economists who called it were smarter than the average bear, and some others were just lucky. Why don't you apply this line of reasoning to your argument above?
When will these great events happen?

The funny thing is that guys like you, the eternal 'what me worry?' polyanna dumbasses laugh till the shit hits the fan then it's 'Poor me! Who could have known?'

roflmao

Who do you lump together in "guys like you?" And what is your forecasting record? In October 2008 I nailed it better than anyone other than Wharton Econometrics, predicting a top unemployment rate of 10.5%, and was only off the Dow low by 400 points. I also predicted no significant recovery for at least four years. Some of it was luck, but most of it was using a good model. This was when Obama was justifying stimulus as necessary to keep unemployment under 8%. That is "pollyannish"?

Mish's Global Economic Trend Analysis

 

[JimBowie1958]

BRICS shake up global economic architecture

By creating their own multilateral financial institutions, the BRICS emerging-market powers are shaking up global economic governance but remain far from dismantling the post-war system dominated by the West.

For the past 70 years, the International Monetary Fund and the World Bank have been the pillars of the world's economic system, coming to the rescue of countries in trouble and supporting development projects, respectively.

But the Bretton Woods institutions are regularly criticised for their inability to reflect the growing and important contributions of the major emerging economies to the global economy.

China, the world's second-largest economy, continues to have just slightly more voting power in the IMF than Italy, about five times smaller.

And, since their creation in 1944, the IMF and the World Bank have only been led by Americans and Europeans.

"Broader global governance reforms have become stalled, despite the many commitments made by advanced economies to emerging markets to give them a more prominent role in international financial institutions and other international forums," said Eswar Prasad, a trade policy professor at Cornell University and a former IMF expert.

In this context, the launch Tuesday of a development bank and an emergency reserve fund by the BRICS -- Brazil, Russia, India, China and South Africa -- appears to be a concrete attempt to address those inequities.

"If the existing institutions were doing their jobs perfectly, there would be no need to go to the trouble of creating a new bank, a new fund," said Paulo Nogueira Batista, who represents Brazil and 10 other countries at the IMF, in an interview.

The mere creation of the two BRICS institutions sends a strong signal to Western powers, where some doubt the ability of the five powerhouses to surmount their individual needs and ambitions.

 

[JimBowie1958]

This seems to be happening with more frequency as well.

Swiss, Chinese Central Banks Enter Currency Swap Agreement - NASDAQ.com

ZURICH--The Swiss National Bank and the People's Bank of China reached a currency swap agreement on Monday, allowing the two central banks to buy and sell their currencies up to a limit of 150 billion renminbi, or 21 billion Swiss francs ($23.4 billion).

The deal will also allow the Swiss central bank to invest some of its huge accumulation of foreign exchange reserves in the Chinese bond market, the SNB said in a statement Monday.

The Zurich-based SNB said the agreement will further strengthen collaboration between it and its Chinese counterpart and is a "key requisite for the development of a renminbi market in Switzerland." It could also facilitate trade and investment between the two countries, the PBOC said.

Switzerland is the latest of a series of countries to set up swap lines with China, which is keen to promote the international use of the yuan.

Last year China signed swap agreements with the European Central Bank and a clutch of others, including the U.K., Brazil and Indonesia.

 

[JimBowie1958]

RMB developing quickly as major world currency|Top Stories|chinadaily.com.cn

The renminbi is on track to become the third-largest international currency behind the US dollar and the euro within five years as China accelerates its promotion of the yuan, said a Renmin University of China report released on Sunday.

Last year, RMB cross-border trade settlement amounted to 4.63 trillion yuan ($746 billion), up 57.5 percent from 2012. It accounted for 2.5 percent of cross-border trade settlement worldwide, the report said.

By the end of the fourth quarter of 2013, direct investment settled in renminbi amounted to 533 billion yuan, 1.9 times the same period in 2012.

The RMB is currently the fifth-most widely used currency internationally. The British pound is third and the Japanese yen fourth.

The offshore yuan market has been developing rapidly in recent years, and this year the People's Bank of China signed a memorandum of understanding regarding yuan clearing and settlement arrangements with the central banks of the UK, Germany, Luxembourg, France and South Korea.

Chen Yulu, president of Renmin University and member of the central bank's monetary policy committee, said the offshore yuan market in Europe has huge potential since major European financial centers are competing for the market.

Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges, suggested the government establish additional centers in places such as Dubai, South Africa and Latin America.

 

[JimBowie1958]

Billionaire Warns: Yellen Collapse 'Will Be Unlike Any Other'

Another horrific stock market crash is coming, and the next bust will be “unlike any other” we have seen.

That’s the message from Jeremy Grantham, co-founder and chief investment strategist of GMO, a Boston-based firm with $117 billion in assets under management.

Grantham pulls no punches when assigning responsibility for the coming financial carnage. In a recent interview with The New York Times, he calls Federal Reserve Chair Janet Yellen “ignorant” and says the Federal Reserve all but killed the economic recovery.

Grimly, he adds, “We have never had this before. It’s going to be very painful for investors.”

Grantham isn’t the only one worried about a market collapse.

“We have no right to be surprised by a severe and imminent stock market crash,” explains Mark Spitznagel, a hedge fund manager who is notorious for his hugely profitable billion-dollar bet on the 2008 crisis. “In fact, we must absolutely expect it."

Billion-dollar investor Warren Buffett is rumored to be preparing for a crash as well. The “Warren Buffett Indicator,” also known as the “Total-Market-Cap to GDP Ratio,” is breaching sell-alert status and a collapse may happen at any moment.

 

[SteadyMercury]

Putting you money on the roulette wheel table is not investing.

Agreed, that is why I don't go play games of random chance with odds in house favor to fund my retirement.

I maintain a diversified portfolio of stock and bond mutual funds instead of stashing my money in a mattress and predicting impending doom over and over while ending up with a much smaller stash.

 

[SteadyMercury]

Billionaire Warns: Yellen Collapse 'Will Be Unlike Any Other'

You realize that is an advertisement right?

It looks like an article with big fear mongering headline, then goes into great details about "Carr’s Peak Profits System" and how gloriously those who use it can profit in the upcoming collapse, closing with:

In a new video called the Peak Profits System, Carr describes his system in detail and how anyone can use it to protect their wealth from the next stock market collapse (Click Here to Watch the Video)

Great source man.

 

[Derideo_Te]

Fed kicks off global dollar squeeze as Janet Yellen turns hawkish - Telegraph

The US Federal Reserve has begun to pivot. Monetary tightening is coming sooner than the world expected, with sober implications for overheated bourses, and for those in Asia, eastern Europe and Latin America that drank deepest from the draught of dollar liquidity.

We can expect a blistering dollar rally, perhaps akin to the early 1980s or the mid-1990s. It is fortuitous that the BRICS quintet of Brazil, Russia, India, China and South Africa have just launched their $100bn monetary fund to defend each other's currencies. Some of them may need it. ....

Since Fed chief Janet Yellen targets jobs above all else, this was bound to force capitulation by the Fed before long. It happened this week in her testimony to Congress. "If the labour market continues to improve more quickly than anticipated, then increases in the federal funds rate likely would occur sooner and be more rapid than currently envisioned," she said.

This is a policy shift. Mrs Yellen has admitted that the Fed misjudged the pace of jobs recovery. The staff did not expect unemployment to fall this low until late next year. The inflexion point has come 15 months early...

Mrs Yellen is not as dovish as believed, in any case. Her lodestar is the "non-accelerating inflation rate of unemployment" (NAIRU), the point at which tight labour markets start to drive a wage-price spiral. She thinks this is near 5.4pc.

When the rate is above NAIRU, she is a dove: when below, she is a hawk. She was one of the first to call for pre-emptive rate rises in 1996 to choke inflation, dissenting from the Greenspan Fed. Nobody thought of her as dovish then.

This will cause a huge ripple effect on the federal budget and the deficit.

But it seems that hyperinflation is not a worry; finding and qualifying for low interest loans will be.

Has Mrs Yellen factored in that there are two apposing factors in the job market right now? Yes, there is job growth but there is also the Boomer generation retiring. Those vacancies are being filled by the Millenials and Echo Boomers. So what we are experiencing is more a changing of the guard which is a phase rather than a trend in my opinion.