Countering the more hawkish tone in Fed speeches given by Fisher, Plosser, Kocherlakota and Lacker, the Fed’s Vice Chairman is taking the exact opposite tact and saying that there is nothing to fear with inflation and sees no reason to pull back from stimulus. Adults can always disagree when looking at the same set of facts but to see no reason to pull back from a tripling of their balance sheet and virtually zero interest rates is a view that is tough to square with and highlights that this Fed is run by the most extreme doves the institution has ever seen. He also said the rise in commodity prices has “virtually nothing” to do with Fed policy. They take a lot of credit for lifting stock prices and tightening corporate credit spreads but commodity prices are somehow in its own fundamental universe according to the Vice Chairman of the Federal Reserve. I grit my teeth.

Category: MacroNotes

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “Ignore the hawks says Dudley, all ok”

  1. What you mention above, plus the “100%” certainty the Bernank referred to in his interview should give those involved in asset markets at least some pause…..

    With all of the resources the Fed has available, you would expect at least some reference to some study supporting his conclusion of no linkage between monetary policy and commodity prices….you would also think an intrepid reporter would ask…

    Dudley appears to be taking his script from the Argentine monetary authorities —- simply deny that the inflation exists or has anything to do with what you are doing and in this manner provide cover for disastrous fiscal policies in the hopes of an economic recovery (ie, fool the folk through a readjustment of the pricing mechanism which most people will not realize)

    Without any fiscal discipline at all, from either party, at some point a day of reckoning will come.

  2. DrSandman says:

    “He also said the rise in commodity prices has “virtually nothing” to do with Fed policy”

    This is an April Fool’s post, right? It’s been a long day; I’m too tired to recognize irony.

  3. carleric says:

    So Dudley thinks all Bennie’s (and his) money printing has no effect in the parallel universe called commodties. There has been a lot of criticism of the Fed so Bennie just sent out one of his pet dogs to deny that anything could possibly be wrong. Dudley replaced Geithner at the NY Fed…does that organization really have any credibility with anyone with a brain bigger than a pea.

  4. gman says:

    With a .81 correlation between unit labor cost and cpi and wages continuing going down, I would say he is correct and you are still wrong Peter! Oh yeah and housing has made new post crisis lows. ” But, but, look at wheat!” (under 10% the cost of a box of wheaties) Yeah but coffee prices!” yawn.. .o7/ cup cost at Starbucks! A rounding error in costs compared to wages and real estate! Keep talkin’ the book Pete, I need someone to trade with!

  5. You may grit your teeth, but factually, the debt hawks are wrong.

    Fact: A growing economy requires a growing money supply. Federal deficit spending is necessary for economic growth. When deficits decline, recessions or depressions follow. See: SUMMARY

    Fact: Since 1971, when we went off the gold standard, there has been no relationship between federal deficit spending and inflation. So what has caused inflation? OIL PRICES

    I know this doesn’t square with popular wisdom or with intuition, but those are the facts.

    Rodger Malcolm Mitchell

  6. rip says:

    Excuse me but commodity price hikes have been prohibitively inflationary.

    Pick the little guy clean. I once knew a businessman that could make that quote in Latin and it sounded impressive.

    Rid the commodity exchanges of speculators and then we can have an honest conversation of how free money starves people. Until then it’s all money grubbing BS.

  7. Greg0658 says:

    “Rid the commodity exchanges of speculators” 2nd that .. and why – because I believe making a living game’g or paper pile pushing is anti-productive to the general population … I’m aware that the laborer producers work with those cartels or collective barganing groups to help their cause (funny days these days)

    on that Gold peg – and how the world used to get along – I heard that yesterday too – NOT in favor – pegging to near slaves digging a material out of the ground for the shaft controling masters … but I’m curious – has anyone seen a chart of what gold would price at per ounce at that stroke of a pen .. and who or what group could buy up the world – the Risk game won with cash & held by force

  8. furiouschads says:

    We need to fix the underwater homeowner/terrified consumer problem. The fed is now holding huge numbers of mortgages that should be modified to reflect their underlying values. That isn’t happening. The market isn’t working to fix this either.

    Given the massive scale of the underwater issue, it is both a political and an economic issue. I’m afraid we will have to wait for another collapse to get it addressed.

  9. Rodger Malcolm Mitchell –

    Just a few words for you: Greece + Portugal + Japan.

    Federal deficit spending is necessary for economic growth? Perhaps, however, what happens when you have too much debt?

    Just because you are able to borrow for long periods of time without any problem, does not mean that you will be able to continue to do so for unlimited amounts into the distant future.

  10. Rodger Malcolm Mitchell –

    I read a few articles on your site, and they appear to indicate that the ability of sovereign states to print more of their own money is a solution to many ills – is this the idea you are advocating?