Fed may need to let inflation run hot to meet goals: Evans

Comments (21)
Simplerman wrote:

Back in recession/depression yet again. They don’t have the courage to admit it.

Feb 28, 2014 1:10pm EST  --  Report as abuse
SaveRMiddle wrote:

Let’s keep it simple.

What these “experts” will not reveal…..America’s “recovery” is pretty much 100% contained in the stock market meaning the past US 70% Consumer Driven Economy is AWOL.

[These divisions have intensified in the last four years of the economic recovery as the value of residential real estate and financial assets continue to grow apart. This divergence is not obvious from the Federal Reserve’s quarterly Flow of Funds report, which is widely cited in the media as evidence that household net worth has returned to nominal pre-crisis levels.

***However, a distributional analysis can be approximated by comparing the Federal Reserve data on total inflation-adjusted household financial assets and owner-occupied real estate.

***Here it is obvious that NEARLY EVERY DOLLAR in aggregate household wealth RECOVERY is attributable to the rising value of financial assets, which are disproportionately held by high-net worth households. Residential real estate, which remains the largest single asset held by the middle class, is still 30 percent below its 2006 peak nationwide. Absent some larger policy change, that situation is unlikely to change any time soon: U.S. tax policy actively promotes investment income over labor income by setting a lower rate for capital gains, disproportionately benefiting high-net worth households.]


Feb 28, 2014 1:57pm EST  --  Report as abuse
WhyMeLord wrote:

Slow growth DOES NOT produce recession/depression you robber-baron.
Slow growth means a slow, sensible return to normal expansion rates.
Extreme peaks and valleys are what produce recessions/depressions.
Artificially inflated stock prices based on smoke and mirrors work.
Listening to you wackos predicting doom and gloom give me a headache.

Feb 28, 2014 2:03pm EST  --  Report as abuse
Harry079 wrote:

There was a time when most economists believed the Markets were a reflection of the strength of the economy.

Today that is no longer true.

Feb 28, 2014 2:45pm EST  --  Report as abuse
izrahim wrote:

In other words the FED is setting up for more money printing, I wonder what they will call it this time as Q is old hat.

Feb 28, 2014 2:54pm EST  --  Report as abuse
disengage wrote:

What else are they going to say? Obamanomics stink??????????

Feb 28, 2014 3:03pm EST  --  Report as abuse
yubamary wrote:

@Harry079, I totally agree with you.

Feb 28, 2014 3:08pm EST  --  Report as abuse
Rich_F wrote:

The Fed pumping money into the economy and growing their balance sheet by a few trillion is what it took to keep us afloat and some slow uneven growth. They think by slowing taking away the punch bowl the cheap money addict USA will wean itself and be self-sufficient. Not going to happen. When the cracks and “black swan” events start surfacing you’ll see reversals and more pumping further inflating their balance sheet and distortions on true cost of goods and price discovery in the markets. The question is how long can this ‘confidence game’ be played before the ship runs aground?

We probably have quite a few years of inflating the money supply and the Fed’s balance sheet to go but it won’t last in perpetuity.

Feb 28, 2014 3:14pm EST  --  Report as abuse
Simplerman wrote:

Yes, the degree of disconnect of the markets to reality is puzzling, but not when you factor in money printing.

I hope these guys have a “Plan-B” when that goes south.

This is such a fake economy. Again look at existing home sales and retail and their you have reality.

Feb 28, 2014 4:10pm EST  --  Report as abuse
anarcurt wrote:

There needs to be inflation in the system. Without a time value on money the people who have it are apt to sit on it. With inflation you have a use it or lose it situation. People will take more risks to expand their business because they need a higher return to keep up with inflation. The rates we have were supposed to be temporary; to solve the liquidity crisis of the crash. There is no more crisis so their should be no more near zero rates.

Feb 28, 2014 4:38pm EST  --  Report as abuse
gregbrew56 wrote:

The only way that the U.S. can even begin to pay off the already accrued debt will be to devalue that debt with inflation. Pay China with “funny money” that’s worth much less than it used to be…

Feb 28, 2014 5:47pm EST  --  Report as abuse
RD137 wrote:

Let inflation run hot. What a joke. If you don’t think inflation is already running hot, try going grocery shopping sometime. A gallon of milk now costs more than $5 where I live.

Feb 28, 2014 6:17pm EST  --  Report as abuse
WhyMeLord wrote:

Nobody seems to give a ‘tinker’s damn’ about the huge negative impact inflation has on retired people. Like it or not, there are more and more of us living today on fixed incomes; maybe some of you inflation addicts will cover our losses in the years ahead for us.

Feb 28, 2014 6:19pm EST  --  Report as abuse
Whatsgoingon wrote:

“The Federal Reserve should be willing to let inflation temporarily run above its target level so as to more quickly bring the economy back to health,” Sounds like a noble idea. But with $4T cash on the side the “temporary run” could run away and turn into a social disaster. With so many guns in people’s hands who gets the nerve putting his/her life on the line?

Feb 28, 2014 6:47pm EST  --  Report as abuse
OuterLimits wrote:

Send $85 billion a month to taxpayers.

Feb 28, 2014 8:26pm EST  --  Report as abuse

Evans comments are really completely logical for the doves on the fed’s board. They’ve had the ZIRP/QE accelerator pinned to the floor for a long time now and we’re still getting little traction (stock market not withstanding). Since the elected politicians are in grid lock there is little chance of getting any meaningful help for main street. What to do? Keep printing and inflation be damned. Hopefully the Plossers and Fischers of the world will put the brakes on people like Evens. You can see the “logic” though.

I’ll betcha they eventually do it. Then we’re all screwed.

Feb 28, 2014 10:19pm EST  --  Report as abuse
Anthonykovic wrote:

We need inflation like we need hole in the head. Printing more money does not create instant wealth, doe not encourage investment and does not create real jobs. Periods of high inflation are always bad times.

Painful structural changes are what is needed – like addressing high US wage levels (minimum wage that is triple Chinese average wages, high taxes and overbearing regulations.

Until Americans are willing to work long and hard (like the Chinese do today) there is no hope for a better tomorrow.

Feb 28, 2014 11:00pm EST  --  Report as abuse
TetraBall wrote:

Inflation is what is designed to happen with currency. After 1933 money has been replaced with currency, with dead presidents. The power to expand the currency is in the hands of the people. Governments can and will issue bonds to expand the currency. Central Banks step in buying “assets” with currency when the people don’t step in and create currency through contracts (notes). Currency is meant to be sprung into existence through creation of promissory notes (what we call “loans”) – but of course, responsibility is needed. Not everyone can be authorized to create notes, look what happened in 2007/2008.

The biggest problem the FED has today (and always had) is in having people understand how the system works. After 1933 there is NO MORE MONEY. It’s all currency, absolutely everything is pre-paid. If they wanted to teach people how the system really works, they could, but it’s a lot of work. Besides, if that ever happens, this would mean everybody would be absolutely responsible — something that is obviously impossible, so the system we have today is PERFECT. It keeps the irresponsibles under statutes, and a lot of times, even the statutes aren’t sufficient to maintain the loons under control.

Feb 28, 2014 11:24pm EST  --  Report as abuse

The only answer the FED has is inflation. They have been trying to deflate the value of the Dollar to spur false demand but it can not work. The FEDs answer is ass-backwards as usual where they have crushed demand by devaluing the Dollar so much that many Americans are finding can not keep up with inflation and it has collapsed their discretionary spending budget. The entire system is rigged from top to bottom. The banksters have bled the patient dry and they wonder why he can not get up off the operating table after a good blood letting. The only answer the banks and the FED have left is to shift blame for the economic collapse they have so brilliantly engineered. The only question is when and where will the World War start.

Mar 01, 2014 12:28am EST  --  Report as abuse
Robertla wrote:

inflation does not help people who work for wages, or the unemployed. it makes their life more expensive.

inflating away debts helps leverage junkies, including the government, pay off loans with money of less value than what they borrowed……..

the Fed’s job seems to be about keeping leveraged assets at a high value….I suppose keeping loans intact……

so this is bad policy,..for working people..really…..but, what me the most is that the Fed keeps using ‘unemployment’ as an excuse for their actions.

I mean, are they being incredulous on purpose? that’s something to be a little worried about.

Mar 01, 2014 5:32am EST  --  Report as abuse
minipaws wrote:

The Fed has made it clear that they will only accept 5.5% or less unemployment. Well savers are now making it clear, we will only accept 5.5% or above interest on our savings if you want our money in your banks.

Mar 01, 2014 6:19am EST  --  Report as abuse
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