{"id":56850,"date":"2021-02-21T09:30:55","date_gmt":"2021-02-21T14:30:55","guid":{"rendered":"https:\/\/olduvai.ca\/?p=56850"},"modified":"2021-02-21T09:32:52","modified_gmt":"2021-02-21T14:32:52","slug":"yellen-challenges-powells-unlimited-control-of-the-markets","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=56850","title":{"rendered":"Yellen Challenges Powell\u2019s Unlimited Control of the Markets"},"content":{"rendered":"
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Yellen Challenges Powell\u2019s Unlimited Control of the Markets<\/a><\/h3>\n<\/div>\n<\/div>\n<\/section>\n
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\"Yellen<\/p>\n

Source: Federal Reserve<\/span><\/div>\n<\/div>\n

The Fed attempts to maintain control of various rates (including inflation, unemployment and long-term interest rates) through its monetary policy decisions. In the past, poor choices arguably led to both the dot-com bubble and the Great Recession. But that\u2019s old news.<\/p>\n

Today, Fed Chairman Jerome Powell is trying to get the U.S. economy moving. A combination of near-zero interest rates and \u201cquantitative easing<\/a>,\u201d which means buying bonds directly. Both these interventions increase the amount of money in circulation. Ultimately, this would lead to inflation, as you\u2019d expect.<\/p>\n

And of course, inflation is closely tied to\u00a0market rates.<\/strong>\u00a0In response to the pandemic, the Fed rate policy that Powell currently\u00a0advocates<\/a>\u00a0is keeping money market rates close to zero for an extended period of time. The Fed also seem to\u00a0intervene<\/a>\u00a0quite a bit, attempting to maintain tight control on those rates.<\/p>\n

Powell has to balance economic recovery and employment against market bubbles and excessive inflation. That\u2019s a lot of balls in the air\u2026 What if one drops?<\/p>\n

Unleashing a \u201ctsunami\u201d of cash<\/strong><\/p>\n

Enter Treasury Secretary Janet Yellen<\/strong>, who just threw a\u00a0big<\/em>\u00a0monkey wrench in Powell\u2019s plans to maintain any semblance of tight control over rates. What did she say? As Newsmax\u00a0reported<\/a>:<\/p>\n

Already low short-term interest rates are set to sink further,\u00a0potentially below zero<\/strong>, after the Treasury announced plans earlier this month to reduce the stockpile of cash it amassed at the Fed over the last year to fight the pandemic and the deep recession it caused.<\/p><\/blockquote>\n

That sounds sensible, right? There\u2019s just one problem: the Treasury is\u00a0planning<\/a>\u00a0to \u201cunleash what Credit Suisse Group AG analyst Zoltan Pozsar calls a \u2018tsunami\u2019 of reserves into the financial system and on to the Fed\u2019s balance sheet.\u201d<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n

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Yellen Challenges Powell\u2019s Unlimited Control of the Markets Source: Federal Reserve The Fed attempts to maintain control of various rates (including inflation, unemployment and long-term interest rates) through its monetary policy decisions. In the past, poor choices arguably led to both the dot-com bubble and the Great Recession. But that\u2019s old news. Today, Fed Chairman […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[18769,7783,303,451,16888,18773,3650,2202],"class_list":["post-56850","post","type-post","status-publish","format-standard","hentry","category-economics","tag-birch-gold-group","tag-credit-expansion","tag-fed","tag-janet-yellen","tag-jerome-powell","tag-monetary-expansion","tag-us-federal-reserve","tag-us-treasury"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56850","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=56850"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56850\/revisions"}],"predecessor-version":[{"id":56852,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56850\/revisions\/56852"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=56850"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=56850"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=56850"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}