Janet Yellen – ”Everything Is Great! Just DON’T Audit Us!”
by Brittany Stepniak, Outsider Club
Welp, I had a super stimulating start to the day yesterday. I tuned into Yellen’s congressional testimony for as long as I could stomach it.
I’m not gonna lie — it was hard not to feel a bit bad for the lady. The questioning procedure was intense, fast, and critical. The House Panel hurled angry allegation after angry allegation, demanding specific answers to tough questions.
And while Yellen held it together, I can’t say she looked completely unfrazzled. The Fed Chair was definitely on the brink of losing her patience.
She answered questions seemingly technically — she used a lot of specific references, “Title 1 says this, Section 1:64 says that…” etc.
But she sort of sheepishly danced around the meat of the questions.
I mean, how could she not? What was she supposed to say?
…That the agency she manages still has (and forever and always WILL have) a host of problems including playing into the plutocratic whims of American’s wealthiest elites… big bankers and politicians alike?
Yeah right. That’s never going to happen… mainly, because it’s the truth.
Recap: Yellen’s Report to Congress
When it came to politics, Yellen was all but mute. Even when asked about income inequality, she wouldn’t bluntly answer which political party focused more intensely on the concern in our nation’s last election. And unless you were a small child or living under a rock during that time, you know the obvious answer to that question…
When it came to the too big to fail banks, Yellen offered equally feeble responses. It seemed all Dodd-Frank rules, regulations, supervisions, fsoc designations and de-designations — and everything else the Fed established after the 2008 financial meltdown — were all arbitrary.
There are no formal criteria currently in place coupled with the renewed regulation checks-and-balances system. Each “situation” is approached on a case-by-case basis.
Even if/when risky behavior is suspected, the institution under scrutiny has two full years to prove it’s changed its ways… meaning there are years’ worth of time for criminal institutions to cover their tracks, patch things up, and/or possibly cause great consequences for our economy at large in the meantime…
So for all the great tools and supervisions Yellen is pridefully boasting about, it’s understandable how the House Panel in yesterday’s testimony — and the American public at large — aren’t totally optimistic on the cost-to-benefit analysis of these new safety measures.
The costs are plentiful and the benefits, nil.
What You Need to Know After Second Day of Testimony
1.) U.S. Treasury prices rallied (well, of course they did).
2.) Markets in general rallied (uhm, obviously).
3.) Interest hikes are not imminent — Yellen indicated future increases would be based on a “meeting-by-meeting” basis (oh, YOU DON’T SAY).
4.) Not surprisingly, gold dipped to a fresh seven-week low (per usual after Fed meetings end vaguely optimistically).
5.) Yellen said she strongly opposes auditing the Fed (again, big shocker here!).
6.) She was adamant that the Fed should not “chain itself to any mechanical rule” — in her mind, it’s “not practical” to operate monetary policy following a mechanical rule (because why should anyone try to tell the Fed to mandate some rules to help keep the economy from collapsing? It’s not like that’s ever happened…oh, wait…).
I understand that mechanical rules can become problematic in unforeseen, unique situations. However, the fact that Yellen approached the entire scale of monetary policy operation via such arbitrary vernacular and appeared vehemently opposed to a Fed Audit leaves so much room for skepticism, doubt, and distrust for us Outsiders.
There’s no doubt in our minds that monetary policy is completely politicized at the expense of America’s working class.
If that weren’t the case, why would Yellen be opposed to Fed audits and a few basic rules to make things more systematically functional and fair? We need something in place to hold the Federal Reserve accountable for all of its actions, especially those currently veiled from public eyes.
After-all, the Federal Reserve is the single most powerful organization involved in the U.S. economy. Meanwhile, Yellen “made ‘central bank independence ‘sound like it was the holy grail”, according to author Michael Snyder.
And she truly did. Quite defensively so. Perhaps understandably so. Because if we the people knew what was really going on behind closed doors, I don’t think an uprising of sorts would be out of the realm of possibility.
One Washington “insider turned iconclast”, David Stockman, brought up a poignant point:
At the end of the day, American capitalism does not need recycled political hacks like Jerome H. Powell or clueless school marms like Janet Yellen to thrive. If we need a Fed at all, it is the one designed by Carter Glass 100 years ago. That is, a “bankers bank” that was intended to provide standby liquidity at a penalty spread above the free market interest rate in consideration for good collateral originating from inventory and receivables in the real economy.
Under that arrangement, there would be no monetary central planning or pointless attempts to manage the level of GDP, the number of new jobs, the rate of housing starts, the fluctuations of the CPI or the amplitudes of the business cycle. There would also be no pegging of the money market rate, no helping hand for Wall Street gamblers, no cheap debt to enable profligate politicians to kick-the-can down the road indefinitely.
In short, what the nation really needs is not an “independent” Fed, but one that is shackled to a narrow and market-driven liquidity function. The rest of its current remit is nothing more than the self-serving aggrandizement of the apparatchiks who run it; and who have now managed to turn the nation’s vital money and capital markets into dangerous, unstable casinos, and the nations savers into indentured servants of a bloated and wasteful banking system.
Amen, Mr. Stockman. Amen.
The Federal Reserve has stripped the middle class of trillions of dollars of wealth through the hidden tax of inflation. On the other end of the spectrum, the Fed made $16.1 trillion in secret loans to the biggest banks in the world during the last financial crisis.
Consequently, America’s biggest banks keep getting bigger and America’s middle class keeps getting smaller.
The U.S. banking system has $14.4 trillion in total assets. The six largest banks now account for 67% of those assets and all of the other banks account for only 33% of those assets.
In fact, the five largest banks now account for 42% of all loans in the United States. The Fed’s goals are so undeniably detached from America’s working class. Its goal is to enrich the big banks.
Yellen’s assertion that secrecy is the best policy couldn’t be more detrimental to you and me… and the rest of us outside the 1%.
Change is mandatory, lest our entire financial system implodes from within. There’s no more time to waste. The best time to implement an auditing of the Fed was probably about 100 years ago at its inception.
Ya live and learn I suppose… So presently, in an age in which the IRS can audit you based purely on your political beliefs… an audit on the most powerful organization in the country is a no-brainer.
So, Ms. Yellen, while we respect your intelligence, we wholeheartedly disagree with much of what you say and do. And we definitely think it’s time to audit the Fed.