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Yellen Press Conference Translated from Fedspeak into English
TND Guest Contributor: Paul-Martin Foss | 
In case you haven’t gotten enough of Janet Yellen’s press conference today, here’s the transcript translated from Fedspeak into plain English. Any errors in the translation are solely the fault of the Federal Reserve. Enjoy!
CHAIRMAN YELLEN: Good afternoon. Many of you have harped on minor tweaks in our statement and concluded that we’re going to hike rates next year. I don’t see how we can be more clear about our intentions to continue loose monetary policy, aside from choking you to death on liquidity. Rest assured, we’ll be printing money around the clock for a long time to come.
In the labor market, things still suck. Sure, we’re adding more “jobs”, but most of those are part-time, so we’re going to keep the easy money flowing for a while. Real GDP has increased, but when it turns down again in the future we’ll definitely blame it on the weather. Or the Russians. We’ll think of something. We also think that Americans are still paying too little for food at the grocery store, so we’ll do our best to keep jacking those prices up and counteract the cheaper gas you’re buying.
And because we’ve got some good group-think going on here, we’ve all got rose-colored glasses on. We all agree that the unemployment rate will go down and GDP will increase at a steady rate. And when the next crisis hits, we’ll fumble around because we had no clue it was coming.
As we’ve said before, we intend to keep interest rates at zero, and any raising of rates will be dependent on economic data coming in. And even if we get down to 3% unemployment, we’ll keep the money flowing for a good long while. I wish you people would get over yourselves and your “the Fed is going to hike rates in mid-2015” narrative that you’ve created. At this point the FOMC is expecting interest rates to be 2.5% by late-2016, but then again, in early 2012 we were expecting interest rates to be around 1% by the end of 2014, which they’re obviously not, so we’re really bad at prognostication.
Oh yeah, and we’re going to keep reinvesting the proceeds from our $4.5 trillion balance sheet into new asset purchases. Questions?
Yes, the teacher’s pet.
QUESTION: Many have projected your liftoff to begin in mid-2015. Could you clarify that? And inflation figures are dropping, can you talk about that too?
YELLEN: I don’t see how I could be more clear. The polar ice caps melting couldn’t flood Wall Street as much as our easy monetary policy will. Yeah, if the economy improves maybe we’ll start normalizing our policy, but there’s no chance of that happening soon. At best it’s maybe middle of next year, but who really knows? As for inflation, until the numbers we cherry-pick start shooting up, we won’t be doing jack to normalize.
QUESTION: A lot of people think that you will only make major monetary policy changes every other meeting, at meetings that are followed by a press conference. Is there any reason to believe that’s the case?
YELLEN: We can do whatever we want, whenever we want to, and there’s nothing you can do to stop us, so don’t try to out-think us. Maybe we’ll raise rates to 5% at the next meeting just to mess with your heads, how about that?
QUESTION: Was any consideration given to lower oil prices? Were you scared out of your minds like all the economic illiterates in the mainstream media who believe that lower prices are the worst thing ever?
YELLEN: Not really, and no. Lower oil prices are a good thing for Americans, because it allows us to pump up the money supply even further so that prices on all other goods start going up. Win-win all around.
QUESTION: There seems to be a disconnect between people who expect you to raise rates soon, and indications from the FOMC that you’ll be easing for years to come. Are markets and media talking heads misunderstanding the very clear and obvious statements you’ve been making?
YELLEN: Yes, they have been. Come on, people, how many times do we have to tell you that we’re going to be handing out money like a drunk lottery winner at a strip club before you finally believe us?
QUESTION: If oil prices remain low, and you keep pumping money into the system, and if oil prices then bounce back up, won’t this mean you’ll get boxed into a corner in terms of interest rates?
YELLEN: As I’ve said before, we’re data-dependent. Except when we don’t like the data we’re seeing and we decide to make up our own. Oil up, oil down, it doesn’t matter, QE won’t stop.
QUESTION: What would it take to make you confident that inflation is headed back up to your 2% target?
YELLEN: Lags in monetary policy last a long time, so we’ll have to wait until inflation is up around 5% before we’re confident that we can maintain the 2% target. That’ll probably be about a decade or more down the road, so everybody on Wall Street can keep partying.
QUESTION: There’s been a lot of focus on the liftoff date, but how often and how much would you hike rates after liftoff?
YELLEN: As I said before, we do what we want when we want it. We might do it ¼% at a time, or we might do it ¼% one month, 2% the next month, and switch it up and drop it the next time. It all depends.
QUESTION: The committee projections show unemployment dropping below what you think its natural rate is. Why? And you’re calling low inflation transitory, yet the committee projections foresee inflation below 2% for many years, so what gives?
YELLEN: Yes, we want to see low unemployment for quite a while before we think of stopping the presses. And we really have no clue why inflation expectations are so low, but we’re not complaining because it allows us to keep creating money.
QUESTION: I’m going to rehash a question that somebody else already asked about the pace of interest rate hikes. Then I’ll ask a new one about the three dissents, does that worry you?
YELLEN: As long as it’s only three people dissenting from our opinions, I’m perfectly happy to talk about how wonderful it is that we have such divergent views on the FOMC. But if they ever got serious about trying to outvote me, believe me, I’d break out the whips. As for the pace of hikes, we’re not going to do it in a measured way. We can do it any way we want, herky jerky, smooth, whatever we feel like. You and the markets will just have to deal with it.
QUESTION: About the New York Fed. There’s been a lot of bad press lately about all the shady stuff the New York Fed has been up to. Do you see the New York Fed’s shenanigans giving the Federal Reserve System a bad name, and do you really think anybody’s going to take seriously a 21-year Goldman Sachs veteran talking about how the New York Fed is going to crack down on conflicts of interest?
YELLEN: Let me talk about bank supervision for a few minutes, which doesn’t really answer your question but will put most people to sleep so they’ll forget what you even asked me. Bank supervision is very important and involves people from different banks and experts from all over and we’re attempting to strengthen our supervisory process. Now, we have to make sure that we have the right information going in, because garbage in means garbage out, but if people disagree with our assessment about a certain bank then we have to make sure that those disagreements are heard, and we’ve undertaken a review to make sure that those disagreements are heard. Does that answer your question? No? Too bad. Next question.
QUESTION: How worried are you that Audit the Fed is going to pass in the next Congress, now that Republicans have taken over? Would you fight against the bill, push for a veto maybe?
YELLEN: Congress has assigned us some important tasks in monetary policy and other roles that we perform and I wish they would leave us alone so we could just do what we want to do without having to answer to them. “Independent” central banks have been proven to make effective monetary policy decisions, as long as you ignore all the “independent” central banks who destroyed their currencies and economies through hyperinflation. We’re very accountable to Congress, I go up their twice a year to testify and not answer their questions directly, and I’m firmly committed to transparency, if by transparency you mean Congress never finding out what exactly we’re doing.
QUESTION: Would you push for a veto of Audit the Fed?
YELLEN: Of course I would. Do I look like an idiot? But I can’t say that publicly so I’ll tell you to go ask the President.
QUESTION: First let me kiss your posterior by offering you a nondescript, inoffensive, seasonally-appropriate, politically-correct greeting. Now about the Russian economy. Did that come up at all in the meeting?
YELLEN: Not really. Russia really doesn’t do a lot of business with the US, which is the great think about sanctioning them. We get to bully the EU into imposing sanctions on them and kill their banks, while our banks remain unaffected. So we’re in great shape and not worried. Who cares about Russia anyway?
QUESTION: Hey, I’d like to brown-nose too by offering you the same insipid, nondescript, inoffensive, seasonally-appropriate, politically-correct greeting. Now, banks are worried about low oil prices, over-leveraged oil companies, and the risk that oil company failures could cause contagion in the banking industry. What do you think about that?
YELLEN: Yeah, I suppose there’s a little bit of worry, but exposure to the oil industry isn’t all that great. But what do I know, I just know the information my staff feeds me. Remember, I and the rest of the people up here had no idea that there was a housing bubble. And when it burst, we thought the housing market crash would be minor, but oh boy were we wrong.
QUESTION: As you begin to think about raising rates, to what extent will you have to take into account the size of your ginormous balance sheet?
YELLEN: We’ll focus on changes in the federal funds rate as our primary means of “normalization”, but we’ll keep a huge balance sheet for a long time. We’ll gradually let these things mature and let our balance sheet run down, so we should be back to normal by 2050.
QUESTION: Let me first make a half-hearted attempt at a joke by mentioning the San Francisco 49ers. Now that that’s fallen flatter than the housing market, let’s talk housing. You said it’s still a drag on the economy. And back to Dudley, are you happy with how he’s handled things?
YELLEN: Do you really think I’m going to undercut the #2 on the FOMC in public? He’s a distinguished public servant who has selflessly sacrificed to ensure that the New York Fed has done everything it can to help this country pull out of the financial crisis that we created. I trust him 100%. As for housing, I’m shocked that it hasn’t done better than it has, especially considering the trillions of dollars we’ve shoveled into Wall Street. But then again, our federal bank examiners are actively keeping banks from lending to people with anything less than perfect credit. Of course, I can’t possibly say that overstrict examiners are at fault because that would make us regulators look like idiots, telling banks to lend on the hand and telling them not to lend on the other. So we’ll just keep printing money until you people stop asking questions. Alright, that’s it. Bye.
# # # #
About Paul-Martin Foss:
Paul-Martin Foss is the founder, President, and Executive Director of the Carl Menger Center for the Study of Money and Banking, an Arlington, VA-based think tank dedicated to educating the American people on the importance of sound money and sound banking.
Prior to founding the Menger Center, Mr. Foss worked in the U.S. House of Representatives for seven years, including six years as Congressman Ron Paul’s legislative assistant for monetary policy and financial services, and one year as Deputy Legislative Director for Congressman Thomas Massie.
As Congressman Paul’s legislative assistant, he assisted the Congressman in his duties as Chairman of the Subcommittee on Domestic Monetary Policy by helping to develop hearing topics, agendas, and briefing Congressmen and their staffs on monetary policy topics. Mr. Foss also was responsible for the management of Dr. Paul’s monetary policy and financial services legislation, including the “Audit the Fed” and “End the Fed” bills, and was co-editor of Ron Paul’s Monetary Policy Anthology, a multi-thousand page compilation of hearing transcripts, lecture transcripts, and other documents related to Dr. Paul’s chairmanship.
Mr. Foss received his Bachelor’s degree from The University of the South (Sewanee), and Master’s degrees from the London School of Economics and Georgetown University’s Edmund A. Walsh School of Foreign Service.
This article appeared on the Carl Menger Center for the Study of Money and Banking and is reprinted with permission, “Creative Commons 4.0.”
Source: http://thenewsdoctors.com/yellen-press-conference-translated-from-fedspeak-into-english/
