Senate moves toward maintaining monetary status quo

Yellen2By George Miller

The Senate Finance Committee, in a 14-8 bipartisan vote, approved Janet Yellen, current vice chairwoman of the Board of Governors of the Federal Reserve System  (photo-L), Obama’s nominee to replace Ben Bernanke as Federal Reserve Chair. A full Senate vote would still be needed to confirm her. Bernanke, a Bush appointee, served through most of  Bush’s tenure and 5 years of Obama’s. Yellen’s confirmation seems assured, but some think this is a good time to air issues, determine positions and secure commitments.

To quote the NY Times: “three Republican senators — Bob Corker of Tennessee, Mark Kirk of Illinois and Tom Coburn of Oklahoma — voting in favor of her nomination. One Democrat, Senator Joe Manchin III of West Virginia, voted against her.”

Yellen has previously enthusiastically supported the Fed’s “QE” (Quantitative Easing) policy of  “buying” bonds, which some experts have said is almost equivalent to printing money. Advocates claim this helped prevent a major depression. No one knows if this is true, but it has greatly inflated the money supply, which in the past has often led to price hyperinflation.  Federal reports claim that actual price inflation is only about 1.7%, well within Fed “targets.”  Economist John Williams claims this is false and provides his own analysis, based upon what he says is a more complete analysis of the government’s own data (see http://shadowstats.com ).

That still doesn’t look like hyperinflation, but is far higher than headline numbers, which don’t include certain elements, such as food and fuel.  Some experts say that the Fed has arranged the flow and storage of most of the money supply so that it doesn’t overly impact prices. Although the money supply is huge, actual velocity of money is quite low, reducing inflation. However, stocks have hit unprecedented highs, lacking financial performance that would justify this rise in prices.  Banks have hugely profited from Fed policies.

QE would be unnecessary if enough buyers of bonds were available, but this has not been the case for years. This is attributed to very low returns, shortage of capital and perceived future risk. Multiple foreign nations are taking steps to reduce their dependence on the dollar, for both financial and political reasons- China, Russia, Iran, India and Venezuela immediately come to mind.

Other issues on the table are an audit of  the Federal Reserve (Senate Bill 209) and gold reserves. Yellen favors neither, nor restoration of a gold standard, which was eliminated for domestic transactions in 1933 and international ones in 1971.

Experts discuss problems:

http://usawatchdog.com/early-stages-of-hyperinflation-next-year-john-williams/

From the Wall Street Journal: Andrew Huszar: Confessions of a Quantitative Easer

From ZeroHedge: http://www.zerohedge.com/news/2013-11-21/how-fed-dove-crushes-any-hawkish-opposition-feds-true-religion

Bill Gross, of PIMCO, widely recognized as a world bond expert, said this last year:

GrossBonds

 

 

 

 

Previous Citizensjournal.us articles on the Federal Reserve:

Changing of the guard at the Federal Reserve

Behind the curtain of the Federal Reserve

 

We also repeat our publication of the chart depicting the dramatic, unprecedented, record growth of the Federal Reserve balance sheet:

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George Miller is a Citizen Journalist, “retired” operations management consultant, active in civic affairs, living in Oxnard.

 

 

One Response to Senate moves toward maintaining monetary status quo

  1. Greg Muller November 25, 2013 at 11:51 pm

    Seems like Yellen would just help accelerate the current path to disaster. Greenspan and Bernanke were bad enough. Haven’t these folks ever studied Murray Rothbard? Even someone like Milton Friedman would be a major improvement. Even Paul Voelker would be better. It may be too late already.

    Reply

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