Sunday, May 10, 2015

The Crock of @#$% Report v.007

May 10, 2015
Yellen just disproved the biggest Fed conspiracy theory

The true goal of the Fed's policies, some suspected, has been to send stock prices higher as part of a surreptitious plot to create the "illusion" of economic growth.

In order for this CNBC headline to be true:

1. One must first prove what the biggest Fed conspiracy theory is. Would any reasonable person think that this is the biggest? It doesn't even involve evil Nazi babies! Or a new world order! Or the illuminati! How can such a tame conspiracy theory be anywhere near the biggest? Only a theory on a grand and epic scale could possibly hold the top honor!

2. Even if one could prove that sending stock prices higher, as a primary goal, was the biggest Fed conspiracy theory, then surely it would also include a grand cover up of Ben Bernanke's comments from 2010. That's where he describes the mechanism of his plan to raise stock prices to boost economic growth.

November 4, 2010
What the Fed did and why: supporting the recovery and sustaining price stability

And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

So why would Yellen worry about high stock prices now when they bring so much apparent good to the world? Why is she offering up her version of Alan Greenspan's irrational exuberance speech from the late 1990s?

Perhaps we need to find the actual biggest Fed conspiracy theory and realize that she did not disprove it. Here's a potential candidate.

The Fed wants the credit when stock prices go up but does not want the blame when stock prices go back down.

You know, for the sake of the evil Nazi babies, new world order, and the illuminati. Crazy theory. Get out the tin foil hats.

Here's another crazy Fed conspiracy theory. This one is way out there on the fringe.

In 2005, Ben Bernanke had a dream. How could he become Time Magazine's Person of the Year in 2009? If the economy remains stable then he has no chance. But what if he ignores the housing bubble and then lets it crash hard? He could then ride in on a white horse in shining armor and bail out the banking system at the taxpayers' expense! Everyone loves a hero! He wouldn't even need evil Nazi babies, a new world order, or the illuminati! Mwuhahaha!

I don't actually believe in this theory. By allowing the housing bubble to grow to epic proportions, I think he was rather incompetent. However, I could be wrong. He may be an evil genius instead. Your opinion may therefore vary.

Happy Mother's Day! And that's no crock of @#$%! ;)


Mr Slippery said...

The Fed is a frankenstein, owned partly by the federal government and partly by commercial member banks.

I think it uses policies to fulfill its dual mandate: transfer wealth from the population to both government and commercial banks, enriching both. It has been very effective at that, especially since 2000.

Stagflationary Mark said...

It makes sense that the Fed is a Frankenstein, credit is the life blood, and commercial banks are the blood sucking vampires.

That would make CNBC Bud Abbott and Mad Money Lou Costello.

Abbott and Costello Meet Frankenstein

When Chick and Wilbur get to McDougal's "House Of Horrors", they open the first crate and find a coffin with "Dracula" inscribed on the front. When Chick leaves to retrieve the second crate, Wilbur witnesses Dracula awaken and tries to get Chick's attention.

House of Horrors indeed! ;)

Mr Slippery said...

That's a perfect analogy, with Ben Bernanke as the wolfman.

We are now watching the sequel, with Yellen as the Mummy, Jamie Dimon as Dr. Jekyll, and the DOJ as the Invisible Man. Across the pond, Mario Dragi is the Creature from the Black Loan-goon.

Joseph Constable said...

You guys are funny. I almost kept myself from laughing but creature from the Black Loan-goon broke me down.

Stagflationary Mark said...

Mr Slippery (& Joseph Constable),

Not only is Jamie Dimon Dr. Jekyll, but he is also Mr. Hyde those assets in the Cayman Islands!

We have assembled quite the Plague of Extraordinary Gentlemen! ;)