Autopilot in Reverse: Fed Discusses Regular Use of QE in Non-Emergencies

-edited

San Francisco Fed President admits open debate on permanent QE as a regular tool. Autopilot is in reverse gear.

Seven Fed presidents gave speeches this week. San Francisco Fed president Mary Daly provided the closing yap for the week.

Daly said the Fed is debating if balance sheet should be regular tool.

“In the financial crisis, in the aftermath of that when we were trying to help the economy, we engaged in these quantitative easing policies, and an important question is, should those always be in the tool kit — should you always have those at your ready — or should you think about those are only tools you use when you really hit the zero lower bound and you have no other things you can do,” Daly told reporters after a talk at the Bay Area Council Economic Institute.

“You could imagine executing policy with your interest rate as your primary tool and the balance sheet as a secondary tool, but one that you would use more readily,” she added. “That’s not decided yet, but it’s part of what we are discussing now.”

Image from She Dropped Out of High School. Now She’s President of the San Francisco Fed.

In Control Not

This discussion is further admission that

  1. The Fed is not in control
  2. The Fed seeks to manipulate and placate the markets

Any sensible person already understood that.

Autopilot In Reverse

In December, the Fed Chair Jerome Powell said the Fed was on "autopilot" for QE reduction. Following a market taper-tantrum, Powell reversed course.

Today, the truth comes out: If the market throws a tantrum, the Fed will listen.

Related: Damn, That's a Lot of Speeches

Mike "Mish" Shedlock

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Esclaro
Esclaro

In the face of this stupidity and corruption why isn’t gold at $2000 or even $5000? The PPT are hard at work with suppression of the price?

Seb
Seb

So I know you say deflation Amish. And you’ve said it since 2007. But I just bought a new car (first since 2008- my old one is done done done) and they have literally doubled in 10 years. And I bought used with 10k miles-Japanese car because they last the longest. As a consumer, to me it looks like inflation. How is it not?

Blurtman
Blurtman

Banks create fraudulent securities in such quantities that there are no buyers. Fed, owned by banks, buys them at face value. CEO in charge of largest fraud ring at Goldman Sachs becomes US Treasury Secretary.

lol
lol

"discuss"....code for admit they've been printing money and buying up well …….everything for over decade,and they may as well now come out and admit it....sort of!

ksdude
ksdude

Recall it was just a few short years ago you'd get laughed off the internet (often by paid trolls---another supposed conspiracy) for any mention of the PPT.

Snow_Dog
Snow_Dog

“Today, the truth comes out: If the market throws a tantrum, the Fed will listen.”

We knew this back in August 2007, when Jim Cramer threw his on-air tantrum at CNBC studios.

Telling everybody that “Bernanke knows nothing” was enough to get the Fed going and voila! We had a new all-time high close in the S&P by early October. It all collapsed shortly thereafter.

DFWRealEstate
DFWRealEstate

This is very disappointing, but not surprising. The Fed employs an army of economists who are essentially useful idiots spouting ridiculous nonsense based on flawed models and institutional group think. The the Fed's economic stench is pervasive. It has even infiltrated the research at the Texas A&M Real Estate Center, funded by the dues of clueless real estate agents. Congress should mandate a reduction in the Fed's staff of economists by at least 50 percent, and restructure the Fed from the ground up. It is blatantly obvious this institution has become a central policy mechanism of the elite and well-connected. All of the drivel about full employment and stable prices is just that, nothing but a glorified PR campaign.

gregggg
gregggg

Curious-Cat
Curious-Cat

Read The Creature from Jekyll Island

gregggg
gregggg

"Fed Discusses Regular Use of QE in Non-Emergencies", but I never heard anybody call an end to the Emergency Economic Stabilization Act of 2008, so what's the point here?

abend237-04
abend237-04

I smell a third congressional mandate coming. I'll even draft congress's note to the FOMC for them:

Dear Fed, since we obviously still don't know crap about economic policy, and with AOC, Maxine, et al here now, we're not likely to be learning, we were wondering if you'd submit a formal proposal for us to mandate that you use your balance sheet antics to repeal the business cycle? The one you've been airing through the San Francisco Fed will do.

2banana
2banana

I am shocked any of this could be in the US Constitution...

Oh wait...

Cajundoug
Cajundoug

Craziness. It seems the Fed is just out to help the rich with asset inflation.

Bam_Man
Bam_Man

The US Government/Corporate/Household "Debt-Berg" WILL be inflated away, of that there is no doubt. Precisely how they (The Fed) will accomplish this feat is what is currently being considered. Prepare yourselves accordingly.

thimk
thimk

exactly what i was thinking, but what type of debt can the feds monetize? I believe they can't buy equity . what about a debt based etf ? What stops them from going full Japanese ?

Freebees2me
Freebees2me

God help us all!

Mish - how much gold is too much, or is it even possible to have too much?