ZeroHedge today reports: Yellen Timestamp: “No Bubble”. We have added emphasis below.
- YELLEN SAYS FED DOESN’T SEE BUILDUP OF FINANCIAL RISKS
- YELLEN SEES LIMITED EVIDENCE OF ‘REACH FOR YIELD’
- YELLEN SAYS FED LOOKS OUT FOR ANY POTENTIAL ASSET PRICE BUBBLES
- YELLEN DOESN’T SEE `MISALIGNMENTS’ IN ASSET PRICES
Since ZH doesn’t provide a source link we go to Fox Business: Yellen Senate Confirmation Hearings Begin. Quotes from this source areare:
- Yellen in her opening statement credited the Fed’s interventionist policies with supporting the ongoing recovery and described the economy as “significantly stronger.” [The economy has not recovered to its pre-recession levels and may be rolling over. Contrary to what the Fed might believe, the business cycle remains, even if it is severely distorted by Fed intervention.]
- Quantitative easing is intended to keep longer-term interest rates on loans such as mortgages low “to spur demand in the economy,” Yellen explained. [after an initial boost there is no ongoing effect. Indeed, the 30 year rate has been rising.]
- Yellen, addressing questions related to potential asset bubbles, said Thursday she doesn’t currently see any “price misalignments” that “would threaten financial stability.” [compared to normal times, risk in the bond market and the stock market is totally mispriced.]
In short, Yellen will perpetuate the Fed policies that have so damaged markets, partly due to a blindness toward their ineffective and destructive nature.
David Stockman, in a King World News interview reinforced the above analysis:
The greatest danger is the Fed. It has become a serial bubble machine. We have seen this move three times already this century … and now they have inflated it even more fantastically for the 4th time. And yet we now have testimony from Yellen, yesterday, in which she couldn’t even use the word, ‘bubble.’ She kept referring to it (the bubbles) as a ‘misalignment of prices.’
So we have a complete disconnect between the Main Street economy, which is struggling and floundering, and financial bubbles throughout Wall Street and the financial system that are clearly being fueled by the lunatic policies of the Fed. And now we have a (Fed) chairman who can not see them, or even hear the word.
These comments crystallize the divide between private sector analysts and economists and the Fed. They represent the antithesis of what the private sector sees and in particular with QE, what academic research is beginning to dismiss as having any ongoing effectiveness.