Janet Yellen Says, “Don’t Worry, I’ll Keep Pumping Out More Money,” And Stocks Rise

Remember when everyone wondered what Yellen would do when she became Federal Reserve Chairperson/woman? The media acted like this was a mystery. It wasn’t. She’s going to do exactly what Alan Greenspan and then Ben Bernanke did. It was all she was ever going to do. She is going to create new dollars to pump into the stock market and other bubbles.

From Bloomberg.com:

Federal Reserve Chair Janet Yellen, easing investor concern that interest rates may rise earlier than previously forecast, said the world’s biggest economy will need Fed stimulus for “some time.”

Yellen said today the Fed hasn’t done enough to combat unemployment even after holding interest rates near zero for more than five years and pumping up its balance sheet to $4.23 trillion with bond purchases.

“This extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policy makers,” Yellen said at a community development conference in Chicago. “The scars from the Great Recession remain, and reaching our goals will take time.”

The Federal Reserve and its insane low interest rates was the reason we had a great recession. The institution Yellen runs started it by running up unstable asset bubbles that, inevitably, had to pop. First, due to Alan Greenspan’s low interest rates during the Clinton years, we got the dot-com bubble that wavered and collapsed in 2000-2001, leading us into a recession. Rather than suffer through and rebuild, Greenspan began lowering interest rates further, creating the notorious housing bubble, which Bernanke claimed did not exist.

All of this was made inevitable by Federal Reserve policy while it enriched a few people. Janet Yellen claims the Federal Reserve can “combat unemployment.” But neither she nor anyone else has shown that pumping money into stock market and other bubbles does anything to fight unemployment. Quite the opposite.

Naturally, when she gave these assurances, as has happened before, the stock market rose. Bloomberg again:

U.S. stocks climbed, with the Standard & Poor’s 500 Index posting a fifth quarterly gain, as Federal Reserve Chair Janet Yellen signaled continued monetary support and tensions appeared to ease in Ukraine.

 […]

“People thought the Fed was insinuating they were going to raise short-term interest rates sooner than anticipated,” Bruce Bittles, chief investment strategist at RW Baird & Co., said by telephone from Sarasota, Florida. His firm oversees $110 billion. “Yellen’s comments probably lay that to rest.”

It blows my mind that anyone believed that Yellen would ever stop the flow of new money. What other trick does she have?

Her real trick is simply pretending that the Federal Reserve board has the power to do anything besides redistribute wealth to the one percent. And she looks forward to being paid a great deal for rendering such service.