We have to confess we might need a little help here.
But let's see if we can just get this right. Fed chair Janet Yellen from what we've been able to read admitted that her bank's policies have created two things--low volatility and paper asset price appreciation.
We'd say stocks here, but for this exercise we want to try to think in the foggy, stilted language economists are noted for. Those two things in themselves are not too puzzling. What's puzzling is, to use an economic term, the lack of correlation.
Simply put, Fed policies caused the run-up in stock prices, but to hear Ms Yellen those higher stock prices --some would suggest bloated prices--are not the Fed's concern. Seems like a disconnect somewhere here to us.
Now we don't know about you, but if you've ever practiced any kind of serious medicine, what they used to teach in the old days is never treat a lab number. That's a metaphor for: Never make your diagnosis in the lab. In short, treat the patient not the data.
But when one is schooled his or her whole life to worship at the Alter of Data, it's probably unrealistic to expect anything else.
From what we can gather, it's Ms Yellen's position that the lab number here, employment, a proxy for steady, continuous growth, is the more important notwithstanding the role she and her merry central banking friends played in creating what many believe is a paper asset bubble.
Sounds like a good gig if one can get it. We're not responsible. Maybe that should be stated a bit differently. You're not responsible.You're irresponsible.
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