Removing The Veil

Well, tomorrow is the day Fed Chair Janet Yellen delivers her much awaited speech. Given all the attention it's getting it would be interesting to know how many times she's gone over or revised it. We will probably never know. Parsing words is rumored one of the primary prerequisites to getting the head job.

What we do know is the rising chorus of those who've been saying the Fed's incompetence and maybe even ego and arrogance caused this mess is growing. Further proof of that surfaced in the past few days. The feelings expressed in the opening paragraph of the below article are hardly new to us. We have been writing about what we call The Fed Problem a long time. As this article concluded the only thing the Fed knows is more of the same. Doubling down and ZIRP are cuts from the same bolt of cloth. One could call it, Double Your Pleasure and Double The Pain.

.zerohedge.com/news/2016-08-25/hilsenrath-slams-fed-years-fed-missteps-fueled-disillusion-help-explain-us-populism.

For years we have argued that the main reasons for rising social anger, populist sentiment, and general disillusion with the US economy boils down to one thing: the Federal Reserve, which as we have argued since 2009, has approached the crisis aftermath in a wrong way, generated unprecedented wealth inequality through its monetary policy favoring a tiny fraction of the population - those invested in risk assets - and instead of reflating another debt bubble, should have allowed the system to undergo a debt purge and start afresh.

For this we have been branded perpetual conspiracy theorists and permabears.

Moments ago, none other than the WSJ's Fed "whisperer", Jon Hilsenrath admitted these allegations have been correct in an article titled "Years of Fed Missteps Fueled Disillusion With the Economy and Washington", and which as the WSJ notes "helps explain one of the US's most unpredictable, populist political years."

In other words, it is the Fed's policies that have led to the current failed economic regime (as noted again yesterday by Citi's Matt King and today by former Fed governor Kevin Warsh), and which are responsible for the rise of such candidates as Donald Trump. Which, incidentally, is also something we have predicted over the years would happen. As such we are delighted that one of the most popular establishment Fed watchers now agrees with our assessment.
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You have to remember it's not easy for people to admit their mistakes and the longer one goes without admitting them the tougher it gets. Taking on a big, indifferent, uncoordinated government bureaucratic monster like the Fed won't get you a lot of RSVP A-list offers from the entrenched elitist crowd.