Tags

, , ,

Janet Yellen
Janet Yellen, head of the US Federal Reserve apparently became confused, or disoriented, toward the end of her U Mass Amherst speech, and was unable to finish it, but seems to have recovered. (Initial reports sounded like sudden onset of dementia). Interestingly, U. Mass Amherst is home of Ed Calabrese who, with US government, military and corporate (e.g. Exxon) funding, has tried for years to prove and promote that both radiation and toxic chemicals are good for you, even though nothing could be further from the truth (See more at bottom of page). As long as her speech was, it probably is simply that she got a dry throat, as claimed. And, she’s no spring chicken. Where exactly she ended, we know not. So, we just posted the end parts which deal with the current economy. The earlier parts seem an interesting, albeit sleep-inducing, history, for those not short on time, or for those suffering from insomnia.

The end of her speech: “Consistent with the inflation framework I have outlined, the medians of the projections provided by FOMC participants at our recent meeting show inflation gradually moving back to 2 percent, accompanied by a temporary decline in unemployment slightly below the median estimate of the rate expected to prevail in the longer run. These projections embody two key judgments regarding the projected relationship between real activity and interest rates. First, the real federal funds rate is currently somewhat below the level that would be consistent with real GDP expanding in line with potential, which implies that the unemployment rate is likely to continue to fall in the absence of some tightening. Second, participants implicitly expect that the various headwinds to economic growth that I mentioned earlier will continue to fade, thereby boosting the economy’s underlying strength. Combined, these two judgments imply that the real interest rate consistent with achieving and then maintaining full employment in the medium run should rise gradually over time. This expectation, coupled with inherent lags in the response of real activity and inflation to changes in monetary policy, are the key reasons that most of my colleagues and I anticipate that it will likely be appropriate to raise the target range for the federal funds rate sometime later this year and to continue boosting short-term rates at a gradual pace thereafter as the labor market improves further and inflation moves back to our 2 percent objective.

By itself, the precise timing of the first increase in our target for the federal funds rate should have only minor implications for financial conditions and the general economy. What matters for overall financial conditions is the entire trajectory of short-term interest rates that is anticipated by markets and the public. As I noted, most of my colleagues and I anticipate that economic conditions are likely to warrant raising short-term interest rates at a quite gradual pace over the next few years. It’s important to emphasize, however, that both the timing of the first rate increase and any subsequent adjustments to our federal funds rate target will depend on how developments in the economy influence the Committee’s outlook for progress toward maximum employment and 2 percent inflation.

The economic outlook, of course, is highly uncertain and it is conceivable, for example, that inflation could remain appreciably below our 2 percent target despite the apparent anchoring of inflation expectations. Here, Japan’s recent history may be instructive: As shown in figure 9, survey measures of longer-term expected inflation in that country remained positive and stable even as that country experienced many years of persistent, mild deflation.34 The explanation for the persistent divergence between actual and expected inflation in Japan is not clear, but I believe that it illustrates a problem faced by all central banks: Economists’ understanding of the dynamics of inflation is far from perfect. Reflecting that limited understanding, the predictions of our models often err, sometimes significantly so. Accordingly, inflation may rise more slowly or rapidly than the Committee currently anticipates; should such a development occur, we would need to adjust the stance of policy in response.

Considerable uncertainties also surround the outlook for economic activity. For example, we cannot be certain about the pace at which the headwinds still restraining the domestic economy will continue to fade. Moreover, net exports have served as a significant drag on growth over the past year and recent global economic and financial developments highlight the risk that a slowdown in foreign growth might restrain U.S. economic activity somewhat further. The Committee is monitoring developments abroad, but we do not currently anticipate that the effects of these recent developments on the U.S. economy will prove to be large enough to have a significant effect on the path for policy. That said, in response to surprises affecting the outlook for economic activity, as with those affecting inflation, the FOMC would need to adjust the stance of policy so that our actions remain consistent with inflation returning to our 2 percent objective over the medium term in the context of maximum employment.

Given the highly uncertain nature of the outlook, one might ask: Why not hold off raising the federal funds rate until the economy has reached full employment and inflation is actually back at 2 percent? The difficulty with this strategy is that monetary policy affects real activity and inflation with a substantial lag. If the FOMC were to delay the start of the policy normalization process for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals. Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession. In addition, continuing to hold short-term interest rates near zero well after real activity has returned to normal and headwinds have faded could encourage excessive leverage and other forms of inappropriate risk-taking that might undermine financial stability. For these reasons, the more prudent strategy is to begin tightening in a timely fashion and at a gradual pace, adjusting policy as needed in light of incoming data.

Conclusion
To conclude, let me emphasize that, following the dual mandate established by the Congress, the Federal Reserve is committed to the achievement of maximum employment and price stability. To this end, we have maintained a highly accommodative monetary policy since the financial crisis; that policy has fostered a marked improvement in labor market conditions and helped check undesirable disinflationary pressures. However, we have not yet fully attained our objectives under the dual mandate: Some slack remains in labor markets, and the effects of this slack and the influence of lower energy prices and past dollar appreciation have been significant factors keeping inflation below our goal. But I expect that inflation will return to 2 percent over the next few years as the temporary factors that are currently weighing on inflation wane, provided that economic growth continues to be strong enough to complete the return to maximum employment and long-run inflation expectations remain well anchored. Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter. But if the economy surprises us, our judgments about appropriate monetary policy will change.
http://www.federalreserve.gov/newsevents/speech/yellen20150924a.htm Chair Janet L. Yellen, At the Philip Gamble Memorial Lecture, University of Massachusetts, Amherst, Amhearst, Massachusetts, September 24, 2015, “Inflation Dynamics and Monetary Policy” (Emphasis our own).

Fed’s Yellen resumes schedule after struggling to finish speech
Posted: Thu, 24 Sep 2015 22:54:15 GMT
AMHERST, Mass. (Reuters) – Federal Reserve Chair Janet Yellen resumed her schedule at the University of Massachusetts at Amherst on Thursday after struggling to finish a speech and receiving medical attention, a Fed official said.

http://feeds.reuters.com/~r/reuters/topNews/~3/NuveW9jG0yI/story01.htm

Fed still on track for rate hike this year, Yellen says
Posted:Thu, 24 Sep 2015 22:53:12 GMT
AMHERST, Mass. (Reuters) – Federal Reserve Chair Janet Yellen said on Thursday she expects the U.S. central bank to begin raising interest rates later this year as long as inflation remains stable and the U.S. economy is strong enough to boost employment.
http://feeds.reuters.com/~r/reuters/topNews/~3/CDnDSX34jME/story01.htm

Some info on Ed Calabrese of U. Mass Amherst, and the attempt to raise the general radiation exposure to 100 mSv which, over a lifetime, will result in 80 additional cancers per 100 people, by conservative government funded (BEIR) estimates: https://miningawareness.wordpress.com/2015/08/22/us-nrc-spreading-the-italian-triangle-of-death-to-america-refuse-omerta-remember-to-comment-by-september-8th/ Half will die of these cancers which shorten life, on average, by 14 to 15 years (i.e. at or before retirement), according to BEIR. For women the number is 100 cancers per 100 for a lifetime of 100 mSv. Some experts believe the cancer and death rate will be double this. This is above and beyond other exposures, and does not account for accumulation in the environment. Cancer rates are already high so this appears to be at least one cancer per person. Comment deadline has been extended to November 19th.