This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Yellen's Desperate Fed Easing Won't Do Much Good

NEW YORK (TheStreet) -- Federal Reserve Chair Janet Yellen all but admitted that she has no clue as to what the future will bring at last Thursday's press conference. She stated that "it depends" upon lots of unknown factors. Just about every answer that she gave had a positive spin. As a consequence of her answers, I think the Fed has lost credibility.

The truth is that the Fed is scared about the future and will continue quantitative easing at all costs. The Fed's fear is based upon Ben Bernanke's and Janet Yellen's concerns that the U.S. will fall into a 1937 type of depression.

Let's examine the facts.

Right off the bat at the press conference, Steve Liesman of Comcast's (CMCSA) CNBC confronted Yellen about inflation. Yellen contended that inflation was under control, and she was looking for 2% inflation as the level to hit before she would consider changing the Fed policy. Liesman stated that we are already there.

Yellen then gave a vague denial, calling it "noisy." Mind you, this was just after the St. Louis Fed posted official data showing inflation at 2.1% and a GDP shrinkage of 1% a year.

Barclays Charged With Fraud Over 'Dark Pool'

NetGear CEO Lo Says 'Internet of Things' Is the Place to Be

A week earlier, Harvard economist Martin Feldstein stated that inflation was already over 2%. We know that our inflation statistics are outdated and faulty. Skyrocketing food prices, energy prices, asset prices for the rich and so on are not properly weighted.

Steve Liesman was polite in his response to Yellen. I do not have to be polite. Yellen does not seem to have a grasp of the different types of inflation that we are facing. She did not explain that the Fed's fear is deflation, where prices go down in a contracting economy. Yet the current inflation is unlike past inflations where strong economies caused consumer demand or higher wages to increase prices.

Rather, much of today's inflation is being caused by other items besides the strength of our economy. For instance, food prices are skyrocketing due to shortages caused by drought and diseased beef. Oil prices have been going up because of war in the Middle East. Asset prices for the rich, such as stocks and homes in wealthy areas like New York, have been rising because of the Fed's QE policy. Take a look at former Reagan Chief Economic Adviser David Stockman's breakdown of the various components of inflation.

Next came Yellen's insistence that employment is getting better. Based upon the government's dated, unrepresentative numbers, that statement is true. However, we all know that chronic unemployment is at historic highs, many standard deviations beyond anything since the Great Depression. Numerous people who want to work are not included in the government statistics -- and they should be.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,880.36 -31.75 -0.19%
S&P 500 1,970.07 +0.12 0.01%
NASDAQ 4,462.9020 +20.2040 0.45%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs