Janet Yellen's Swiss Cheese Statements on the US Dollar

Mish

Biden's nominee to be Treasury Secretary, Janet Yellen, has disingenuous remarks on the US dollar.

Yellen's Disingenuous Dollar Remarks

Janet Yellen is former Fed Chair and Biden's nominee to be Treasury Secretary. At her confirmation hearing the WSJ reports Yellen to Make Clear U.S. Doesn’t Seek Weak Dollar.

Janet Yellen is expected to affirm the U.S.’s commitment to market-determined exchange rates when she testifies on Capitol Hill Tuesday, and she will make clear the U.S. doesn’t seek a weaker dollar for competitive advantage, according to Biden transition officials familiar with her hearing preparation.

Officials responsible for briefing Ms. Yellen said she is prepared to say, “The value of the U.S. dollar and other currencies should be determined by markets. Markets adjust to reflect variations in economic performance and generally facilitate adjustments in the global economy.”

“The United States doesn’t seek a weaker currency to gain competitive advantage,” she is prepared to say, according to the officials. “We should oppose attempts by other countries to do so.”

Well La Dee Frickin Da

For starters, it is Fed policy and government fiscal policy that sets the tone for the US dollar.

Yellen can make whatever swiss cheese statements she wants but how would a central bank act if it wanted to sink the dollar? 

Steps to Weaken a Currency

  1. Cut interest rates
  2. Engage in massive QE balance sheet expansion
  3. Pledge to keep rates low indefinitely
  4. Pledge to ignore inflation and let it run hot to make up for alleged undershooting 
  5. Encouraging more fiscal stimulus

The Jerome Powell Fed is five for five on doing the very things that would cause the dollar to sink and Yellen supports all of them.

Other counties are doing many of the same things and if they weren't the dollar would be dropping faster. 

Regardless, please ignore her disingenuous, cheesy statements because actions speak louder than holes. 

Short Tribute to Yellen

If you can stand 30 seconds of ads, this is a funny 5 minute Saturday Night Live skit.

Musical Tribute to 4 Fed Chairs Including Yellen

If you haven't watched my video in entirety, please do so. Thanks.

Open Letter to the Fed

In an open letter to the Fed, I asked Powell a set of questions on inflation expectations, demographics, the Phillips Curve, and the CPI, all areas in which the Fed has made repeated errors.

Hello Jerome Powell, We Have Questions

My questions, sent directly to the Fed are of course unanswered.

Hello Jerome Powell, I ask again, instead of failed bubble-blowing tactics, how about some answers?

Mish

Comments (36)
No. 1-16
Sechel
Sechel

I'd rather see stronger dollar. It's good for inflation and give Americans greater purchasing power. Don't know where interest rates should be other than much highe than where they are now. George w Bush had the right idea when he selected his firt treasury secretary Paul O'Neill who focused on fiscal prudence and wasn't a creature of the banking system but that decision was short lived and deemed inappropriate after the financial system collapsed

Eddie_T
Eddie_T

Crickets. Hehehe.

I’m surprised you don’t get a form letter or something......

”Dear Mike,

Thanks so much for your comments. The Federal Reserve Board appreciates the input of concerned citizens like yourself. Enclosed, you will find a brochure that explains the role of the Fed in setting monetary policy and gives examples of how we work diligently to fulfill the dual mandate bestowed on us by the US Congress.”

Sincerely,
Jerome Powell

LMFAO!

I think..and I could certainly be way off.....but I think in terms more of what the Fed DOESN’T want...it isn’t so much that they think a weak dollar is necessary to balance trade....it’s more that they are worried about a super-strong dollar that keeps trying to blow out to the upside in spite of so much effort to prevent it.

And in spite of the evidence that might seem to indicate otherwise, they are acutely aware of the bubbles they’ve blown up....and like ducks, they appear to be sitting calmly while their feet are paddling up a storm just under the surface.

Extend and pretend.....it’s worked for a long time. It won’t work forever but if there is a plan B, they’d like to hold off on it as long as possible. They see themselves as a Machiavellian, but pragmatic band of money magicians.

I’d say that the “specter” of inflation is met at the Fed by a sigh of relief.....because the bubbles are in constant need of it to keep them from collapsing in ways that might negatively impact central bankers. The were worried.......now we have the helicopter money, which makes it easier.

PecuniaNonOlet
PecuniaNonOlet

Great video Mish. It is fun to see something lighthearted here. Give us more!

FromBrussels
FromBrussels

auwriii' then !.....give us 3% on the 10 year and next week the $ will be at par with the fckn but ever so strong Euro..... Manipulating fckn LIARS, all of them, arm-twisting ignorami into insanely overvalued shares and 2% junk bonds.....How do you spell DISASTER ?

KidHorn
KidHorn

We're doing everything possible to kill USD. Everything except negative interest rates.

anoop
anoop

So @Mish given Yellen’s appointment, are you going all in on stocks?

caradoc-again
caradoc-again

A question, with so much stuff sourced from China, what happens if:

  1. $ weakens,
  2. RNMB strengthens

Would that be an inflationary acceleration beyond that of just a weakening $?

Playing with fire.

Scooot
Scooot

Good article Mish.

“Cut interest rates
Engage in massive QE balance sheet expansion
Pledge to keep rates low indefinitely
Pledge to ignore inflation and let it run hot to make up for alleged undershooting
Encouraging more fiscal stimulus”

So which one do they reverse, if they are actually concerned that is? I’d guess QE, maybe more talk of a tapering timetable.

truthseeker
truthseeker

Since the Yuan is not in the dollar index, our trade deficit with China is only effected indirectly by a strong or weak dollar. When Trump threatened China with tariffs years ago I knew this would backfire since in its culture, especially the way they do business is to always save face. So anyway I wonder if Trump could have found someone from China who stayed here in America after graduating from someplace like Wharton or Harvard business school, who could have been hired to negotiate trade deals, even partnerships with the Chinese that would benefit both countries. At the same time, a really top negotiator should be able to convince the Chinese how it could help them to let their currency float or at least strengthen would reduce our trade deficit and increase growth dramatically here at home. They could slowly become less of an export based economy and develop their domestic markets with enough foreign exchange reserves to buy technology and energy from all over the world increasing productivity in their domestic markets which they are doing already though I know we won’t allow them to buy our technology, energy companies, they have found other ways to develop these assets.

JoeJohnson
JoeJohnson

As much as the dollar is flawed, what are the alternatives? The yuan is still pegged and has capital controls, euro has potential but shared by 19 sovereigns with no joint debt market, the pound belongs to an island country that still dreams about its empire, average age in Japan is 45 so yen is not the answer either. Bitcoin is subject to whims of government regulation, gold is not practical for day to day microtransactions and way too expensive for most people.

Eddie_T
Eddie_T

Remember what I said about the Biden plan really being the Yellen/ Powell plan?

More evidence today in Ms. Yellen’s remarks.

PecuniaNonOlet
PecuniaNonOlet

Off topic but this relates to the “living in a van down by the river.”

Trumpikazee, Mike Lindell, has been dropped by numerous retailers: Kohls, Bed Bath Beyond, Wayfair, HEB.

A trumpikazee is a person willing to fly their career, freedom, gun rights, business, and/or social standing into a brick wall for Trump.

bradw2k
bradw2k

How is a tidal wave of deflation not coming? Production is depressed and will be for years, debt overhang is monumental and growing monumentally, workforce participation is terrible, the next wave of layoffs, after service jobs, is just getting started, savings rate is up = demand is down, CRE got slammed and won't be back. Second worse pandemic wave is a very real possibility. Did I mention the Dems buckle in tomorrow and will for the next 2 years raise taxes while increasing spending and regulations? How many days until Biden bravely announces a national lockdown, any takers? ... Okay I feel better.

Mr. Purple
Mr. Purple

How's Judy Shelton's nomination going now?


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