San Francisco Fed President: "No Signs Bubble About to Burst"

Mish

San Francisco Fed President John Williams cannot spot any bubbles. He wants gradual hikes.

In a clear effort to ease market fears, John Williams says market rate hikes will be gradual and the Fed Needs to "Stick to That Plan".

The U.S. central bank should stick to the plan of gradual rate hikes even though the economy has shown such “buoyancy” recently,” said San Francisco Fed President John Williams on Friday.

In a speech to the Financial Women of San Francisco, Williams insisted the Fed should not “have a knee-jerk reaction to all this positivity” about the economy.

Raising rates too rapidly could knock the expansion off track “and that’s the last thing I want to see happen,” Williams said.

In his speech, Williams noted that inflation appears to “finally” be turning higher toward the Fed’s 2% target, but added he did not think the economy was overheating.

For the moment, I don’t see signs of an economy going into overdrive or a bubble about to burst, so I have not adjusted my views of appropriate monetary policy,” he said.

Thanks John, for the laugh of the day. Central bankers never see bubbles. Why? They created them.

Williams' statements are in contrast to those made by Alan Greenspan just a few days ago. For details, please see the Man Who Said "Bubbles Only Identified When They Burst" Suddenly Detects Bubbles.

Mike "Mish" Shedlock

Comments (26)
No. 1-26
wootendw
wootendw

DOW down 666.

Bam_Man
Bam_Man

Let's see how long it takes this incompetent jackass to change his tune if the stock market's "hissy fit" continues.

Snow_Dog
Snow_Dog

Greenspan spent most of 2003-04.yakking up how great it would be for consumers to take out adjustable rate mortgages (ARMs). Then, when everyone who had so much as a detectable pulse was licked into their ARM, Greenspan oversaw 17 consecutive (.25) rate hikes. At that point, he retired and handed the reins over to Bernanke.

DFWRealEstate
DFWRealEstate

And Kaplan says if we wait to see actual inflation we may be too late. #latetotheparty https://aaronlayman.com/2018/02/fed-unwinds-21-billion-markets-puke-on-higher-yields/

RonJ
RonJ

Appropriately, on Yellen's last day in office, the DOW dropped a beastly 666 points. Yellen didn't get to walk away scot free from that which she has helped to create.

Sechel
Sechel

you can't have what's been going on with bitcoin if there's no bubbles

channelstuffing
channelstuffing

only way to end this peacefully is with (QE4) massively increasing mony printing,a few moar trillion to buy bonds,few moar tril to buy moar shares of S&P,few moar trillion to bailout out hopelessly bankrupt federal gov't,few moar trillion to bail out banks (again),and we're just gettin warmed up!tap for 2018 alone low ballin......20 trillion,they can print that in a couple weeks,problem solved

Bam_Man
Bam_Man

@channelstuffing - The only problem with that is the countries with valuable natural resources (who don't "play ball" with Uncle Scam - first among them RUSSIA) won't be happy to accept these newly created from thin air dollars as "money". Unfortunately, it is highly likely that there will be blood.

Bam_Man
Bam_Man

It will certainly not end "peacefully".

Bam_Man
Bam_Man

In a river of blood and tears.

DBG8489
DBG8489

When it pops, they will find someone to blame - other than themselves.

Witness the housing crash: The cause was obviously all those banks making all those risky loans for no good reason, and then selling them to an unwitting Fannie and Freddy who - clearly without knowing how shitty the underlying risks were - chopped them up and re-rated them to AAA or whatever and sold them to investors (many of them public and private pension admins) who thought getting a "steady" return from this new type of investment was a great idea. It was all the fault of the "greedy banks"...

There's no way the cause could have been the fact that the federal government - at every step of the way since the mid-nineties had been pushing banks to make riskier and riskier loans to riskier and riskier clients under the guise of "policing" the banks for "racism" in their loan practices. And to make it easier, they promised that Fannie and Freddy would help them by "guaranteeing" the loans...

And spare me the "Fannie and Freddy didn't know" bullshit. Everyone knew - everywhere. They just didn't care. They thought they'd found a real-life Rube Goldberg Perpetual Motion Machine that printed free money. Politicians, former politicians, Fannie and Freddy administrators, bankers, stock brokers - everyone was getting rich and no one wants to be the turd in the punch bowl at a party where everyone is getting laid.

That doesn't mean there weren't critics. In fact there were plenty of people pointing out that this wasn't going to end well - and all of them were laughed at and/or ignored. They were invited on news and investing shows so the panels could use them as foils for comedy routines.

And as soon as the bottom fell out - everyone played stupid. "There's no way anyone could have known!"

Bullshit. Everyone knew. Just like everyone knows now. The only problem is that this time, the central banks have nothing left. When this one pops, and pop it will, they will be completely powerless to stop the fallout.

DBG8489
DBG8489
killben
killben

First BoJ, now Williams. Let the market fall some more (fall is less than 3%), then you will find more central banksters coming out of the woodwork,after all, they are the self-assigned guardians of the world, the present day Atlas. Bullard (of QE4EVER fame) is waiting.

MorrisWR
MorrisWR

And when will Atlas shrug?

MishMash
MishMash

The market will (likely) implode under the goy's watch. That seems to be the plan. Reel in all that liquidity through crashing the markets. Kicked off by the 666. Then raise rates and the third worlding of the U.S. is ramped up in earnest. The crashing of the towers on 9/11 was a not and unrelated or dissimilar event to what is (likely) coming. 9/11 was certainly a metaphor at the very least.

MishMash
MishMash

was not an unrelated... (what I meant to write there). ..

Blacklisted
Blacklisted

Saying CB's create bubbles is like saying people don't shoot other people, guns do. While the money center banks will certainly not turn away the captive loan business, they DO NOT force govts to deficit spend. THE ROOT PROBLEM IS CAREER POLITICIANS!

The stock "bubble" is also caused by periphery govt's being more irresponsible than our govt, causing capital to look for a safer haven. As rates spike higher, not due to rising loan demand, but because of the soveriegn debt crisis becoming more obvious, and the govt debt bubble (socialism) pops, capital flight into blue chip stocks will be obvious again by mid-March. This is also the same reason and timing behing cryptos reassurting themsleves.

killben
killben

No doubt about it. It is not either or between Career Politicians and central banksters. It is both. Hand in glove.

While it is likely that FASB changed the mark to market rules due to politicians in Mar 2009 and the politicians do have a major role to play, it CANNOT absolve the central banksters. The central banksters (they have acted in concert) are responsible for

  1. ZIRP and NIRP and forcing people to take all sorts of risks in their search for yields
  2. Keeping interest rates low for long time (now nearly 10 years, earlier 3 years) and creating asset bubbles, which they cannot see before its bursts
  3. Turning Investment Banks into Banks in 2008 with the sole purpose of funneling money
  4. Turning on the money spigot for the banks (Collectively, the biggest U.S. banks already have their get-out-out-of-jail-free cards and are now sitting on record profits after, not so long ago, triggering sweeping unemployment, wrecking countless lives, and elevating global instability. (Not a single major bank CEO was given jail time for such acts.) ... more at https://www.zerohedge.com/news/2018-02-02/nomi-prins-fingers-trumps-financial-arsonists-next-financial-crisis-not-if-when). Simply handing over money hand over fist in 2008/9 to banks
  5. Now also funneling money to banks through interest on excess reserves
  6. Blowing asset bubbles
  7. Sleeping at the wheel in 2007/8 and getting away scot-free for it. In fact Bernanke got a second term
  8. Anything happens or is to happen they come out proclaiming that they would do all it takes. Who are these guys to keep helping us whenever there is trouble on the horizon. Also they do talk TOO MUCH! Every other one central bankster or another will keep giving a speech somewhere or the other. The one thing the central banksters shoudl really learn is to keep their mouth shut.
  9. Constantly intervening in the markets e.g. Draghi's whatever it takes, Bullard low etc.
  10. Being clueless most of the time e.g. Bernanke's uttering in 2007/8, Bernanke inane 'wealth effect' etc.
  11. Not allowing capitalism to work and cleverly blaming capitalism.
  12. Creating moral hazard
    13 Usurping power (Faced with what it thought would be a series of cascading financial failures if Bear Stearns went down, the Fed probably knew what it wanted to do, knew it had to do it quickly, and then had to figure out “how to get it done within the confines of its legal structure,” DeRosa [a partner at Mt. Lucas Management Co.] said. “The Fed used legal sleight of hand to reconcile what they wanted to do with what they’re permitted to do by law.” "The Federal Reserve decided last week to overstep its legal boundaries – going beyond providing liquidity to the banking system and attempting to ensure the solvency of a non-bank entity. Specifically, the Fed agreed to provide a $30 billion “non-recourse loan” to J.P. Morgan, secured only by the worst tranche of Bear Stearns’ mortgage debt. But the bank – J.P. Morgan – was in no financial trouble. Instead, it was effectively offered a subsidy by the Fed at public expense." ....https://www.themaven.net/mishtalk/economics/fed-uncertainty-principle-g7EeKBV_3UmdMFmsXuw1ng)
Ambrose_Bierce
Ambrose_Bierce

These guys are just bureaucrats, to them every day is the average temperature for this time of year. Like 2008 the massive creation of credit OUTSIDE the control of the monetary centers is of no concern and of grave concern, and so their first reaction is to panic (raise rates) and to do so in an orderly fashion (gradually and linearly as though this nightmare is really under their complete control) . Just remind yourself this is just a dream. When I wake up in the morning they won't be collateralizing future sales of tulip bulbs and offering them as 100 year duration bonds and using the proceeds to buy Bitcoin.

RonJ
RonJ

Yellen: "I don't want to label what we're seeing as a bubble." A bubble by any other label, is still a bubble.

Snow_Dog
Snow_Dog

“Sleeping at the wheel in 2007/8 and getting away scot-free for it. In fact Bernanke got a second term” ~ Killben

Hold your horses! The banking system was given a stress test in July 2008 by House Financial Services Committee Chair Barney Frank (D-MA). He declared that it was sufficiently well capitalized and in good health. Not even sixty days later came September 15, the date when Lucifer purchased Henry Paulson’s soul. The govt types covered for each other. The Wall Streeters did not. Lehman was still on the phone trying to get bridge loans when Goldman Sachs put out the word to cut those bastards out. Funny, you might’ve thought the Bear Stearns debacle in Marcyh ‘08 would have shown the lay of the land. Greed is a weapon in the hands of these bankers.

bradw2k
bradw2k

If the root cause is politicians, or their bureaucrats, then the root cause is actually voters. And if the root cause is voters, then the root cause is actually the bad ideas they accept. Like the unnamed belief that we can all have our cake and eat it too. Which pretty much sums up the culture of a welfare state.

stillCJ
stillCJ

Editor

I wasn't much worried about the bubble until the fed said "don't worry about it". Now I'm very worried!

Carl_R
Carl_R

and, if the root cause is voters, the root cause is human nature, which causes people to vote for people who promise them stuff. All democracies eventually fail because people learn that they can be elected by making voters dependent on government, which in turn eventually bankrupts the democracy.


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