Federal Reserve Admits It Has NO IDEA What It’s Doing

AP reports today:

Federal Reserve Chair Janet Yellen is stressing the need to review the unconventional monetary policies that central banks around the world deployed in response to the 2008 global financial crisis.

She said Thursday that the post-crisis period offers policymakers an opportunity to assess the effectiveness of the tools and better understand the impact of new regulation.

“Policymakers have to carefully weigh the advantages and disadvantages of alternative monetary implementation frameworks in the presence of new policy tools,” Yellen said in remarks at a two-day research conference sponsored by the Fed.

Translation: We have no idea what’s going on, or whether or policies are helping or making things worse.

Also today, St. Louis Fed Chairman James Bullard said (via Zero Hedge):

The Fed “may need to alter some fundamental assumptions about how Fed policy works if U.S. stays in persistent state of low nominal rates, low inflation.”


But the most important thing Bullard said in his speech titled “Permazero” is that the the US may be entering a permanent period of lower inflation and interest rates. Wait, wasn’t ZIRP and QE supposed to push the US economy, boost inflation and hike rates?Good to know 7 years later that the biggest monetary experiment in history did precisely the opposite of what it was supposed to achieve.

We’ve noted for over 7 years that the Federal Reserve has no idea what it’s doing.

For many years, the world’s most prestigious financial institution, known as the “Central Banks’ Central Bank” – the Bank for International Settlements – has slammed the Fed’s policies of:

  • Letting big banks hide their debt, instead of making them write it off
  • Propping up too big to fail banks
  • Leaving interest rates too low for too long
  • Blowing bubbles
  • Using “gimmicks” and “palliatives” to try to paper over the mess

Indeed, one the Fed’s core tools – quantitative easing – which is aimed at boosting inflation, may actually CAUSE deflation.

Another core tool – creating a “wealth effect” – actually HARMS the broader economy in the long run.

Heck of a job …

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  • Ken

    The Fed knows EXACTLY what it is doing. The ruling class is the best of the best predators, and the Financial community their farmer of humans. Instead of eating it’s prey, it uses it as a continuous source of wealth and power. The term sheeple applies well.
    Think of it this way, does a predator announce it’s intentions? Does the lion walk up and ask the herd of gazelles for one of them to eat for dinner?
    NEVER believe the ruling class, in fact, they never believe or trust one another. It truly is the law of the jungle for them. Morales are not a factor, pshycopathy is their best asset and the lust for power their driving force.

    • groud

      Love the “no one could have known?” defense. Like 911, even as they had multiple drills for planes hitting the buildings coinciding as the exercises went live. with FEMA arriving the night before to “prepare for the event”. yet the bimbos believe the govt and we let the perps off the hook

    • “The Fed knows EXACTLY what it is doing.” You are correct. They are bankrupting the Middle Class with QE.

  • kimyo

    typo alert: third to last paragraph – i think you mean inflation instead of information.

  • Ted Smith


  • MrLiberty

    They are systematically transferring the wealth of the nation into the hands of the first recipients of the newly-created credit/money and out of the hands of everyone holding dollars and savers. It has been that way since this crime syndicate was created by Congress in 1913. No, they of course do not know what they are doing as it relates to their two “claimed” objectives – full employment and price stability, but thankfully they have the liars in government to cook the books for them to make it seem as though everyone is employed and there is no inflation. Every bubble bursts and this one will be no different. Sadly the worship of the Fed will likely continue even through and after the global misery fades

  • “Inflation is taxation without legislation.” Milton Friedman

  • The Fed Audit GAO (Government Accountability Office) report Of the Federal Reserve


    July 26, 2011 The Federal Reserve ‘ADMITS’ that Its 12 Banks Are PRIVATE – Not Government – Entities

    Much of the tens of trillions in bailout money and “easy” money from quantitative easing went to foreign banks (and see this, this and this). Indeed, Ron Paul noted recently that one-third of all fed bailout loans – and essentially 100% of loans from the New York Fed – went to foreign banks.


  • Which Corporations Control the World?

    A surprisingly small number of corporations control massive global market shares. How many of the brands below do you use? It’s a Small World at the Top, and the largest banks hold a total of $25.1 trillion enough to fund the federal U.S. government for over 7 years or roughly $3500 per person on earth.



  • jadan

    Agreed, the Fed does not know what it’s doing. The Fed is a private corporation that has been given the power and the privilege of creating and managing the nation’s money supply. Janet Yellen does not understand the most basic truth about the economy and its financial system. The engine of an economy, any economy, is productive labor and consumption, not finance. This is the horse that pulls the cart. The Fed believes that finance & money is the engine, which is natural enough since the people who own the Fed are financiers. “Monetary policy” is the lever the revs up the economy or throttles it back. But, it’s not working! Yellen wants to turn back the clock, raise interest rates, and restore Fed control. If these people, these rich people, are dumb enough to raise interest rates, they will destroy the economy. But that may hardly matter since the economy is collapsing as a result of mismanagement and corruption. Call it the stupidity of the rich.

    As a privately owned corporation, the Fed is accountable primarily to its stake holders, regardless of bogus congressional mandates. Rich people have wrecked the system by doing what rich people always do: maximize their own profits. They have great faith in the invisible hand. The private pursuit of wealth and advantage is mysteriously transformed to benefit the public interest. They don’t have to bother themselves. The “free market” will take care of everything. There is no invisible hand, however. and there is no free market. These are delusions of the irresponsible and self-serving rich. Without correct understanding and a clear dedication to promoting “the general welfare”, the economic system will ultimately fail. The irony is that a private system designed by the owners of capital will ultimately fail to protect that capital if it does not also serve the broader public interest.

    This is where we are: on the brink of economic catastrophe. The private system has failed. It’s a bad idea to begin with. The rich don’t know what they’re doing. This means you, BIS. You can’t rise above your own bullshit central banking system! You’re authority is just smoke and mirrors! The idea that finance drives the economy is nonsense. Private bankers need to get the hell out of the drivers seat. Nationalize the system, create a public banking system! Take the money power out of the hands of the rich and give it to the people. This is real revolution!

  • mulga mumblebrain

    The prime purpose of neo-liberal economics is to ever further enrich the plutocrats who own the economy and run the country. That this process causes certain ‘contradictions’ was papered over for years with certain economic axioms, giving the impression that economic was a ‘science’. It is, rather, a classic pseudo-science, where the results are known beforehand, with religious conviction, and the facts are then ‘fitted to the argument’, like Tony Blair’s Downing Street document. The jig is up, the collapse is accelerating, ecological catastrophe is being ignored, and it looks like the Western elite have chosen war as a way out. With Russia and China, can you believe it. They are as mad as they are evil.

  • Carl_Herman

    Awesome; thanks, GW. Shared with ~2,000 AP Economics teachers who access our list serve.

  • Bob

    The Fed knows exactly what it is trying to do, and it has been successful. There are consequences however. When you create USD out of thin air, lend it to favored institutions (wealthy and powerful individuals) at zero interest, purchase worthless “assets” from favored individuals, and develop methods to skim, front-run, and otherwise manipulate every market to help favored individuals, we can see they were very successful at their job. What was supposedly unknown to them was exactly how these policies would affect the other 99.999% of the planet. Personally I believe they are not only full of shit when they play dumb, they also knew exactly what they were doing and didn’t give a fuck what would happen to everyone else.

  • hyperbola

    You shouldn’t cite the BIS for ANYTHING. It is exactly the same corrupt sect in a different guise.

    Other Western Élites
    The World Central Bank: The Bank for International Settlements

    The BIS is the most obscure arm of the Bretton-Woods International Financial architecture but its role is central. John Maynard Keynes wanted it closed down as it was used to launder money for the Nazis in World War II. Run by an inner elite representing the world’s major central banks it controls most of the transferable money in the world. It uses that money to draw national governments into debt for the IMF…..


  • ahuxley

    “…Translation: We have no idea what’s going on, or whether our policies are helping or making things worse…”


    They know exactly what’s going on. They conjured and dispensed $trillions of dollars within their banking/corporate cabal while knowing that virtually none of that cash would percolate into the real economy until such time that they have maximized their gains with mergers and acquisitions, stock buy backs and executive mega-bonuses. When they are ready, they will position themselves to make gazillions with derivatives that are sensitive to inflation, and then dump the cash into the economy.

    Oligarch…Great job if ya can get it…!