Yellen admits she was mistaken about inflation
On the one hand, at least Yellen admitted she got it wrong.
On the other hand, I don’t think that serious inflation was actually a difficult call. I’ve often said that economics is very far from my field of expertise, but even I was aware that inflation was very likely, and long ago it appeared it was no transitory fluke. So her error was actually pretty egregious.
And of course they are making all sorts of excuses:
A Treasury Department spokesperson told FOX News, “The Secretary was pointing out that there have been shocks to the economy that have exacerbated inflationary pressures which couldn’t have been foreseen 18 months ago, including Russia’s decision to invade Ukraine, multiple successive variants of COVID, and lockdowns in China. As she also noted, there has been historic growth and record job creation and our goal is now to transition to steady and stable growth as inflation is brought down.”
The article says that a lot of people on Twitter are calling for Yellen’s resignation. As far as I’m concerned, she can stay put, because any replacement would almost certainly be far worse than she has been.
Can anyone imagine the Fed setting the fed funds rate at 20% interest as Volker did in 1980?
No word on inflation in 2021. I guess that was still Trump’s fault.
She admits she got it wrong, but with a hyuge BUT…
…as she continues to employ all those “Biden” talking points about the “REAL” cause of all this golly-gee inflation (e.g., PUTIN!!) that she just didn’t see coming—though strangely enough, Larry Summers sure did, and early on; as did Manchin, as did anyone with half a brain—IOW anyone who wasn’t a clownish partisan hack.
And she’s STILL lying; still a lying, self-serving slime-ball.
They just can’t seem to help themselves.
None of them.
They’ve just gotto lie.
The BUT-IT’S-NOT-OUR-FAULT-IT’S-YOURS Gang.
And what kind of “historic” gobbledygook be this???
“…there has been historic growth and record job creation and our goal is now to transition to steady and stable growth as inflation is brought down….”
Yep, there’s that “transition” again.
The jargon that will save us all, no doubt, by obfuscating EVERYTHING.
File under: Trans-economics…
Like Biden, she’s trying to blame anything except administration policies. They passed a blowout spending bill, extended the time period when people could continue not working, and acted deliberately to restrict energy production.
japanese would commit seppuku, but that would be a lot of swords, shes also totes on abortion, and kowtowing to china, seems to be of a piece,
Contrary to what Biden said, Milton Friedman is still in charge and his ghost told you what was going to happen and what did happen. Economics is hardly a science but you can use past history as a guide to the consequences that will happen when you do something. MF said it better but every time a government prints too much money there is going to be inflation. How hard is that to understand?
As long as she parrots Scarecrow’s teleprompter her position is safe.
My two take-aways:
(1) she admitted this in an interview with Wolf Blitzer on CNN, so even the Democrats will hear she was wrong, but they will also buy-in to the excuses because those fit their existing biases.
(2) Per Fox, Conservative commentator Harrison Krank wondered, “Should @SecYellen resign?” He later tweeted, “I have to give Janet Yellen credit for being the first member of the Biden administration to admit they were wrong about something.”
I predict she will also be the last to admit being wrong about anything.
The truth is that Yellen and her lefty economist friends specifically rejected the economic teaching about fiscal spending and inflation which has, once again, proven to be correct.
They understood the question perfectly well. Their answer was totally wrong. She has been repudiated by events.
On a different tack, she is even more annoying for me to watch than Obama. That shouldn’t be possible. She’s even more annoying than Elizabeth Warren and AOC. Well, maybe not THAT annoying. It’s close. And that’s really, really awful company for Yellen to be compared to. She’s not nearly as stupid as they. So she doesn’t have their excuse.
Paul in Boston: “MF said it better but every time a government prints too much money there is going to be inflation. How hard is that to understand?”
Except that the Obama administration printed way too much money – doubled our debt in eight years and the Fed did QE the whole time- and inflation didn’t get out of hand. Why? IMO, the other factor necessary for inflation is shortages of necessary or consumable goods. During the Obama administration there were no shortages of any note because the supply chain was working, and though energy prices were higher than normal from 2008 to 2014, inflation did not rise markedly.
The combination of showering money on consumers via the Covid rescue plan, coupled with actively opposing fossil fuel production and exploration, along with the disruption of the supply chain all converged to create shortages of necessary and consumable goods. Shortages plus lotsa money equals inflation. They created a shortage of fossil fuels, they didn’t/couldn’t fix the supply chain, and they infused 2 trillion into the economy. What could possibly go wrong? 🙂
IMO, Yellen is taking one for the team by admitting she didn’t see it coming. What none of Biden’s team will admit or try to remedy, is their anti-fossil fuel policy’s role in helping create inflation or their reckless spending. Those things are baked into their policy cake.
My conjecture is that this is classic machine politics. Things are going terribly for Biden, both in terms of the reality of the nation as well as his poll numbers. So he needs a fall guy. An inconsequential fall guy won’t do. It must be someone of import.
Dwaz understands the key fact. Yellen’s reputation may take a hit, but as long as she doesn’t muck it up, her employment and pension are secure. She may actually get a few extra trips on Air Force 1 to some 5-star hotels out of the deal.
I understand Neo’s point. Yellen is semi to very competent so replacing her with some Buttigieg-like clown would not be a good thing. However, …
In the corporate world when bad things happen the CEO must go. If he or she is a terrible CEO then the point of it is obvious. But often they are not terrible CEOs. What is the point of it then? The point is that pain is inflicted (OK, ignore the golden parachutes) on the person who stops the buck. And this is important because only then can investors have some confidence that the actions have gone beyond mere theatrics.
So, … Yellen’s job is safe because this is just theatrics.
_______
I predict she will also be the last to admit being wrong about anything. — AesopFan
You could be right. But if things get worse for Biden he may feel that he needs several scapegoats. Upshot: That brilliant Joe Biden was victimized by a multiple incompetent staff members.
Whatever one thinks about her politics this is not a stupid woman when it comes to economics yet she was out there championing all the massive spending including BBB.
If she really wanted to be taken seriously she would publicly offer up some suggestions like, I don’t know, stop spending like drunken sailors or take steps to improve the supply side of things which would help to bring about price stability which she should know all about as a former Fed chair.
But I doubt that will happen and I also don’t think anybody will be sacrificed until after the midterms and as others have said she is probably the most qualified member of the cabinet right now so I can only imagine who would replace her.
John Galbreith said economics was created to give astrologers a good name.
@ TommyJay > “But if things get worse for Biden he may feel that he needs several scapegoats.”
In which case, considering the lengthy list of debacles for the Brandon Administration, I predict he will run out.
@ Griffin > “she is probably the most qualified member of the cabinet right now so I can only imagine who would replace her”
Well, it probably won’t be any of these former staffers, but it might be some of their compatriots who haven’t bailed out yet.
https://pjmedia.com/columns/paula-bolyard/2022/05/31/another-historic-biden-first-black-staffers-leaving-white-house-in-droves-n1602221
According to Politico, “At least 21 Black staffers have left the White House since late last year or are planning to leave soon. Some of those who remain say it’s no wonder why: They describe a work environment with little support from their superiors and fewer chances for promotion.”
I wonder if they knew or suspected that they were just window dressing for the benefit of the Wokerati who supported Biden?
“…probably the most qualified…”
Qualified for what? Wrecking the joint?
For that, they’re all SUPER qualified and running on all cylinders.
If the point is that she’s brighter than the pack, she’s still a lying partisan hack, which makes her all the more stupid. (She displayed the same lovely traits in Obama v1—nothing new here.)
So “more qualified”?
Nope. They’re all geniuses…when it comes to destruction, prevarication, chicanery, criminality…and UNITY!!!
What a team!!
The belief that Yellen was “mistaken” is, I am afraid, also mistaken. It was not by mistake that the inflationary mechanism was set in motion; it was intentional. It was also not a mistake that our energy production and distribution was “disrupted”; it was intentional. It was not a mistake that our southern border has been thrown wide open; it was intentional. It was not a mistake when the FBI initiated its investigation into Trump and his campaign; it was intentional misuse of power (as clearly documented by the revelations in the Sussman trial and the Gaetz revelation of FBI’s “safe space” inside PerkinsCoie. I could go on, but I think the point has been made. When will you people get it?
What Steve said.
The chaos and destruction are all intentional.
All part of the PLAN. (Look at those sleaze balls Mayorkas and Sec. Pete; look at the Sec. of “Education”, look at VPOTUS…if you can bear it, etc….)
Which means that Yellen’s “admission”—replete with all its BUTS—is pure distraction…
…which is, in fact, the “Biden” MO, pure and simple.
Related:
“Janet Yellen’s utterly shameless excuses as raging inflation slams America”—
https://nypost.com/2022/06/01/janet-yellens-excuses-as-raging-inflation-slams-america/
In other news, Joseph Biden admits that he was mistaken about calling son Hunter “The smartest guy I know”…
https://www.youtube.com/watch?v=PwHP0FQsa24&feature=emb_rel_end
Just kiddin’….
Yellen got inflation wrong.
Granholm got energy supply and pricing wrong.
Garland got j6 and parents of school children wrong.
Mayorkas got border crisis wrong.
Buttigeg, let them eat cake and get an electric car, got it wrong.
Milley and Austin got Afghanistan wrong.
Fauci got quite a bit wrong.
Biden’s son got life wrong.
Accountability?
Nah, it is probably all part of the plan and going swimmingly for the left. They just can’t say it out loud. Yet.
John Galbreith said economics was created to give astrologers a good name.
He had a Harvard professorship and wrote for public audiences for 50 years. Now see if you can find among all his writings an actual theoretical model or an empirical study, peer reviewed. I’ve tried and I do not believe there is one. Paul Krugman dismissed the man as a hack, and Krugman is right.
I’d also refer you to Thos. Sowell’s account of having sat in his class ca 1955. The first lecture was applauded. As the semester progressed, attendance declined, because little substantive was related.
Except that the Obama administration printed way too much money – doubled our debt in eight years and the Fed did QE the whole time- and inflation didn’t get out of hand.
The payment of interest on reserves reduced the money multiplier. Banks weren’t lending much of the additional monetary base. BTW, the Fed undertook three discrete instances of QE. They weren’t doing it ‘the whole time’.
What none of Biden’s team will admit or try to remedy, is their anti-fossil fuel policy’s role in helping create inflation or their reckless spending.
The principal problem has been that the Fed monetized the enormous deficits. Up until recently, the majority on the Fed board were Trump appointees. The Republicans have a lower propensity to engage in spending pukes than do the Democrats, but they’ve been implicated to a degree.
Can anyone imagine the Fed setting the fed funds rate at 20% interest as Volker did in 1980?
The discount rate is what’s set. Volcker’s innovation, which Jimmy Carter disrupted but which Reagan permitted, was to place controls on the growth of monetary aggregates through open market operations and let interest rates fluctuate.
The truth is that Yellen and her lefty economist friends specifically rejected the economic teaching about fiscal spending and inflation which has, once again, proven to be correct.
Again, the problem has been that they monetized the deficits.
But I doubt that will happen and I also don’t think anybody will be sacrificed until after the midterms and as others have said she is probably the most qualified member of the cabinet right now so I can only imagine who would replace her.
She may be the only member of the cabinet who isn’t a bucket of whale chum. It’s possible the man who was Governor of Iowa is tolerable.
Economic “science” is really a joke; even astrologers can predict where the planets will be anytime into the future.
Economists can “predict” a recession three months after it has commenced.
Check out an academic econ paper: all full of partial differential equations or other fairly advanced math, with theorems, etc; just like one would expect to see in a STEM paper.
The difference however is that in an econ paper, all sorts of assumptions are made to make the math tractable. As such, the “models” model an economy not of this solar system.
No wonder they get it wrong so often.
Of course the other real problem, and more problematic, is that economists develop their economic thinking / models to first conform to their political ideology. Thus you have free market (conservative) economists and leftist economists, the latter or which are never lacking in “demonstrating” that greater govt. involvement will provide a ready solution to whatever ails an economy.
Jared Bernstein, formerly Obama’s econ advisor and now Biden’s has 100% perfect record of being wrong in the policies he has promoted.
No need to mention Paul Krugman who famously predicted the internet would amount to nothing or that the Trump economy would be the Great Depression II;
or Paul Samuelson MIT PHD, who, despite all his fancy mathematical econometric models was unable to tell if the USSR or the USA had a better economic system.
Perhaps if he had actually visited the USSR – and seen all the empty store shelves- and noted that to buy a car there, it had to be paid in full about 10 YEARS !! before you could actually obtain it, it may have focused his math-laden brain; but I doubt it.
Check out Long Term Capital Management, in which the theories of two Nobel Prize winning economists were actually applied by a hedge fund and when it went bust – by applying those theories in the real world – it almost brought down the world’s entire financial system in 1998. This hedge fund was chock a block with MIT and Harvard PHD grads in econ and finance in addition to the two Nobel Prize winning economists.
Last, but not least, Mr MIT PHD Ben Bernanke, Fed chair in 2008 – during the housing bust – famously predicted just a few months (!!) before the shiite hit the fan, that the housing mess would not affect the economy and would be confined to only the housing market.
Recall that the 2008 financial bust was the worst economic dislocation since the great depression of the 1930s.
The FED needs to be rolled back into its original mission when established in 1913; to be the lender of last resort to prevent bank runs or other financial panics.
But like all bureaucracies, and with the blessing of Congress (which is more than happy to fob off their constitutionally mandated responsibilities onto unaccountable agencies they have birthed) , it has morphed into a powerful decision making body that is accountable to nobody and whose members suffer no consequences when they make horrible decisions that hurt the citizenry.
But like all academics (you need a PHD to be hired by the FED as an economist) they are so arrogant and self absorbed, they actually believe they can “manage and guide” a gigantic economy.
They are literally a dangerous joke.
They are literally a dangerous joke.
Guess what? Economists, like engineers, make mistakes. If you fancy you’ll get more serviceable policy advice consulting some other occupational segment, you won’t.
Of course the other real problem, and more problematic, is that economists develop their economic thinking / models to first conform to their political ideology.
No, it’s usually the other way around.
So, … Yellen’s job is safe because this is just theatrics.
Yellen advises who is ever making the decisions and may have given poor advice. Please be advised as to who she supervises. She does not supervise the director of the Office of Management and Budget and she does not supervise the Board of Governors of the Federal Reserve. She supervises the payments system, bond issues, tax collection, and the most salient component of the bank examiners’ corps.
I’m by no means trained in economics, so this take is probably amateurish, but here goes. I’ve been hearing warnings about how our economic policy courted disastrous inflation for a long time, and indeed I’m old enough to remember serious inflation in the 1970s. For decades, though, we spent and spent without ever seeming to reap the threatened inflation. I wonder now whether the deadly combination was to crush production with reckless lockdown policies while at the same time throwing money out of helicopters in the form of COVID handouts. Isn’t the essence of a stable monetary system keeping the money supply roughly in proportion to the total production of goods and services?
I will add that, in late 2020, my little county undertook to borrow a great deal of money to rebuild the courthouse we lost in the 2017 hurricane. The plan was to borrow on a relatively short-term basis and refinance a few years out. Not much liking the borrowing proposal, I quizzed the county financial advisor sharply about his assumption that we could refinance in a few years at a comparable rate. Had he noticed whom we had just elected president? Did he not think we were at risk of inflation? He thought I was jumping at shadows, and certainly he had the last several decades of massive deficit spending, without significant inflation, to bolster his position. That’s one reason that I wonder now whether what we were missing was the new element of crushing production nationwide.
Yellen got it wrong, Baccera prefers “birthing people”, Buttigeig takes maternity (?) leave during supply chain breakdowns, Haaland knows nothing, Granholm laughs at high gas prices, Mayorkas believes the border is “operationally” secure while millions cross illegally, Milley will call the Chinese before we attack, Garland investigates terrorist parents & Biden can’t read minds. Did I miss anything? What a clown show.
TBH, the real question is more one of “How the fuck did it take so long to start?”
Inflation is tied to the difference between the “True GNP” (i.e., the total value of new goods and services, less the value of depreciated/consumed existing goods and services.) and the change in the actual money supply (e.g., how much the government ACTUALLY puts into play vs. what they say they put into play.
Changing the deficit adds money to the system just as though they’d printed it and put it into circulation.
And we’ve been steadily increasing the deficit for MANY decades (no, don’t give me that BS of how Clinton “balanced” it. Clinton “balanced the budget” in the same way you balance the budget when you have a monthly shortfall of cash vs. expenditures and “eliminated” said shortfall by taking out a cash advance off the CC, rather than just charging some of the shit directly to the CC.).
This really zoomed as the 2000s rolled around, first with the Housing BS, then the War on Terror, then the Housing collapse, then “Quantitative Easing” — that last being a tap dancing euphemism for inflating the money supply.
Trump, unfortunately, did nothing to help this, and Brandon has been spending money like he had Scrooge’s money bin, and got to keep everything he spent.
The real question is: “Why did inflation not leap forwards around Bush’s second term?”
My own suspicion is that we vastly underestimate the value of much IP, so the estimates of GNP are woefully undercounted. So we actually had lots more value in the system than was realized.
Note: Pssst — Don’t tell The Left about this.
Inflation has finally taken off because they finally manage to catch up with it.
}}} What a clown show.
And no one around with sufficient brains to fill The Big Shoes.