Cones Of Dunshire: Yellen Speaks As M2 Money Velocity Lowest In History Despite Doubling Of Federal Debt And Fed Expansion

Fed Chair Janet Yellen spoke to Congress this morning at her semi-annual monetary policy testimony. Trying to juggle inflation and unemployment (Humphrey-Hawkins) is difficult … like the Parks and Recreation’s game Cones of Dunshire.  Yellen testified  “waiting too long to hike (rates) is unwise.”

Well, the 10 year Treasury yield jumped on her statement.

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Oddly, Yellen forget to mention that the US Public debt has doubled since 2008 while M2 Money Velocity has crashed to an all-time low.

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Although little has been discussed about the unwinding of the Fed’s balance sheet other than “the Committee has continued its policy of reinvesting proceeds from maturing Treasury securities and principal payments from agency debt and mortgage-backed securities. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, has helped maintain accommodative financial conditions.”

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Or what to do about the exploding pension liabilities and how The Fed’s zero interest rate policies have helped increase the vulnerability of state pension funds.

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Or that average hourly earnings have gotten progressively worse with the additional Federal debt and all The Fed’s easing.

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Here is The Fed’s Assistant Chair Stanley Fischer explaining the rules of the economy to Fed Chair Janet Yellen.

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