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Meyer Says Fed Must Shift From Inflation ‘Obsession’ to Jobs


moore_capital54
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For my dear friends on the board that think QE is not money printing.. or that the fed will sell those securities. LOL

 

Meyer actually believes that debasing currency will create sustainable jobs long-term. This is wealth redistribution par excellence.

 

Wire: BLOOMBERG News (BN) Date: Sep 8 2011  12:21:09

Meyer Says Fed Must Shift From Inflation ‘Obsession’ to Jobs

 

 

By Steve Matthews

    Sept. 8 (Bloomberg) -- Former Federal Reserve governor

Laurence H. Meyer said the increased threat of recession means

the central bank should shift from a focus on inflation to

creating an environment supportive of more jobs.

    “I would be asking my colleagues why are they so obsessed

with inflation?” said Meyer, co-founder and senior managing

director, Macroeconomic Advisers LLC, at the Bloomberg Global

Inflation Conference hosted by Bloomberg Link. “The Fed has to

rebalance a little bit and has to focus more on what they can do

about employment.”

    Chairman Ben S. Bernanke said last month in a speech at a

Fed conference at Jackson Hole, Wyoming that the central bank

still has stimulus tools, while not providing details or

committing to deploying them. Policy makers will meet for two

days Sept. 20-21 to “allow a fuller discussion” of the economy

and the Fed’s possible response, he said.

    One possible move is replacing short-term Treasury

securities in the Fed’s $1.65 trillion portfolio with long-term

bonds in a bid to lower rates on everything from mortgages to

car loans, according to economists at Wells Fargo & Co. and

Goldman Sachs Group Inc.

    “They still have some firepower left,” said Torsten Slok,

chief international economist at Deutsche Bank AG, on the same

panel in New York City today. Yet after two rounds of asset

purchases intended to stimulate growth, investors may be

skeptical, he said. “The firepower of those tools is less than

it used to be.”

 

                    Inflation Expectations

 

    Inflation expectations could over time become unhinged

because Bernanke has earned less credibility than prior

chairmen, said Axel Merk, president and chief investment officer

at Merk Investments LLC in Palo Alto, California, and another

Bloomberg Link speaker.

    With Paul Volcker, Fed chairman from 1979 to 1987, “We

know he would bring down inflation,” he said. “We think

Bernanke may tolerate more inflation than past Fed governors.”

    Meyer disagreed and said the public’s and investors’ view

of inflation is “well anchored.”

    “The Fed is not trying to increase inflation except up to

its target” of 2 percent, Meyer said. “The Fed has all the

power it needs to stop inflation.”

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Where is Gross' evidence that credit supply is constrained due to low reference rates? Mortgage lenders have been dropping interest rates and points to little effect, and NFIB surveys consistently show demand expectations as the major concern. If people won't borrow at current rates, why would they do so at higher rates?

 

Instead of focusing on yield twists, collateral pricing provides a better explanation for limited loan demand and the relative rise of C&I loans. And general deleveraging, of course.

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