Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Retirement Compounders®
  • Free Email Signup

Fed President Proves Common Sense Innate

September 27, 2013 By Jeremy Jones, CFA

Trying to prove that common sense and good judgment must be innate, Narayana Kocherlakota, the President of the Federal Reserve Bank of Minneapolis and graduate of the venerable Princeton University at the age of 19 is out with a speech on monetary policy that makes Argentina’s central bank sound credible. For those of you who don’t follow this stuff regularly (something you can give thanks for on Turkey Day), Kocherlakota is the Fed president who 12 months ago flip-flopped from hawk to uber-dove.

In a speech yesterday, displaying more than a touch of hubris, Kocherlakota, likens today’s Fed (himself included of course) to the widely respected former Fed chief, Paul Volcker. Kocherlakota is making a thinly veiled attempt to justify today’s reckless and failed monetary policy experiment by stamping it with Volcker’s seal of approval. Mr. Volcker would not approve.

Kocherlakota goes on to tell anybody who will listen that the Fed should do “whatever it takes” to lower the unemployment rate, savers, asset bubbles, and inflation be damned. To Wit:

Doing whatever it takes in the next few years will mean something different. It will mean that the FOMC is willing to continue to use the unconventional monetary policy tools that it has employed in the past few years. Indeed, it will mean that the FOMC is willing to use any of its congressionally authorized tools to achieve the goal of higher employment, no matter how unconventional those tools might be. Moreover, doing whatever it takes will mean keeping a historically unusual amount of monetary stimulus in place—and possibly providing more stimulus—even as:

  • Interest rates remain near historic lows.
  • Economic growth rises above historical averages.
  • Per capita employment begins to rise appreciably.
  • Asset prices rise to unusually high levels, leading to concerns about “bubbles.”
  • The medium-term inflation outlook rises temporarily above 2 percent.

It may not be easy to stick to this path. But I anticipate that the benefits of doing so, in terms of employment gains, will be significant.

If this is the type of monetary policy investors are going to have to navigate in coming years, proper risk management is going to become much more challenging.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • What Long-term Capital Management and the Fed Have in Common
  • This is What Terrorizes the Fed
  • Who Should be the Next Fed Chairman?
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. CNBC has ranked Richard C. Young & Co., Ltd. as one of the Top 100 Financial Advisors in the nation (2019-2022) Disclosure. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Money Market Assets Hit Record High: $5.4 Trillion - May 26, 2023
  • The Mania in AI Stocks Has Arrived - May 25, 2023
  • The Wisdom of Sam Zell - May 24, 2023

Search Young Research

Most Popular

  • Your Survival Guy Felt Like a U.N. Worker in Rome
  • The Mania in AI Stocks Has Arrived
  • Money Market Assets Hit Record High: $5.4 Trillion
  • Your Survival Guy in Rome 30-Years A.B. (After Babson)
  • The Future of the American City is This…
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • A Three-Week International Research Trip to Paris via Rome
  • Is an Investment Property Disaster Looming?
  • The Power of a Compound Interest Table
  • Risk and Reward: An Efficient Frontier

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

The Importance of a Balanced Portfolio

Invest with Peace of Mind and Comfort

What Kind of Life Are You Investing For?

RSS The Latest at Richardcyoung.com

  • The Nickel Pickle from EVs
  • My Nephew Graduates, and I’m Larry the Cable Guy
  • Why Is the Media So Terrified of Robert F. Kennedy Jr.’s Ideas?
  • Sen. Rand Paul Says It’s Time to Fight Back Against the Woke Left
  • Should McCarthy Have Forced the Government’s Hand?
  • Will America Succumb to Intimidation from “The Group?”
  • Rewarding Loyalty with Ridicule
  • Rome, Paris, U.S.A.: Global Crisis in Confidence
  • June Is Retirement Compounders Month
  • Americans Scared of CBDC Control of Their Money

RSS The Latest at Yoursurvivalguy.com

  • My Nephew Graduates, and I’m Larry the Cable Guy
  • California Is Driving These Wealthy Businesses Out of the State
  • Rome, Paris, U.S.A.: Global Crisis in Confidence
  • Your Survival Guy’s Best Insider’s Guide to Rome
  • What Is a Fiduciary Duty? Are You Working with a Fiduciary?
  • Survive and Thrive June 2023: Your Survival Guy in Rome 30-Years A.B. (After Babson)
  • Birth Rates in France Worst Since Post-WWII Era
  • Your Survival Guy Felt Like a U.N. Worker in Rome
  • Social Security: Declining Italy Needs a Bambino Boom
  • ATTACK ON THE IVAN KHURS: Unmanned Vessels Changing Naval Warfare

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2023 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.