Cleveland Fed President Loretta Mester discussed monetary policy at a virtual meeting today. Let's tune in.

Mester Comments 

“We’re going to be accommodative for a very long time because the economy just needs it to get back on its feet,” Mester said during a virtual discussion organized by the Toledo Rotary Club.

Mester said shThee supports Treasury Secretary Janet Yellen’s efforts to work with regulators to make sure that investors are being protected.

“We want them to make sure the game being played is a fair game,” Mester said, adding that the U.S. central bank would continue to monitor for signs of excess in financial markets.

The above via Reuters.

Fed Groupthink

Mester is part of the groupthink culture at the Fed that does not know what inflation is.

Moreover, every person on the Fed is either an economic dunce who cannot spot bubbles or a bold-faced liars about what they are doing. I suspect a healthy dose of both.

The Fed will "continue to monitor for signs of excess in financial markets," just like they did in 1998, 1999, 2000, 2005, 2006, 2007, 2008, and of course now. 

They will continue their vigilant monitoring up until the next crash. 

National Debt

The national debt is approaching $28 trillion. I snipped that image from US Debt Clock. If you haven't been to the site, please check it out. It is debt in real-time, updated every second.

Three percent of $28 trillion is $810,000,000,000 ($810 billion). 

If the interest rate was 3%, that is the amount of money the government would have to collect annually just to pay interest from now until eternity unless progress was also made on paying down principle.

Inflation and Speculation are Rampant

Inflation as measured by soaring credit, stock market bubbles, the bubbles in junk bonds and housing is through the roof. 

The Fed either does not see it or prefers to ignore it and is being disingenuous about it. 

Either way, it's a problem.

Inflation: How Should We Measure It?

The Fed brushes all this aside by pointing at the CPI. I have news for the Fed, the low CPI is a mirage. 

It's not the only measure of inflation that matters. 

For discussion, please see Inflation: How Should We Measure It?

There Are No Temporary Measures, Just Permanent Lies

On April 20, 2020, I declared There Are No Temporary Measures, Just Permanent Lies.

Fed Chair Jerome Powell stated the blatantly illegal junk bond-buying measures it was taking were "temporary". 

What a hoot.

Just like the Fed's announcement that its previous balance sheet expansion was "temporary".

The Fed had 10 years to unwind its balance sheet after the last crisis but never did. Now we have new balance sheet records every week.

There are no temporary measures, just permanent lies.

Very Long Time or Forever?

When the Fed says "accommodative for a very long time" they may as well be honest. They mean forever (or some sort of global currency crisis along the way to forever).

My bet is a currency crisis comes first.