Article Review #7

This article talks about David Stockman's opinion about Janet Yellen, the chairman of the Fed, and how the central bank is mismanaging our economy. In light of the experience of European countries and others that have gone to negative rates, the Fed is taking a look at them because they would want to be prepared in the event that they are needed to add accommodation. The "accommodation" that was mentioned means that the US economy is everywhere and always sinking towards collapse unless it is countermanded, stimulated, supported and propped up by central bank policy intervention. The Fed can inject central bank credit conjured from thin air into the bond market in order to raise prices and lower yields. And it can falsify money market interest rates and the yield curve. Both of these effects are aimed at inducing businesses and households to borrow more than they would otherwise, and to then spend more than they produce. The "accommodation" may have worked before, but now those household and business balance sheets are all used up because we are at Peak Debt, along with most of the rest of the world. There has actually been negative growth in household debt since the financial crisis. Janet is saying that it doesn't matter that the Fed has spent years falsely inflating equity markets via massive liquidity injections and props and puts under risk assets. Any correction in stock prices and any regression of ultra-tight credit spreads to normality which could cause economic and job growth to slow must be countered at all hazards.  In this specific article, Stockman is yelling at Yellen about how she is not doing her job properly and as a result, she is damaging the economy. Stockman in this article argues against government policies and states that the supposed new jobs aren’t really to be considered new jobs.