by Jeff Berwick, The Dollar Vigilante: Of all people, the last person you should ever ask about what is going to happen in the economy is a central banker or a Keynesian economist.
They are, after all, communists trying to centrally plan the economy. Commies are always clueless about economics.
And, their track record of predicting the economic future is almost perfect in that they almost always say “this time things are different” just moments before another crash happens.
In September of 1929, Keynesian Yale Economist, Irving Fisher, said, “Stocks have reached a permanently high plateau.”
Less than two months later, the most devastating stock market crash in US history occurred along with a 12-year depression.
More recently, Ben Bernanke, in 2007, said, “Our assessment is that there's not much indication at this point that subprime mortgage issues have spread into the broader mortgage market, which still seems to be healthy.”
And he went on to say, “The global economy continues to be strong, supported by solid economic growth abroad. U.S. exports should expand further in coming quarters. Overall, the U.S. economy seems likely to expand at a moderate pace over the second half of 2007, with growth then strengthening a bit in 2008 to a rate close to the economy's underlying trend.”
Then within weeks, the biggest housing crash in US history occurred along with the biggest stock market collapse of all time.
And, now, Janet Yellen has come out with a shockingly moronic statement, saying, “Would I say there will never, ever be another financial crisis? You know probably that would be going too far, but I do think we're much safer and I hope that it will not be in our lifetimes and I don't believe it will be.”
Well, it is either moronic, or she is outright telling us that the US will soon be entering into hyperinflation.
Let’s analyze what she said.
First, she was speaking without a teleprompter, so it’s possible she was off her meds today and was just rambling and making stuff up at random… because a lot of what she said in that interview was really meaningless. But, Greenspan was a master of that, so maybe she is learning Greenspeak.
But, her statement that she doesn’t think there will be another financial crisis in our lifetimes needs to be considered.
At first, I thought she meant, in “her” lifetime. And, being 70 years old my first thought was maybe, hopefully, she has cancer and was going to die soon.
But, she didn’t say “her” lifetime, she said in “our” lifetimes. What’s that even supposed to mean? Children alive today should expect to live at least 70 years. Or longer. Did Janet Yellen really say that she doesn’t believe we’ll have a financial crisis in the next 70 years??
There was one less than a decade ago in 2008. And, almost every metric is far worse now.
US government debt has doubled since then to $20 trillion. The stock market is at all-time highs having nearly tripled since the lows in 2009.
Well, if Janet is claiming the banks are so solid now, their capital to assets ratio must have gotten much better since 2008, right?
Hmm, it’s gotten worse. And don’t forget we are nearing the end of the nearly 40-year long bond bull market.
So worldwide government debt has skyrocketed, stocks are at all-time highs, the bond bubble is close to popping and banks are leveraged more than they were during the last crisis in 2008/2009. And this data makes Ol’ Yellen quite comfortable in predicting that we’ve got 70 years of smooth sailing ahead?
So, really, there are four possible reasons she said that.
#1 is she accidentally took an extra handful of Prozac that morning and she just kinda went a bit loopy.