The equal opportunities offender

Let us begin with a criticism:

“What you said about Janet Yellen is disrespectful to All Women. You said you meant no disrespect, and then you go ahead and say most women her age are baking cookies for their grandchildren and saying she has soft shoulders. You would not make the same kind of sexist comment about a man holding the position that she does. You should grow up… your comments are so old fashioned and out of touch. If you are going to put someone down because you don’t agree with what they are doing, resorting to sexist commentary as a metaphor only makes you look like the fool.”

Ouch, what? We thought we headed off this kind of complaint with our frank alert a few weeks ago. Didn’t we warn readers?

Sexist, ageist, religionist, racist, abilityist, intelligentist – we are an equal opportunity offender: we disrespect all groups without favour or distinction. Especially those we like. Besides, weren’t those with delicate feelings and hyper-sensitivities advised to cover their ears and eye, lest they discover some calumny?

The writer says she speaks for “All Women”. We don’t know if she’s polled them all, but wow! We offended half the world’s population in a single paragraph. And without even breaking a sweat.

And we stick by our point: better to bake cookies than to wreck the world’s biggest economy! So, let us divert the conversation, from our personal failings to the coming disaster.

Our latest insight is that the above-referenced Ms Yellen claims to be adding to ‘demand’ by keeping interest rates at their lowest level ever. In fact, she is reducing real demand.

Real demand comes from real output. That is, people who produce things have the wherewithal to buy other things. If you produce nothing, you can buy nothing no matter how much money the central bank prints. That is a lesson that has been learned and relearned over centuries.


Real demand comes from real output and real wealth. And real wealth is the result, not the cause, of a long, hard process of saving and applying those savings to wealth-producing activities. Starting new businesses. Building new factories. Developing new, cheaper, better products and finding better ways to deliver them.

Zero interest rates discourage saving. The saving rate today is only half what it was in the early ‘80s. Why save money when it earns you so little interest?

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Cheap money also reduces real output. The rate of new business start-ups has gone down. So has the rate of real business investment. Instead, the cheap money is spent on cheap tricks: M&A (mergers and acquisitions), share buybacks, equity stripping, you name it.

As a result, growth has declined. Following the dreadful performance in the first quarter, consensus view for this year is GDP growth of just 1.7% – way below where it ought to be for this point in a ‘recovery’.

Yellen’s policies – low rates and QE (quantitative easing) – have succeeded in transferring trillions of dollars of wealth to the insiders, but have failed to produce generalised prosperity. In fact, they have depressed the economy, resulting in lower wages and lower growth.

Yet, Ms Yellen who should be bouncing grandchildren on her knee, or whatever grandmothers do that is still politically incorrect to mention, is instead becoming a bigger and bigger nuisance. In her most recent testimony, she not only assures most investors that they are on solid ground, she advises others where to put their money:

” …valuation measures for the overall market in early July were generally at levels not far above their historical averages, suggesting that, in aggregate, investors are not excessively optimistic regarding equities. Nevertheless, valuation metrics in some sectors do appear substantially stretched – particularly those for smaller firms in the social media and biotechnology industries… ”

See how easy investment analysis is? Even a Fed chairman can do it. “Get out of social media and biotech,” she practically urged investors. “Buy blue-chips and the broad market.”

In this, Ms Yellen is not just making headlines; she’s making history. As far as we know, no other Fed chairman has ever offered sector analysis.

We’d like to see her portfolio. Here is a woman who not only observes markets; she moves them. Was she short social media and biotechs? In any event, investors sold the sectors she warned against, and bought the broad market, sending the Dow back to record territory.

What a fortune you could make if you knew what she’d say next! And what a dope you’d be if you believed her.

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  • Kris Armani

    Well said, Bill. Sexist or not, whenever I listen to Yellen’s grandmotherly testimonies, I feel exactly the way you do. Either she is clueless on the enormous harm she is doing to the economy or she is too well clued in. Her only redeeming feature is she doesn’t have the arrogant Bernanke smirk. That was such a provocation, it is a miracle my TV is still surviving.

  • Ellen14

    I don’t like judgments to be made on a person that is based more on their gender or race then on the subject under review and so I believe your reference to women her age engaging in baking cookies is about as relevant as judging George Osborne by referencing him against a champagne swilling polo playing contemporary. Or, as Max Kaiser does, belittle Mark Carney by ridiculing Canadians and hockey players. However, there does appear to be extremely dangerous madness involved in worldwide central banking and no real will, from any of them, to enable their economies back into more normal monetary policy planning. I am starting to believe the economies of the world are being deliberately crashed and none of this is accidental.

  • mcbadog

    Dear Bill, I note that you were criticised for the comment; “most women her (Janet Yellen’s) age are baking cookies for their grandchildren”. Seems to me that would be statistically correct. I absolutely agree with you about La Yellen.

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