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Janet Yellen is putting banks and everyone else in the financial world on notice
David Jolly ?@davjolly 4hJanet Yellen "thinks interest rate policy is a poor substitute for good regulation," @Neil_Irwin writes http://t.co/PuqsufP8Zn
____ First, many Fed critics view too-low interest rates during the mid-2000s as a crucial factor behind the housing and credit bubble that popped so disastrously beginning in 2007. Sure, higher interest rates in 2003 to 2006 might have slowed the rate of home price growth, Ms. Yellen concedes. But, she adds, “the magnitude of this effect would likely have been modest relative to the substantial momentum in these prices over the period … but the job losses and higher interest payments associated with higher interest rates would have directly weakened households’ ability to repay previous debts, suggesting that a sizable tightening may have mitigated vulnerabilities in household balance sheets only modestly.”
Moreover, she argues higher interest rates would have done nothing to address some important points of vulnerability in the pre-crisis financial system, such as excessive leverage in the world’s largest banks.
She doesn’t absolutely rule out using interest rate policy as a tool to combat financial excess, while making clear it is a less than optimal option. But with her speech on Wednesday, Ms. Yellen is putting banks and everyone else in the financial world on notice: The Fed is not going to protect you from making mistakes. It is just going to try to ensure that if you do make them, the rest of us won’t pay the consequences.
Yes, the Yellen Fed will raise interest rates one day, (projections from the policy makers point to that day being in 2015). But they will probably do so because the United States economy is getting back on its feet, not to lean against the winds of markets . . .
read: http://t.co/PuqsufP8Zn
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. . . thank you, Elizabeth Warren and President Obama (who actually nominated Yellen)!
to read that gobbledeegook and got a headache five paragraphs in.
macroprudential bullshit on an immense scale if you ask me.
Maybe if the freaking banks couldn't borrow money from the U. S. Treasury at 0% interest and loan it to us suckers
at 8.9% until the hidden rate change occurs, we'd be in a much better place.
Just the backdrop of that meeting looks scary for the working class. 
