During her latest testimony in Congress, when asked by rep Mick Mulvaney if the Fed has considered buying equities, Janet Yellen had a cryptic, yet open to interpretation answer: “the Federal Reserve is not permitted to purchase equities. We can only purchase U. S. treasuries and agency securities. I did mention in a speech in Jackson Hole, though, where I discussed longer term issues and difficulties we could have in providing adequate monetary policy. Accommodation may be somewhere in the future, down the line that this is the kind of thing that Congress might consider.”
Then, the very next day, during a video conference Q&A, Yellen once again unexpectedly latched on to the topic of the Fed buying stocks, saying that “the idea of expanding into areas like equities might be ‘good thing to think about,’ noting that (for now) The Fed is more restricted in which assets it can purchase than other central banks. If we found, I think as other countries did, that they could reach the limits in terms of purchasing safe assets like longer-term government bonds, it could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions.”
Assets such as equities.
Then, jumping on to the idea of nationalizing the stock market, none other than the world’s most farcical former econopundit, Larry Summers, who has plunged to such recent depths he has to retweet himself on Twitter to get page views for his blog, “floated the idea of continuous purchases of stocks as a potential ingredient in a recipe for the developed world to strengthen economies struggling with subdued growth and inflation.”
This post was published at Zero Hedge on Oct 2, 2016.
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