– Fed Hits Rumor Panic Button: “Sources” Confirm Yellen’s Confidence In US Recovery (ZeroHedge, Oct 15, 2014):
It would appear The Fed is in panic mode. According to two “people familiar with her comments” – who asked not to be named because the meeting was private last weekend:
- *YELLEN SAID TO VOICE CONFIDENCE IN EXPANSION AMID FOREIGN RISKS
Of course, this is now the last thing that markets want to hear since it means she is less likely to unleash QE4.
Well, I’m a renegade banker. I have sat in at meetings where the Federal Reserve came in, sat down and “said stop lending, we think there is a recession coming.” The very fact that we were told to stop lending caused a recession. That happened in 1990-1991. Word of that finally hit the mainstream media and one of the first acts Clinton did was that he grabbed the regulators by the throats and said, “why don’t you let the bankers start lending again.” The next time they came in, they told us to start lending.
They have that kind of power. They decide when recessions and depressions happen. They decide when hyperinflation happens.
They can do it through a lot of different tools. The hidden one is the regulatory agencies where they come in and intimidate bankers and tell them what to do. They have a lot of power. They can have the boards of directors of banks thrown in jail. They can have people fired. They use those powers behind the scenes, nobody knows about them. As a banker, I have seen the dark side of the Fed. I have watched them rate good loans as bad loans, and charge off loans when in fact, customers were fine, the loans were fine. We are in a bit of that environment again now. What happens is, the last thing these government agencies want to happen is that they get called on the carpet before Congress. So they become overzealous, overcautious at precisely the wrong times. There is a lot of action by the Fed that messes with the normal business free market cycles that would prevent excesses. A lot of the publicity in today’s market is that there wasn’t enough government intervention, there wasn’t enough regulation and that is true too, they got too far in one extreme, but they create imbalances and create these problems by overacting as well. [emphasis mine]