Tags: Rickards | Yellen | dove | Bernanke

Rickards: Yellen a Different Type of Dove Than Bernanke Is

By    |   Friday, 11 October 2013 09:20 AM

Contrary to popular belief, having Janet Yellen as head the Federal Reserve would be different than having Ben Bernanke as the chairman, says Jim Rickards, author and senior managing director at Tangent Capital.

Rickards tells Yahoo Yellen is definitely a different type of dove than Bernanke is.

Sure, Bernanke is a money printer, but it's been "on again, off again," Rickards explains. Under Bernanke's stop-and-go approach, there have been several rounds of quantitative easing.

Editor’s Note:
New Video Exposes a ‘Great Retirement Heist’

But Yellen is "more of a hard shell believer in the benefits of monetary easing," he notes.

"I think Janet Yellen is much more likely to say, 'You know what? We need to print money. We've got to have some goals and we're gonna keep printing money until we hit those goals,'" he adds.

The Fed's tendency to use employment to build a case for monetary policy could be very flawed, according to Rickards.

"What if it turns out there's no relationship between money printing and unemployment?" he asks.

"Everyone assumes that's the case. But unemployment is a structural problem," Rickards tells Yahoo.

"We're in a depression. Depressions are structural," he says, explaining that the real definition of a depression is "a long sustained period of below trend growth."

"You can have recessions in a depression," Rickards adds, noting that he expects a recession next year.

He claims he doesn't see any drivers of growth and Bernanke's quantitative easing strategy has been largely ineffective.

"Today the Fed is printing money trying to drive it through the banking system to get people to spend. It's not working because the banks are not doing their job. People don't want to borrow; banks don't want to lend."

Next year, Rickards projects the Fed will step up its efforts and deliver "helicopter money," a strategy that banks out of the equation and give the money directly to people who are likely to spend it.

"You do that with tax cuts," Rickard maintains. "The Fed would whisper in the Treasury's ear, 'Don't worry about the deficit. If it goes up from $700 billion to $1 trillion we'll monetize it, we'll keep a lid on rates, we've got your back. Go ahead and spend the money.'"

But Rickards notes that strategy isn't likely to work either because "when people get the money they are going to deleverage."

In a Wall Street Journal poll, 25 of 42 economists surveyed said monetary policy would be no different with Yellen than if Bernanke stayed on.

However, 16 economists projected Yellen would be more dovish, or less concerned about inflation, than Bernanke is, The Journal reports.

Some economists are concerned Yellen would be so focused on the goal of tackling unemployment that she would be reluctant to address inflation.

Editor’s Note: New Video Exposes a ‘Great Retirement Heist’

Related Stories:

Yellen Fighting for Job Growth Doesn't Give Ground on Inflation

Laurence Meyer: Yellen Faces 'One of Most Challenging Tasks the Fed Has Ever Had'

© 2020 Newsmax Finance. All rights reserved.


   
1Like our page
2Share
Personal-Finance
Contrary to popular belief, having Janet Yellen as head the Federal Reserve would be different than having Ben Bernanke as the chairman, says Jim Rickards, author and senior managing director at Tangent Capital.
Rickards,Yellen,dove,Bernanke
498
2013-20-11
Friday, 11 October 2013 09:20 AM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved