The Federal Reserve just released transcripts from its 2009 meetings.
And in these documents, we hear from current Fed Chair Janet Yellen, then an alternate member of FOMC and president of the San Francisco Fed.
In comments during a January 16, 2009 conference call, Yellen addressed concerns over current inflation levels, inflation expectations, and what sceptics in the market think about the Fed’s efforts to stimulate the economy.
And while Yellen’s remarks largely centered on the Fed’s efforts to effectively tell the market what course it believes inflation will take, she also addressed the Fed haters who believed then — as many still do now — that the Fed’s policies will lead to rampant inflation.
Here’s Yellen in 2009 (via NYT’s Neil Irwin):
“But I also agree with your remark that a second problem has developed, and we need to address it, too. There is growing concern that the Fed is printing money with abandon to stimulate the economy, and the combination of trillion dollar deficits and trillions of dollars of money creation can have only one outcome in the long run, which is high inflation that debases the currency. Now, I think this reasoning is completely misguided, but it is out there, and I think we need to consider it because it is dangerous for our credibility as an institution. So I also think we have to say that we are not willing to tolerate very high inflation.”
Yellen’s comments came more than a year before the most public act by the anti-Fed cabal that believed quantitative easing would lead to inflation — the famous letter warning Ben Bernanke about inflation risks.
Back in October, Bloomberg caught up with a number of the letter’s 26 signees, some of whom retrenched their position and said there is, in fact, inflation.
Over the last several years, inflation has been tepid, running below the Fed’s 2% for almost all of the post financial crisis period.
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