Federal Reserve Board vice chairman Janet Yellen, in an interview published today, provides insight into the Fed's thinking behind the new bond purchase program. One quote stands out:
"The purpose of it is not to push down the dollar."
This is a very interesting comment, since the dollar has dropped by about 10% since the Fed started making it clear that they were going to do more bond purchases. Quite obviously, the effect of the policy is to push down the dollar, whatever the purpose was.
That kind of sums up the problems with current Fed policy in a nutshell, though. Even after the facts are obvious, they are ignored in favor of wishful thinking when the decisions are made.
The interview is at http://online.wsj.com/article/SB10001424052748703670004575617000774399856.html?mod=WSJ_economy_LeftTopHighlights#articleTabs%3Darticle and is replete with additional examples of Yellen's cluelessness.
Yeah, I assume that she was told to "stick to the talking points", i.e. lie about the purpose of the program. Because they don't want to turn it into a currency war. They presumably just want to push the US currency down and not have anyone else respond. Not like sticking to the talking points is really going to trick anyone but I can see why they don't go around bragging that they are going to push the dollar down.
It seems to me that, based on the interview, Yellen actually believes what she is saying. Of course, I'm generally inclined never to attribute to malice what can be explained by incompetence, but she also takes several other positions that seem to show a high level of naivete.
Of course, maybe they had Yellen give the interview instead of Bernanke because Yellen wouldn't have to consciously lie.
I do often wonder whether various official statements are due to cluelessness, an intentional effort to deceive, or just lots and lots of wishful thinking. Even after the fact it's sometimes hard to figure out, e.g. did Bush really think that there were weapons of mass distraction in Iraq? There was definitely some deceiving going on, plus probably a lot of wishful thinking, and I'm sure some cluelessness. I also wonder about all the climate change skeptics that have popped up recently, especially with the tea party. I'm guessing that that is wishful thinking plus deception, but maybe it's just that more clueless people are running for office?
You may be surprised to find out that the recent climate change skepticism actually comes directly from recent data:
Not much of a global warming trend there, is there? So when younger people look at that data, they start wondering where the idea of global warming and climate change came from. Typically, those who believe in global warming show them something like this:
Now, if the first graph they saw was similar to that, as it probably was for you and for me, they'd be global warming believers. However, since they've established priors based on the previous graph, they are rightly skeptical of the new graph. They soon identify two problems with it: (1) it stops in 2000, and (2) the global "average" data before 1960 is suspect because we didn't have enough weather stations before then.
Meanwhile, the global warming believers have generally become politically motivated - not good for science - resulting in their tending to downplay the data from after 2000. This leads to suspicions of a cover up by the skeptics. They would do better to show something like this, which uses a more rigorous data set, and which I believe still shows a warming trend:
The only problem is, using comparable data over longer time periods tells a more equivocal story:
At this point, both sides usually cherry pick their data to support their political positions, and objective information has become hard to find.
Personally, I think there's manmade global warming going on, though it may be as much due to agricultural intensification as to fossil fuel use. I also think it's too late to do anything about it. There are good reasons to conserve fossil fuels, but they have more to do with peak oil than with global warming.
I agree that's a reasonable presentation of the global warming situation. Though I would say that although it's too late to prevent any global warming it's definitely not too late to reduce the magnitude of the problem.
But, as you agree, humans are definitely having an effect on the planet, both through CO2 levels as well as through many other mechanisms. My point is that it has become fashionable recently to deny this and I don't think that's due to the recent temperature data. I suspect that most of it is an intentional deception in order to get votes. After all, it's pretty appealing to hear that continuing to burn lots of coal and oil is fine, especially in some parts of the country. You could argue that the climate deniers are just clueless (and maybe some are) but I suspect to a large extent the denying is intentional.