Academic economist Janet Yellen, now President of the San Francisco Federal Reserve Bank and Bill Dudley, long time Wall Street (Goldman Sachs) economist, now president of the New York Federal Reserve, have both chimed in on inflation in the last 24 hours. They don't see it coming. The Fed, in their view, should continue to expand its balance sheet to historic levels, effectively printing massive quantities of new dollars. Why?
Well, in their collective view, the economy is still weak and the incredibly surging commodity prices will soon be reversed. Maybe they should be trading, not running FRS banks. Their views and analysis show the poverty of economics as a science. Both Yellen and Dudley are staunch supporters of President Obama. He doesn't see any inflation coming, so neither do they. It's that simple.
Once again, the Yellen-Dudley theme is that government knows best. In this case, the government's agent is Ben Bernanke, whose famous utterance in 2007 that housing prices were justifiably high based on sound economic fundamentals, still echoes as a reminder of how little economists know about the economy.
There ought to be a rule that when you don't know anything about the future don't do anything that might make things worse. If that were the case, Ben Bernanke would be joining the ranks of the unemployed, instead of setting up future problems for the struggling American economy. His cheerleaders, Yellen and Dudley, should go back and do some research to justify their political leanings instead of sounding off about things they know nothing about. All we have learned from their pronouncements is that they both still worship at the shrine of Obama. We've learned nothing about the future of inflation from either of them.