The constant changes to Fed policy targets and enslavement to the ticker must change, according to former Fed Governor Kevin Warsh.
"The markets think they have Yellen's number," that she will never allow markets to go down, Warsh warns "that is a very dangerous development."
We must stop QE, Warsh chides, as the inflation goals are close enough to a comfort zone and arguing for QE because of lowflation is poor thinking "because our gauges are not even that good."
Dollar strength is The Fed's doing, he adds, since they have been telling everyone to do what we have been doing… and adds "The Fed talking about the dollar tells me they are more concerned about the dollar's impact on earnings."
What worries Warsh the most, however, is "The Fed's policies changing based on what happens on the ticker… The Fed should be thinking 3 to 4 years ahead."
Finally, he crushes the memes of all the malinvestment deniers… "people in the real economy who dont have big balance sheets have been suffering from wage pressures and stagnation…"
"We tried negative real rates in the mid 70s and the early 2000s and both ended badly."
As Jim Grant opined so eloquently… "The Fed can make things look better but can't make things better," and Kevin Warsh blasts buybacks and financial engineering as evidence of this.
"This is an experiment we should be taking with great care without some obvious conviction that there is no financial stability risks."
Investors "think good times can last forever," he warns… they can't…
Amid all the turmoil in global geopoltics, "you still don't see any of those risks in financial markets.. and I cant help but think aggressive central banks are responsible for that."
The Full Warsh…
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Someone is not getting invited back on CNBC…