Helicopter Ben is passing the keys to the printing press (and the copter) to Janet Yellen in this New Year. We're told we can sleep well at night knowing the US dollar is in good hands. Don't believe me? Take it from an academic who teaches economics.
Back when her appointment was announced, University of Michigan economics professor Justin Wolfers said, “Yellen is quite simply more qualified for the job than any of her predecessors. She's an imaginative and technically adept economist possessed of a brilliant and precise mind.” Wolfers continued, “Tonight, I feel reassured that my daughter's economic future is in good hands.”
The US dollar, once backed by an unfeeling barbaric relic, is now under the stewardship of the best and brightest. Richard Nixon replaced the dollar's gold backing with the PhD standard back in 1971. The Tricky One, like Obama, also selected an immanently qualified Fed chair.
Why, none other than Milton Friedman gushed in a column for Newsweek at the time of Nixon's selection of Arthur Burns as chairman of the Federal Reserve. Burns, he wrote, “is the first person ever named Chairman of the Board who has the right qualifications for that post.”
Those previous chairmen were, in Friedman's words, “able, public-spirited men with high standards of integrity and service.” However, none saw the big picture, only having “experience in individual business or financial institutions,” and none “had any training or special competence in the problems of the economy as a whole.”
Real-world business or banking experience is not what Washington wants in a Fed chair-man or woman. That sort of background might dissuade a Fed head from trusting her models to know exactly what interest rate should make for maximum employment and just how much “Q” to put in the central bank's monthly QE sauce.
Yellen, like Burns, has only worked in academia and government. She actually believes her employer can print jobs, and, to quote the New York Times, she has a “greater willingness to tolerate a little more inflation in order to reduce unemployment more quickly.”
The new chair is said to be tougher than Bernanke, but like her predecessor was drawn to study economics by the Great Depression. Not surprisingly, she too believes markets are imperfect and require lots of government supervision.
It's long forgotten that Arthur Burns tried to get his boss reelected by stimulating the economy with easy money. The result was unforgettable stagflation, which he blamed on everything but his monetary policy. Burns cited the business community's “exuberant mood” and “waves of speculation” as inflation causes.
I think you get the idea of what the Yellen Fed will do in the coming years, making now the perfect time to start considering hard assets. And who better to answer your hard questions about gold, silver, and precious metals stocks than one of the top resource speculators himself—Doug Casey.
A week from today, subscribers to BIG GOLD, Casey International Speculator, Casey Investment Alert, The Casey Report, as well as the Casey OnePass and the Casey Club membership services will have the opportunity to attend a Q&A discussion by a team of Casey experts—including Jeff Clark, Olivier Garret, Louis James, and of course Doug—answer the most pressing questions about the volatile gold market.
Please join moderator Andy Duncan and the Casey team at 2:00 PM Eastern next Wednesday, January 15 for “Answering the Hard Questions About Your Hard Assets.”
If you have a question you would like answered, you can submit it via the link you've received in yesterday's email. Deadline is midnight, Friday, January 10. Watch your inbox for another email from us on Friday, for last-minute submission of your questions and to listen to the event on January 15.
Now that we have the housekeeping out of the way, in today's column EverBank's Chuck Butler considers Triffin's Dilemma and what it means for the dollar's future as the world's reserve currency. Most of us don't remember a time when the dollar wasn't the king of currencies. Butler puts the US currency in historical context and gives us an idea of what comes next. Don't miss it.
Doug French, Contributing Editor