Mind numbingly stupid comment from Fed's Kocherlakota. I mean, seriously mind numbing!

Where do they get these morons? WHERE. DO. THEY. GET. THESE. MORONS?

Narayana Kocherlakota is the President of the Federal Reserve Bank of Minneapolis. Here's what he said in a speech in Frankfurt the other day:

"Increasing the supply of assets available to investors would push downward on debt prices, and so upward on the long-run neutral real interest rate..."

First  of all did Kochelakota ever look at a chart of the historic relationship between Federal debt and interest rates? Well, here it is below. By the way, I got this chart FROM THE FED.

Secondly, is he aware that it's the FED THAT SETS RATES? Even if the government expanded its debt, the Fed would have to at least signal higher rates before it could happen simply because the Fed would be buying all bonds, notes and bills at higher prices (lower rates) to defend its target. There'd be no sellers at lower prices (higher rates). NONE!

Third: higher levels of Federal debt entails more deficit spending, which is exactly what we need. Is that what he is advocating? If so, why doesn't he come out and say it?

What idiots. I really can't take it anymore.

"Operation Twist" would represent a subtle, yet important, policy shift at the Fed.

If the Fed announces Operation Twist today (selling short dated securities and buying longer dated securities) it would represent a subtle, yet important shift in Fed policy in my opinion. It would signify that the inflation hawks on the FOMC have won the debate.

Operation Twist would be policy action that doesn't entail an expansion of the Fed's balance sheet and an expansion of the Fed's balance sheet is exactly what guys like Fisher, Plosser and Kocherlakota oppose. They believe it's inflationary and that it hurts the dollar.

So Operation Twist, if it is announced, would mean that the inflation hawks on the FOMC are in control.