Drama Queens

The recent Humphrey Hawkins testimony by Chairman Yellen did not disappoint when it came to excitement and suspense. Bond Markets and Stock Markets around the world were on edge at the possibility of removing the  critical word patient from the next Fed Missive. However the award for the biggest display of drama came from Senator Bob Corker who commented (on attempts to audit the Fed) ” I can’t imagine anything worse for the nation or the free world than for congress to get involved in monetary policy” Come on Bob, you really can’t think of anything worse  for the free world than congressional oversight over an organization that has taken ad-hoc to a  whole new level. I am not making the case for additional congressional powers, however one wonders whether congress is providing cover for the Fed solely because it has done all the heavy lifting that a bickering and ineffective legislative body can’t do or won’t do. However, we can’t blame the Fed solely for allowing Congress to shirk their responsibilities, a good deal of blame can be laid at the Bond Markets feet. When Governments can borrow at negative rates of interest, the incentive for fiscal probity is rendered entirely moot.