It's not what you say but the way that you say it?
Today the wires are all full of comments from banks and institutions reviewing how dovish Yellen was yesterday. She didn't disappoint those who expected that performance but is it now becoming a problem that will damage the US?
Central banks have a responsibility to their populace. The bulk of communication is for the benefit of the people whose lives will be affected by monetary policy, not the market.
Whether Yellen is dovish or hawkish is just something the market attaches to her words to make a move. For your everyday US citizen her comments mean something different, are more important and far reaching.
Yellen seems very un-American. I view the yanks as very confident people. Always looking forward not backward. Ready to tackle a challenge and take adversity on the chin. They are 'glass half full' people, as opposed to the view of Brits which is one of a glass half empty. Well, the glass was full then someone spilt it, and now you'll never get that stain out, and you've only got half a drink left, grumble grumble.
What gets me most about Yellen is that she never really highlights the positives. There's none of the usual over the top yank bluster about how well they've done to recover or how great things could turn out in the future. That's not a bad thing in itself but there needs to be some balance.
As a person of great authority in the US she has a responsibility to manage confidence. When the bulk of her comments highlight the risks rather than the rewards it can have an adverse effect on the population. How are Americans supposed to believe that the economy is going to do better and how they are safe to spend, when all they keep hearing about is storm clouds on the horizon? How are businesses going to step up spending and hiring if they're told they face a looming brick wall? How can anyone view the comment "The domestic economy has progressed in a remarkably satisfactory way" as a big pat on the back? Even in praising something she manages to undersell it. It's self defeating.
She's not wrong in highlighting the risks but for me the way she's saying it is all wrong and she's going to do the US more harm than good.
There may be risks ahead, there always is but she needs to give some real praise to what's been achieved. She needs to forget about telling people why rates won't rise but rather why they will, because of how well Americans have performed so far, and will continue to do so. Note that the hike was applicable for how well the economy was/is now, how rates will continue to rise if the US keeps working hard to further the recovery. Americans don't want to hear doom and gloom, they want to hear that US is benefitting from their hard work and for all the sacrifices they've had to make over the last few years. She needs to make a case why America can go forwards not backwards, and that Americans will be the driving force but if there are risks then hey, the Fed will have their backs.
Confidence breeds confidence and if there's not much coming out of the head of one of the biggest central banks in the world, that negativity is going to filter through to the confidence of the people, and thus their willingness to spend, trade, employ and push the economy to better places.
My call to Yellen is to come out from under the umbrella, acknowledge that there is some sunshine, give Americans that pat on the back and the encouragement to do more. They may not be able to do anything about global growth but they sure as hell can do something about American growth. Keep moving them forward. Don't give them an excuse to go running back into their shells. She's got the power and she needs to start using it.
God bless America
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