“That it should come to this!”
Hamlet, Act I, Scene II
Any student of Shakespeare will recall that Hamlet’s procrastination did not bode well for Denmark.
Centuries later, the Scandinavian country has Tivoli and perhaps the world’s best ice cream, but it’s not exactly a world power. It may not be Hamlet’s fault–after all, Denmark is even more socialistic than the U.S. and Canada–but his hesitation was not a good thing for him or his country.
So what does this have to do with Janet Yellen? She chairs the Federal Reserve Board, which, like Denmark, has wielded its power clumsily, although it doesn’t even produce ice cream. And, like the tragic prince, she will likely be remembered more for her inaction than for her action.
Even Hamlet didn’t procrastinate for years, although it may seem that way if you watch a poor production of the famous play. Also, like the melancholy Prince of Denmark, Ms. Yellen seems to be collapsing under the weight of the world and fretting over the potential consequences of her actions. And so, like Hamlet, she does nothing.
Her words before the New York Economic Club last week could have come straight out of Hamlet. Princess Yellen may be far less eloquent than the young prince of Denmark, but the parallels between what she said and what he said are significant.
While Hamlet’s soliloquy began with “to be or not to be,” not “to raise or not to raise,” and he was talking about suicide and real death, not the political death that would follow a significant interest rate increase, consider how well the following passage fits today’s Fed:
The undiscover’d country from whose bourn
No traveller returns, puzzles the will
And makes us rather bear those ills we have
Than fly to others that we know not of?
Thus conscience does make cowards of us all;
And thus the native hue of resolution
Is sicklied o’er with the pale cast of thought,
And enterprises of great pith and moment
With this regard their currents turn awry,
And lose the name of action.
So Hamlet took no action, because he knew not what awaits us on the other side. Is Ms. Yellen’s inaction over fear of the unknown much different? The “undiscover’d country” of higher interest rates remains undiscovered, no doubt, because she and other Fed members know not what will happen when interest rates hath been raiseth. And so, while a few other board members are acquiring “the native hue of resolution,” she hath “lose the name of action.”
During her speech last week, Ms. Yellen may as well have declared, “That it should come to this!” When Hamlet makes that declaration, it reflects his concern about the world that appears to be falling apart around him. Likewise, the Fed chair blamed the condition of the world for her inaction, saying, “The major thing that changed between December and March that affects the baseline outlook is a slightly weaker projected pace of global growth.”
While the U.S. economy remains “remarkable resilient,” she said, “Global developments pose ongoing risks.”
Given that the allegedly “data-dependent” Fed has pretty much met the goals for which it raised interest rates, the lady doth protest too much, methinks.
Helping the Commoners
Like Hamlet’s words, Ms. Yellen’s words are open to interpretation. For example, anyone with common sense (I’m including myself here) would likely interpret Ms. Yellen’s lack of action to mean that she wants to continue to boost stock prices, which will make her popular, rather than do the right thing and raise rates, which would make her unpopular. Jim Cramer, though, chalks up her overt dovishness to her desire to help the commoners.
“She seems to be concerned about … the working person,” Cramer said on “Squawk on the Street. “She recognizes the rents have gone up a lot year over year, she recognizes that health care has gone up year over year for the $40,000 [a year] person [and] she recognizes that gasoline prices are not offsetting that.”
Of course, the nearly non-existent growth that’s resulted from Fed policy hasn’t helped the working person. And the stock market boost caused by Fed jiggering has mostly benefitted the top 1%.
Though this be madness, we’ll chalk it up to what Hamlet referred to as the “insolence of office.”