Exclusive: Wary of natural disaster, NY Fed bulks up in Chicago

Perhaps the Fed is preparing for a crisis of its own doing and a ‘natural disaster’ is a scapegoat.

Although, and admittedly to their credit, a natural disaster is looming as Mt. Saint Hellens is ready to blow at any moment and a mega earthquake is poised to sink half of California into the Pacific. The New Madrid Fault line is also a great concern at the moment. However, normally in the real world, it’s rather difficult and borderline asinine to try and make a connection between Fed rate hikes and natural disasters.

As the article notes, cyber attacks likely will also play a role in a new crisis.

 

(Reuters) – The New York branch of the U.S. Federal Reserve, wary that a natural disaster or other eventuality could shut down its market operations as it approaches an interest rate hike, has added staff and bulked up its satellite office in Chicago.

Some market technicians have transferred from New York and others were hired at the office housed in the Chicago Fed, according to several people familiar with the build-out that began about two years ago, after Hurricane Sandy struck Manhattan.

Risk of 1937 relapse as Fed gives up fight against deflation

The US Federal Reserve has jumped the gun. It has mishandled its exit strategy from quantitative easing, triggering a global bond rout that it did not anticipate, and is struggling to control.

It has set off an emerging market shock and risks “blowback” from a fresh spasm of the eurozone debt crisis, and it is letting all this happen at the same time, before the US economy is safely out of the woods.

It has violated its own counter-deflation strategy, tightening monetary policy even though core PCE inflation has fallen to the lowest levels in living memory and below levels deemed dangerous enough in the past to warrant a blast of emergency stimulus. It is doing so even though the revival of bank lending has faded.

The entire pivot by the Federal Open Market Committee is mystifying, almost amateurish, and risks repeating the errors made by the Bank of Japan a decade ago, and perhaps repeating a mini-1937 when the Fed lost its nerve and tipped the US economy into a second leg of the Great Depression. “It’s all about tighter policy,” was the lonely lament by St Louis Fed chief James Bullard.