Sign "O" the Times

Fed Chair Janet Yellen is nervous about raising interest rates:

Ms. Yellen’s first keynote speech at the annual conference here in the shadow of the Grand Tetons was mostly an extended explanation of the reasons for the Fed’s caution, and an effort to buy time for the Fed to deliberate. She emphasized her view that no single factor, including inflation, could be used to judge the recovery.

“While these assessments have always been imprecise and subject to revision, the task has become especially challenging in the aftermath of the Great Recession,” she said, both because of the downturn’s “nearly unprecedented” depth and because of simultaneous changes in the economy separate from the ups and downs of the business cycle, including the aging of the work force.

Of course she nervous. We’ve been running on cheap money since shortly after Alan Greenspan engineered the “soft landing” of 1995. The so-called “Maestro,” you may recall, fully expected another soft landing in 2006. But you can’t build recoveries on eternal pain avoidance, with so many and such massive government-induced distortions in our spending and investments.

1995’s soft landing was followed by a harder landing in 2000-01, and then by Great Recession from which we still haven’t fully recovered. Yet the Fed still refuses to give up the sauce of cheap money.