Skip to comments.Mr. Bernanke Gets the Jones: Every time he wants to taper, he can't
Posted on 09/20/2013 5:29:07 AM PDT by SeekAndFind
Chairman Bernanke: We could raise interest rates in 15 minutes if we have to. So there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation at the appropriate time. Now that time is not now.
Scott Pelley, CBS 60 Minutes: You have what degree of confidence in your ability to control this?
* * *
No doubt that exchange of 2010 will go down as the most famous of Mr. Bernankes tenure as chairman of the Federal Reserve. It is the context in which to savor if that is the word the news of todays surprise, as the headlines labeled the announcement of the Federal Open Market Committees decision to keep on pumping. On the one hand the Fed has been signaling it's getting ready to start ending the regime of quantitative easing by which it has been trying to keep the sluggish economy from falling back into recession.
On the other hand every time it wants to start tapering off it discovers it cant.
What did they used to call it in another context the jones?
If Mr. Bernanke really is going to leave the chairmanship at the end of his second term we have our doubts, but were a minority of one on the point he doesnt have much time to start doing what he once said he was 100% confident he could do. He would insist, of course, that there is no danger of inflation and that the Federal Open Market Committee just wants to make sure of things. Here it is, quoting todays Fed press release, in the micro-language known as Fedspeak:
(Excerpt) Read more at nysun.com ...
Bernacke has done more harm to the United States than any one man in history.
Raising interest rates from 0 percent to 1 percent means that the US budget deficit increases by 180 billion a year or in “washington speak”
1.8 trillion over 10 years.
And 1 percent is still a really low interest rate.
You meant to say
Bernacke has done more LONG TERM harm to the United States IN PURSUIT OF SHORT TERM GAIN than any one man in history.
Barney Frank ranks equally.
Ben is trying to resolve the mess Frank created.
The Queeah from Massachusetts created the lending debacle thet precipitated the ensuing economic disaster
As long as the Federal government is borrowing a $trillion a year, any slowing of the FED buying federal debt will crash the bond market, followed by a dramatic increase in interest rate, and crashes in both stock and commodity markets, and ultimately, the real estate market and the economy.
However, floating a $trillion dollars a year in newly created money will be causing hyperinflation, followed by an even worse economic collapse. Bernanke is putting off the inevitable, and making it worse.
take a look at this graph of the volocity of money.
this is the graph that the fed is looking at for guidance on QE’s. as long as the velocity of money is falling—then the feds will continue their QE’s.
(velocity just refers to the amount of lending the banks are doing. this just means that the banks aren’t doing a lot of lending and corporations aren’t spending a lot of the capital reserves. only about 10% of the fed’s QE’s are actually getting into the system—and that’s mostly just to pump up the stock market and increase federal revenues byo taxes on stock market capital gains.)
Bernanke crosses his own Red Line.
Talk of tapering led to talk of replacing Bernanke by Obama.
Many said that Bernanke would cave — not to economic reality but to political pressure behind the scenes.
They were right.
Sadly, the right answer is to end the wholesale printing of money out of thin air. That’s not going to happen.
How long can they keep up printing a trillion a year to keep rates low? Low rates mean low inflation, mean housing starts, mean car purchases. They also mean, however, a stock market bubble, a housing bubble, a devalued dollar, and an expansion in defiance of every indication there should be a contraction.
How low can the dollar go?
As opposed to the wizards in government who don’t like the volatiles being included in inflation, the volatiles like food and fuel give some idea what the devaluation of the dollar looks like overseas.
How long will world markets permit themselves to sell at 100 a barrel when that 100 is worth less and less each month?
The check on them is alternative sources of fuel and increased food production to keep prices lower.
That means fracking and oil shale, on the one hand, and it means ending the gasohol fiasco on the other, so that food is no longer used for fuel. That will buy a little extra time.
I figure about 3 years or so, if the US opens up freedom to all forms of energy and stops their war on coal. It will take that long for the markets to figure out the new baseline. Then reality will again hit.
So, huge recession toward the end of the next presidency. The democrats won’t want to be in charge for that time. I’d not be surprised to see them blow this next presidency. They’ll want to hang that crash around the necks of Republicans again.
The Rinos know their role is to be stooges for the socialists, so that’s why they’re desperate to get rid of Cruz and Lee now.
“Bernacke has done more harm to the United States than any one man in history.”
Ben Bernanke was chosen for the job by George W. Bush. Bush also put Henry Paulson, Chairman of Goldman Sachs into the Secretary of the Treasury slot in time for the meltdown. Timothy Geithner also became head of the New York Federal Reserve Bank under Bush.
The Republican Party is a creature of Wall Street. During the 2008 meltdown, Bush turned management of the crisis over to Bernanke, Paulson, and Geithner who proceed to bail out the banks at the expense of the taxpayer. Bush’s Justice Department did nothing to investigate and bring to justice the perpetrators of the run on the banking system that set off the collapse in September 2008. A year after the collapse and bailout the Goldman Sachs boys were back to paying huge bonuses.
The administration of George W. Bush was the setup for the economic and cultural destruction we see today. Bush sat with his veto pen in his pocket while Congress went on a spending spree. He installed Bernanke at the Federal Reserve, Paulson at Treasury, Gates at Defense, and Roberts on the Supreme Court. He would have installed Harriet Myers on the Supreme Court if the Republicans in Congress hadn’t rebelled. He did nothing to root out the socialists and leftists Clinton installed in the bureaucracy. The Patriot Act and the Department of Homeland Security were his creations. He failed to enforce immigration laws and protect the southern border. He called Islam the “religion of peace” immediately after 9/11. When conservatism thought and principles were under attack, he sat silent.
Voting for Republicans is not the solution. A new conservative party is needed that is not dependent on Wall Street and multinational corporations for its financing and is not invested in preserving the inside the beltway power structure.
The Bernank is all concerned about getting out before the house of cards falls and he gets the blame. If he tapers, the big banks and corporations will collapse. His deal is to get out and let Yellin or whatever fool takes the job get hit with the crash.
Contrary to Keynesian theory, the economy is not a machine that can be primed by increasing the flow of fuel, which is money. An economy consists of billions of people, making trillions of decisions, based on their perceptions and their values. It’s way too complicated to be controlled by bureaucrats.
I think Bernanke did what he did because he has some hope that Obama will reappoint him rather than appoint Yellen. He is currying favor w/Obama by doing what Obama wants done, and protecting Obama’s Dem party from a falling stock market prior to the mid-term elections.
“Bernanke is all concerned about getting out before the house of cards falls and he gets the blame. If he tapers, the big banks and corporations will collapse. His deal is to get out and let Yellin or whatever fool takes the job get hit with the crash.”
This is my second scenario. My first is that Bernanke is angling to be reappointed to his Fed Reserve position as I’m not sure Obama is in love with the idea of appointing Yellen. Your scenario above is also an excellent analysis of what’s going on. Bernanke props up the economy until he can make his getaway, and the next appointee has to deal with the collapsing economy. It will be blame it on the woman; she’ll be the fall guy (or gal) if Obama appoints her.
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