BERNANKE CONFUSES DEPRESSION CURE WITH DISEASE (For all you funny money lovers out there)

Financial Sense Online ^ | December 8, 2005 | Peter Schiff

[hubbubhubbub]

An article in yesterday’s Wall Street Journal discussed how self-proclaimed “Depression buff” Ben Bernanke claims understanding of how the Fed caused the Great Depression and precisely what he would do to prevent such a calamity from reoccurring under his tenure. Not only are his assertions naïve and egotistical, but flat-out absurd.

Though he claims to have studied The Great Depression in depth, Bernanke is completely clueless as to its actual cause. However, he is partially right about one thing: the Fed did help create the Depression, but for the opposite reasons Bernanke believes. The Fed-induced credit boom of the roaring 1920s laid the foundation for the inevitable bust that ushered in the Great Depression. Bernanke has mistaken the disease for the cure, and his antidote, were it ever administered, would prove to be economically fatal to the U.S. economy.

The mistake made by the Fed during the 1920s was expanding the supply of money and credit too rapidly. However, as increasing productivity prevented consumer prices from rising, the Fed was unconcerned about the inflation it was creating. Instead, the excess money and credit that spilled into financial and real estate markets caused asset prices to rise, which resulted in claims of a “new era” (sound familiar?). The bust of 1929 led to the Great Depression of the 1930s not as a result of Fed tightening, as Bernanke claims, but due to the misguided economic policies of the Hoover and Roosevelt administrations. By preventing market forces from efficiently correcting the imbalances created during the inflationary boom of the 1920s, the Federal Government turned what otherwise would have been a normal, though severe, cyclical recessionary bust, into what became known as The Great Depression.

During the 1920s the British pound, then the dominant world currency, was under pressure. In an effort to prevent British inflation from causing the pound to weaken against the dollar, Federal Reserve Chairman Benjamin Strong decided to increase inflation in the United States as well. By debasing the dollar along with the pound, their relative values could be maintained, thus preserving the illusion of pound stability. Through competitive devaluation, Great Britain exported its inflation to the United States, much the way the U.S. now exports its inflation to China and Japan.

However, the money and credit supplied by the Fed unexpectedly produced the speculative stock market bubble of the roaring 1920s. When Benjamin Strong died in office in 1928, his successor George Harrison (not of Beatle’s fame) understood the problems and addressed them by correctly tightening monetary policy, reversing the inflationary expansion that occurred under Strong.

It is to this action which Bernanke objects and for which he blames the ensuing Great Depression. However, the problem was not that stock and real estate prices collapsed, but that they rose so much in the first place. It was not the mistakes of Harrison that caused the bust, but those of Strong that produced the false boom, making the subsequent bust necessary.

Had Harrison allowed the monetary expansion to continue, as Bernanke suggests he should have, the result would have been hyper-inflation, which would have produced even more dire economic consequences than did the bursting of the bubble. The problem is that Bernanke, like Harrison, will soon replace Greenspan, the modern version of Benjamin Strong (though a more accurate comparison may be to Montague Norman, the governor of the Bank of England during the 1920s.). However, unlike Harrison, Bernanke will likely make the wrong policy choice.

Ben Bernanke believes that credit expansions need never end - that a boom can be prolonged indefinitely simply by printing enough money. The fact that the incoming Fed chairman believes such nonsense is similar to a cold-war president having believed he could win a nuclear war. However, Bernanke’s finger will not be on the button, but on the printing press: and he seems itching to crank it up as he is convinced he will win the deflation war.

When asset prices are too high, credit out of line with savings, and consumption out of line with production, serious economic imbalances result. Curing those imbalances is a painful but essential process. In attempting to prevent the adjustments from taking place, Bernanke will do far more harm then good.

As a result of his confusion, Ben Bernanke wants to cure the disease by killing the patient. The best analogy is to a heroin addict continuously shooting-up to avoid the unpleasant reality of withdrawal. He may “succeed” but only by dying. In economic parlance, hyper-inflation is the monetary equivalent of a drug overdose, and Dr. Ben (Kevorkian) Bernanke seems dead set on administering it.

[LS]

Bull puckey. Money shrank in the 20s.

1) The money growth fell behind manufacturing growth for the entire decade; and the U.S. maintained a balance of trade surplus or, at the worst, was even, throughout the 20s;

2) in addition to that, we had net inflows of gold, for which the Fed was to pump up the money supply proportionally---it didn't;

3) there is NO scholarship that can identify a stock "bubble" as defined by stock prices wildly out of kilter with company values and/or reasonable expectations. The very stocks that were soaring were the same companies that were booming---utilities, cars, radios, and so on. What's interesting is that several economists have asserted a bubble existed, but as of 2000 when I last surveyed the scholarship on this, there were not studies that found a bubble and two that found exactly the opposite;

4) the Fed allowed the money supply to plunge 1/3 after the stock market crash, and failed to perform the role of lender of last resort for crucial big banks like Bank of United States and the big Nashville bank (whose name escapes me).

We came up waaaaayyyy short on money compared to goods---the classic definition of deflation. Bernanke is 100% right.

[Fiddlstix]

BTTT

[RegulatorCountry]

The Great Depression was in truth the "great deflation." It wasn't just stocks that fell in value. Too few dollars, chasing too many goods. Prices had to fall as a result, and did.

[Pessimist]

You seem knowledgedable on economics. Maybe you can answer a question for me.

You frequently hear people talk about the gvt "just printing more money". However my understanding is that this does not in fact really happen. It would seem to me their control of money would be mainly limited to:

1) Changing the reserve rate to alter the multiplier effect.
2) Changing the federal funds rate in an attempt to alter the general interest rate, thereby again altering the multiplier effect.
3) Buying or selling obligations to absorb or distribute dollars.

So what am I missing?

[hubbubhubbub]

1) The money growth fell behind manufacturing growth for the entire decade; and the U.S. maintained a balance of trade surplus or, at the worst, was even, throughout the 20s;

False. If U.S. had balance of trade surplus throughout '20s as you contend, then by definition (Econ 101) money supply grew through this trade.

2) in addition to that, we had net inflows of gold, for which the Fed was to pump up the money supply proportionally---it didn't;

False again. By definition if the U.S. had inflows of gold going into their vaults as you contend, then they printed more money to redeem the gold with. Or, is it your wild contention that citizens made DONATIONS of gold to the government. Point in fact U.S. money supply growth was 60% in the Roaring 20s. It was in fact reckless. It was done to help bail out England from WWI.

3) there is NO scholarship that can identify a stock "bubble" as defined by stock prices wildly out of kilter with company values and/or reasonable expectations. The very stocks that were soaring were the same companies that were booming---utilities, cars, radios, and so on. What's interesting is that several economists have asserted a bubble existed, but as of 2000 when I last surveyed the scholarship on this, there were not studies that found a bubble and two that found exactly the opposite;

False. See my earlier point on money supply growth which led to the bubble and a host of malinvestments. True there were companies that were booming during this time but once every household which had electricity bought a radio, washing machine and car - where were the new customers supposed to come from after that? Hence a business downturn was due.

4) the Fed allowed the money supply to plunge 1/3 after the stock market crash, and failed to perform the role of lender of last resort for crucial big banks like Bank of United States and the big Nashville bank (whose name escapes me).

False. The Fed choked off money supply growth and raised interest rates starting in 1928. In fact, starting in January 1928 the Fed raised rates four times from 3.5% to 6% thus setting the stage for the market downturn. The smart money guys like Joe Kennedy and Bernard Baruch saw the money supply contraction taking place and got their money out of the market well in front of the crash. You did get one thing right in your entire post. The Fed did continue constraining money supply growth right through 1933. I'll give you credit for that. LOL

[LS]

You know more than I do---I think the latter of the three you listed is currently the most common method of expanding the money supply.

In the 1920s, however, even the Fed had an additional restraint that we don't have now, namely, it was supposed to keep the paper money supply at some relatively fixed ratio to government gold. By the late 20s, however, many of the major nations abandoned the gold standard; and this placed additional pressure on those nations remaining on gold. It was reverse "gresham's law," in that if France was not on gold, you could buy dollars with francs, exchange dollars for gold, but we could not get gold for francs. So there was a net outflow of gold, which was seriously undermining the whole economy. If ALL had gone off gold, it wouldn't have been a problem. But by 1932, ONLY the U.S. was on the gold standard, and it was rapidly causing the collapse of the U.S. monetary structure, as the gold was just flowing out.

FDR's prohibition against owning gold privately and taking the government off gold are often berated by conservatives, but that action (and no other that he took, really) saved the banking system, which, after two years, was finally on an even playing field with the rest of the world.

[LS]

Are you nuts? The "money supply" doesn't magically appear: the Fed has to order the dollars by monetizing the debt. It didn't. But the evidence is overwhelming---not theory---EVIDENCE---that this did not happen.

You really don't understand this at all, do you? We had foreign trade balances where governments made payments to us to cover the debt in securities. Again, this did not automatically result in "more dollars." It would only do so if the Comptroller printed up more money, which did not happen.

Wrong. You have no evidence, only some crackpot theory that there was a stock market bubble. Find some evidence. Find some actual studies that support anything you say.

4) You agree with me. Thank you. That's exactly what I said in the whole post: the Fed did NOT keep up the money supply. Since you want to cite Econ 101, find me ANY measure of the money supply in the 1920s. You'll see they all fell; that prices fell steadily---not just after 1928. In fact, they fell since 1920, by a lot.

As for your notion about "big money" guys somehow getting off scott free, guess that didn't apply to Samuel Insull or thousands of other millionaires who lost everything.

[stylin19a]

This could be too simplistic, but, in the early 30's, the money supply constricted by 31%.
It seems, if anything, it was a run on the banks that caused the constriction, or least was a huge contributing factor.

[baseball_fan]

Wikipedia has a go too at this "Holy Grail" of economics:
http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression

[Christopher Lincoln]

It was Milton Friedman who popularized the bizarre idea that the Federal Reserve caused the Depression by failing to cause enough inflation and credit expansion.

The confusing, and perhaps fatal, thing was that the expansion of the 1920's was superimposed, so to speak, on a period of genuine progress following the First World War. Contrary to the current mythology, technological and economic progress make things cheaper, not more expensive.

[Santiago de la Vega]

I'm amazed.

Really.

Most of the comments on this article are correct, and show a firm understanding of the cause and effects of the use of fiat money. Congratulations, Freepmates!

The article is wrong, as my Mates say above, because the Fed did cause the Great Depression by failing to increase the stock of high-powered money fast enough, as the collapse in bank deposits accelerated.

What they should've done, as Bernanke knows, is to buy government securities as fast as they could, and when they ran out of them, buy anything else they can find: stocks, bonds, wheat, real estate - anything to get money in the hands of the people.

Instead, faced with the Fed's failure to both understand and accomplish its assigned tasks, the US treasury ended up buying all the silver in the world, ruining the Chinese economy, and setting the stage for the Japanese conquest of the Celestial Empire.

The Fed's actions caused the war in the Pacific.

The Fed is the single most powerful entity on earth and it must be watched closely.

[LS]

One of the problems has been a failure of integration of these theories. They aren't all right, nor all wrong. Keynes, mostly wrong. Peter Temin proved that there was some slowdown in the housing market prior to the Crash, but not much, and not enough to explain the GD. Friedman has really not taken into account the impact of gold, as has Barry Eichengreen ("Golden Fetters"), but it's more than gold. Neither Eich. nor Friedman really show the significance of the Hawley-Smoot Tariff, as Jude Wanniski did (and as new studies by Doug Irwin and Mario Crucini support).

I give a brief overview of where all the literature stood as of 1994 in "Business History Review" in an article called "American Commercial Banking: A Historiography," or some such title.

What is important is that most of the research is starting to find a position to the right/center, which is that a) there was no bubble, or not enough of a bubble to cause the GD; 2) the stock market crash was caused by the HS Tariff AND by business expectations of what the HS Tariff would do, 3) COMBINED WITH the ongoing deflation (that few serious scholars deny), which had the effect of making (as Irwin shows) the real effect of HS about a 5% hit on the U.S. economy. (This is the equivalent of 5-10 "9/11s" in terms of damage to the economy, as Irwin and Crucini show).

Friedman was mostly right in that the Fed simply failed to keep up with the productivity and output, but he failed to really tie this into the declining gold stocks, whereby under the old Fed rules and the International Gold Standard, governments were OBLIGATED to print new money in proportion to rising gold stocks, and to take money out of circulation with falling gold stocks.

Keynes was right only that there was a skewed wealth curve, but didn't get that that was normal and desirable in a GROWING economy, especially one filled with inventors pouring out new inventions, as occurred from 1900-1930.

In short, all the modern scholarship points pretty strongly to a consistent story of the GD in which primarily the government is the culprit, exacerbated only by businesses' expectations of what else the government might do.

See my book, "The Entrepreneurial Adventure," (Harcourt, 2000) especially the sidebar section on the most recent economic studies, althoughwe repeat much of the essence of this in "A Patriot's History of the United States."

[palmer]

The money growth fell behind manufacturing growth for the entire decade;

A better comparison is credit to GDP. In 1929, it reached 260%, today it's more like 300% which the Fed controls mainly by adjusting reserve requirements. You can see in this table http://www.federalreserve.gov/releases/h3/hist/h3hist5.txt that reserves are up about 25% since 1975 while the monetary base (the banks' supply of credit) has increased from 108 billion to almost 800 billion.

[palmer]

The article is basically correct. Creating money to fight deflation is like pouring gasoline on a fire in the hope that it will spread up and not out. By not allowing it to happen, the inevitable contraction is only made worse and worse. In the end the only two remedies are depression and hyper-inflation and we all know which one will be chosen by the spineless politicians and their appointed money-monkey.

[palmer]

Upon further reflection, what we arguing about here is the tail and not the dog. The real problem in the 1920's and today is overproduction of goods. There are always ways to encourage or discourage production through manipulation of the money supply but the real cause of overproduction is psychological. If everyone believes they can sell more widgets and start producing them all at once, there will be an oversupply followed by a reduction of production followed by a ripple through the rest of the economy. Many times overproduction in different parts of the economy is not synchoronized so there is no overall expansion and contraction.

But money supply tinkering is an especially good (or bad) way to synchoronize the entire economy which is what happened in the early 20's after the contraction of 1921 which was caused by the post WWI boom. The current overproduction is mostly abroad with China's non-capitalist economy contributing far too much production to the world market. There is unfortunately every incentive for communist businessmen in China to overproduce widgets of every type for both internal and export markets. The inevitable contraction to correct this would be so devastating to the Chinese economy and society that the central government refuses to do anything about it (such as floating the currency).

The bottom line is the current world overproduction will lead to a world contraction irregardless of money supply increases. The money will sit in banks unloaned which will prompt Bernanke to do his helicopter thing which will bring on hyperinflation and economic disaster.

[palmer]

synchronize (which is bad), not synchoronize which is just bad spelling.

[hubbubhubbub]

"The Fed is the single most powerful entity on earth and it must be watched closely."

But it won't allow us to watch it anymore (M3 going stealth next year). Why? What does the Fed know about '06 that it's not telling us?

Notice how Gold has gone up almost everyday since the M3 announcement and Bernanke was confirmed. Something smells here.

[hubbubhubbub]

Fellow crackpot. Quit your stammering and spouting and engage your brain.

My sources are Rothbard (America's Great Depression), Reed (Great Myths of Great Depression) and Friedman/Schwartz (Monetary History of the U.S.) What are yours??

[Pessimist]

Thanks for your response.

Last night I read the WSJ article about Bernancke that started this conversation. I know that by all accounts the guy is a conservative macro economics genius, so I imagine he'll be fine in the long run.

But I have to say I too question some of his assertions and plans.

I think the notion that its the pricking of the bubble that causes problems is essentially flawed. Apparently its based on the notion that its eventual natural deflation would not have been so cataclysmic. Unfortunately the article doesn't point out any evidence that would support that assumption.

Maybe more concerning though is his apparent intention to specify a target rate of inflation. No doubt Greenspan had some figure in mind anyway, but it was never exact or publicizes. To telegraph your intentions the way Bernancke wants to seems to me an open invitation for currency speculation and arbitrage.

Anyway, what do I know. He's a macro economic genius and I'm just an engineer, so I'm sure his points are probably going right over my head.

[Pessimist]

Oh, BTW...

After I read the WSJ article last night I see Bernancke also suggested what was my method #3 a while back. But for a variety of reasons that was roundly shot down by the intelligensia.

Guess I don't understand that either. I though I actually learned that one in econ many moons ago.

[LS]

Rothbard is wrong. Friedman is partially right, but completely ignores the role of gold and the Hawley-Smoot Tariff. The only one yammering is you. Try some real, academic studies---and Friedman is a great one, but he is way, way outdated by newer research.

[baseball_fan]

"One of the problems has been a failure of integration of these theories...."

Could a distinction be made between a tipping point and a cause? Today just as during the '20s & '30s certain areas have gotten extended which make them vulnerable to dramatic corrections. It then only takes a small pebble which could be almost completely random to start an avalanche.

If there were a dramatic correction today, for instance, could we really say what was the real cause versus a tipping point since a large multitiude of vulnerable, highly interdependent areas that are mutually reinforcing are involved? If it wasn't one tipping point item, would not another have eventually taken its place as things get extended? A great heart surgeon might be able to perform miracles for a while, but eventually we have to lose weight, stop smoking and exercise if we hope to not have a recurrence of a heart attack.

We need to lower the risks factors so we turn the Fed Chairman meetings into a boring position like having a regular physical. Increasingly becoming dependent on a heart surgeon or Fed Chairman's world class expertise almost becomes a moral hazard in itself. Better, it would seem, to not be as interventionist, allow more market discipline to take place at earlier stages before the whole system is put at risk. Eventually there will be a Fed Chairman no matter how smart who will not make the right call.

A person by way of analogy who does not take care of their health will eventually reach a stage where any procedure will have such side effects as to be counterproductive, thus tying the surgeon's hands. Today, if the Fed raises rates to have enough ammunition for the inevitable next crisis they endanger bringing down the asset markets and consumer demand at the same time. No matter what they do, whether they act or not, there is increasing danger.

The moral hazard of trying to protect people who need to be protecting themselves is just setting up a bigger fall. Corporations I think are anticipating this fall and are now holding almost unprecedented amounts of cash. The Fed Chairman's role is viewed with an increasing mystic almost like that of the ancient oracles at Delphi, the reading of entrails by a priesthood in ancient Egypt and old Soviet Kremlin watchers to predict the future with similar ambiguity.

Working to devolve these decisions and risks back into the hands of the citizens lessens the systemic risks. Bernanke needs to say he can buy us at best some time, but we have to do the heavy lifting ourselves, and that over time he is going to lessen the moral hazard that guaranteeing our protection brings being cognizant that the law of unintended consequences has not been repealed.

Trying to do away with forest fires only increased their destructiveness. Controlled burns allow a necessary natural regeneration as we've now learned. Not providing federal flood insurance would cause some to be damaged, but providing it has encouraged far more than would do otherwise to build in areas prone to destruction. The Fed faces the temptation of becoming an insurance agent rather than focusing on ensuring the value of the currency. In the former role it would seem only a matter of time before they fail imho although there might be an attempt to control more and more of the economy to forestall this outcome for awhile.

As citizens working with each other in association on issues we have in common we have to be able to assess dangers of hurricanes, fires in our neighborhoods, perils of overeating, buying overvalued stocks, the economic impact of wars, speculating in land and housing, etc. as we've always known if we are to retain our liberty and prosperity. Giving this job to big government only results in our eventual enfeeblement. People use to save money to provide a margin of safety. Today we now have an almost zero savings rate nationally. If people only drive more recklessly upon being given a seatbelt, they just endanger themselves and others more. Return market discipline, keep the currency sound and leave the rest to us and our elected representatives to make the adjustments.

(That is my hypothesis, being a non-economist.)

[getsoutalive]

I believe that you and the "Austrians" are correct. It was not the "pricking" of the Roaring '20s bubble that caused the Depression. Once the credit bubble was created, the aftermath was inevitable. Sure, the Fed and FDR did plenty after the crash to hinder recovery, but the actual cause of the crash was the inflation of the bubble to begin with.

I still believe that we have repeated the same mistakes in the '90s and Bernanke can drop money from helicopters all he wishes, the debts we have built will be repudiated one way (inflation) or another (deflation). All we have done since the 2000-01 crash has been to shift from one bubble to another (stocks to housing) and put off the same inevitability as then.

Except that the dollar was tied to something with tangible value then and today it is nothing more than a confidence game.

[LS]

"We need to lower the risks factors so we turn the Fed Chairman meetings into a boring position like having a regular physical. Increasingly becoming dependent on a heart surgeon or Fed Chairman's world class expertise almost becomes a moral hazard in itself. Better, it would seem, to not be as interventionist, allow more market discipline to take place at earlier stages before the whole system is put at risk. Eventually there will be a Fed Chairman no matter how smart who will not make the right call."

This is Friedman's argument and it's essentially right. Where the disagreement comes in is which measurement tool you use to effect an automatic rate hike or rate cut. Is it CPI? GNP growth? It is not as simple as it sounds, which is one reason the Fed looks (supposedly) at a myriad of factors to determine if the economy is heating up or cooling down.

[baseball_fan]

"Where the disagreement comes in is which measurement tool you use to effect an automatic rate hike or rate cut. Is it CPI? GNP growth? It is not as simple as it sounds, which is one reason the Fed looks (supposedly) at a myriad of factors to determine if the economy is heating up or cooling down."

Why wouldn't it be the CPI if the Fed's role were limited to maintaining the soundness of the currency? What did Volker use?

People have come to rely on a Greenspan "put" which is inducing moral hazard behavior that eventually will inject greater instability into the system. I realize now that "full employment" is a legislated target, but trying to accomplish that through Fed policy (if that is happening) seems to put us back on the slippery slope. Better to accomplish these other goals through non-Fed policy?

[LS]

I am all in agreement that the Fed has been damaging, at best, in the 1990s and early 2000s. But many economists hate the CPI as completely inaccurate.

I'm NOT a monetary economist. I'm a historian. But I attended a Liberty Fund seminar with five or six quite brilliant free-market economists discussing this very issue, and none of them could agree on what should be used, if anything, as a "target."

If I were king of the world, I'd have George Gilder be the Fed chairman. He's not an economist, but more of a "futurist," and he thinks that a little (repeat, LITTLE) inflation is actually no inflation because the monetary market is a little slow in adjusting for new inventions, productivity, etc. I tend to agree. People seem to adjust faster to inflation, if it is there, than to deflation. There are psychological elements of economics that are not measured in supply-demand curves---Keynes called them "Animal instincts," and Friedman agreed that they exist. For ex., in the late 1800s, there was humungous deflation, but farm prices appeared to deflate less slowly than all other prices. Well, that didn't sink in to the farmers, who raised "less corn and more hell." The Populist movement was born specifically out of this phenomena, which largely was psychological. And no one denies that psychology can outrace the market at times (See Kindleberger's work in "Manias, Panics," etc.)

My own study of the Panic of 1857, with Charles Calomiris (Journal of Economic History) found that markets reaction to news is based on their ability to transmit and process news---this is more than just "the nightly business news" or the WSJ. For ex., in 1857, the South was not affected at all by the Panic . . . because its banks were largely branch banking systems wherein, even in the 1800s, news about stability, resources, etc., traveled pretty fast between member banks. The NORTH, largely made up of unit banks, did not have that transmission mechanism, and as a result, news about financial flows moved more slowly, allowing panics to set in where they did not in Southern banks. (There were other factors, but this one was important).

Calomiris has MANY articles studying this, with the same conclusion: imperfections in the market vary in their impact, and the more institutional imperfections you eliminate, the more rapidly consumers/depositors react to news. So in that regard, I think Gilder is right in saying that the lubrication of a very small level of inflation overcomes that "lag time" between news of invention/productivity and money growth. I know the Rothbardian goldbugs here will completely disagree.

[Santiago de la Vega]

This was posted by hubbubhubbub to Santiago de la Vega

But it won't allow us to watch it anymore (M3 going stealth next year). Why? What does the Fed know about '06 that it's not telling us?

Notice how Gold has gone up almost everyday since the M3 announcement and Bernanke was confirmed. Something smells here.

My response is:

I agree with your comments above. The Fed has clearly put too much money in the system. That's what the price of gold is telling us and why the economy is booming. Money growth recently has slowed dramatically. Here's a chart of money growth I just generated from economagic.com: Click on the chart of money growth



Notice the huge bulge in money growth in 2002. That's what got Bush re-elected. It's also what's causing the spike in gold prices.

BTW, the rally in gold is real. Click on the chart of gold prices:



Notice the spike in prices and the lack of volume. No one was selling into this rally as it pushed through $500. When it comes back down and makes a nice bottom, buy it and don't sell it till you see record volume.

[hubbubhubbub]

Just sold a bunch this week. Waiting for a pullback to $470 - $490 and them I'm back in.