Posted on 04/28/2011 12:48:08 PM PDT by Wuli
It was a news conference held by a central banker, full of empty words and invented phrases, signifying nothing new. A politician couldn’t have done better.
[snip]
Federal Reserve Chairman Ben Bernanke used this news conference to affirm the Fed’s outlook on the economy, nothing [noting] the need to keep interest rates near zero for “an extended period.”
[snip]
(Excerpt) Read more at moneynews.com ...
Not enough progress [inflation] yet!!!
“We are not out of the hole yet, so we’re just going to keep digging.”
Yikes! Is this guy just plain stupid or is it me?
Translation: What we've been doin' ain't workin'.
So, we're gonna do some more of it...
The trouble with Bernanke’s lie is that under his system THERE IS NEVER GOING TO BE MUCH IN THE WAY OF PROGRESS!
They can’t give away money to simulate the economy for a number of reasons among them:
1: The high costs of taxes and regulations making the feasibility of turning a profit some what low with such a lone some what low.
2: New Banking rules and lesion makes lending more difficult, perhaps missing some good investments and perhaps still lowing a lot of bad investment either way things are slow right now. That means there will be little in the way of inflation.
Remember While the Federal reserve enables inflation the actual mechanism of inflation takes the form of banks loaning money that does not exist. Also known as fractional-reserve lending.
Furthermore, Bernanke’s policies are artificially inflating the stock market bubble.
Sooner or later that bubble will burst and it could fall as much as six hundred to a thousand points in one day.
I think that day is coming sooner rather than later.
“Hey, Curley. Drill some more holes in the boat. We’re still taking on water!”
“OK, Moe. Nyuck, nyuck nyuck.”
Let’s see. at this point in the debt regime decline,...
Raise the rate. The result is big layoffs of government employees, cuts against Social Security, etc., and the “service industry” ceases now (due to lack of government employees/retires spending money from debt). The government heads toward default much more quickly, as paying the debt with deflated dollars won’t happen for sure.
At this point in globalism, America is no longer the center of the globalist universe. Oil would continue to go up. And the dollar would fall.
Keep the rate nearly zero. Result, we continue the slow decline with inflation, etc. Default happens anyway, but probably much later.
Look for another QE, too. Otherwise, in June, virtually all activity would cease. ...no revenues to services from tourists, etc.
And BTW, fuel (gasoline, etc.) exports also increased most recently, so refineries knew that they could pay more for oil. Have fun. Enjoy the ride.
Bingo. What BurnYankee really means is, “wake me up when the official CPI hits 10%”.
and what is the classic definition of insanity??
There is no assurance that would be the outcomes. In part it would depend on how much the rate went up and how quickly, or how slowly. Any rate-goal that was approached in gradual increments would likely have less abruptly disruptive impacts.
Secondly, a rise in the Fed's discount rate would not have an immediate impact on rates that state and local governments are paying to borrow, generally, as they are already well above that rate; as also is the Treasury bond rate the federal government is paying to finance it's deficits. So, a Fed rate rise is neither going to be an immediate precursor to government layoffs or a worsening of the social security deficit. The "service industry" will also not cease, because the outcomes you predicated that on are also not likely.
The government's ability to finance its debt will increase, not diminish, if the Fed raises its rate, as the dollar will recover somewhat as will, thereby, the value of dollar denominated debt. The government can still "head to default" for other reasons; primarily for the political reason of a lack of an agreement to PARE EXPENDITURES INSTEAD OF HEADING TO DEFAULT.
"Raising the debt ceiling" cannot automatically trigger a "default". Even if the debt ceiling were not raised, the Treasury has some means to temporarily avoid default, briefly, on its own and a political agreement to pare expenses to a much lower level can prevent any need to "raise the debt ceiling".
At this point in globalism, America is no longer the center of the globalist universe. Oil would continue to go up. And the dollar would fall.
America though "no longer the center of a globalist universe", it still has the largest economy and it is an economy others are more in need of than is she in need of them. Second, the biggest change in the global economy is that it altogether has less of a "center". Some American's see this is an altogether "decline" in the U.S. economy, but it is really due to how much so many other countries have risen towards an American standard. If we don't get that socialist out of the White House and soon, then America will stop growing at a rate sufficient to keep it among the best economies.
Keep the rate nearly zero. Result, we continue the slow decline with inflation, etc. Default happens anyway, but probably much later.
That depends on the political process. No matter what the Fed does with its rate.
If we do not radically trim Federal spending and do not come to an agreement on that, and the RINOS cave and raise the debt ceiling anyway, then the spending and borrowing will continue and the default will come later.
If we do not radically trim Federal spending and the RINOS do not raise the debt ceiling, the Treasury may briefly avoid default by means it has to temporarily adjust what we pay so that interest on any debt or redeeming any debt at maturity is paid; whereupon the politicians will have another chance to, quickly, agree to cut expenditures.
If we do not radically trim Federal spending and the RINOS do not raise the debt ceiling, and nothing else happens, we will "default" to some extent. Notice, the only thing that will make this happen is the failure of the politicians, not the actions of the Fed.
Look for another QE, too. Otherwise, in June, virtually all activity would cease. ...no revenues to services from tourists, etc.
There is nothing that is setting in stone any time line to "default". Many things are yet to happen and many are as yet unknown.
And BTW, fuel (gasoline, etc.) exports also increased most recently, so refineries knew that they could pay more for oil. Have fun. Enjoy the ride.
They have already, prior to now, been paying more for oil. The gasoline price increases seen today have been making their way through the supply lines for months. That means, given the continued rise in oil prices, we have not seen the end of them. If Bernanke doesn't stem his cheap dollar machine before June, which looks like that's how it is, $6-$7/gallon gas in some states by the 4th of July would not surprise a lot of people.
It is doing that in two ways. The cheap dollar makes domestic revenue seem larger than it is, on a purchasing-power parity basis, as the dollar gets cheaper. That is "inflating" domestic business revenue, in relation to the global market place.
The inflation is itself inflating business revenue, in how much people keep paying the higher prices, particularly in as much wages are not rising at all. Sooner or later two forces will raise their heads - consumer spending will keep getting hit and wage demands will increase. That also means today's earnings expectations are inflated, just in the domestic sense, because coming down the road are demands to cut prices somewhere as well as demands to raise wages.
Problem: as long as the inflation machine keeps running, so will the stock market and its belief in current numbers as barometers of tomorrows, no matter how screwed up we are in obtaining today's numbers.
Lesson: don't use the stock market as it is today as your own guide to the longer term. The stock market may, over the long term, represent reasonable income and growth. That does not mean it is particularly doing so at any given time.
“Remember While the Federal reserve enables inflation the actual mechanism of inflation takes the form of banks loaning money that does not exist.”
It’s a global banking and global capital system. Dollars - cheap inflated dollars - leave the domestic economy and are recycled (by investment and purchases) and “loaned” back into it by all the foreign sources it was spent on or owed to.
It is through that global mechanism, as much as our domestic banks, that cheap inflated dollars in the fractional banking system help generate inflation in the United States.
That inflation is already here. It is not a figment of people’s imagination. Bernanke lives in an academic bubble. Sometimes I think someone else must do ALL his shopping for him.
Again, default is not certain; possible but not certain and more dependent on political action/inaction than actions of the Fedr’l Rsrv.
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