Posted on 06/26/2013 8:42:19 AM PDT by blam
The Bernanke Fed Is Playing With Deflationary Fire
By Ambrose Evans-Pritchard
June 24th, 2013
I hope the Fed knows what it is doing.
It has chosen to tighten monetary policy even though core PCE inflation is actually lower right now than it was when the Fed previously thought it dangerous enough to launch further QE. America is one shock away from a slide into outright deflation, and the eurozone is half a shock away.
Anyone who still thinks the Fed has not just tightened significantly – or that markets have overreacted – should read this lament by St Louis Fed chief James Bullard in the Washington Post:
This was tighter policy. It’s all about tighter policy. You can communicate it one way or another way, but the markets are saying that they’re pulling up the probability we’re going to withdraw from the QE program sooner than they expected, and that’s having a big influence.
Here is M1 money to cheer you up:
And here is M1 velocity to cheer you up further:
Now, short-term M1 money data is very volatile, and can often flash wild signals. Nevertheless, I am frankly flabbergasted by the actions of the Bernanke Fed at this point.
They are gambling that the US economy will shake off the effects of fiscal tightening of 2pc to 3pc of GDP this year, arguably the biggest squeeze in half a century. It may indeed do so, but it may not, and the costs of making a mistake before the US recovery is safely established are asymmetric.
Scott Sumner, the spiritual father of the Market Monetarists, says the errors made by the Fed in 1937
(snip)
(Excerpt) Read more at blogs.telegraph.co.uk ...
‘I hope the Fed knows what it is doing.’
I can assure you that they do not! They are little more than reactionary fools. Bernanke, along with Obama, will go down as a disgrace and a destroyer of the Republic!
What recovery? There is no recovery. Nothing is getting any better. As long as Ostumbles is Prez nothing will get better. His job is to destroy the economy and usher in a Marxist totalitarian regime.
Bernanke makes Greenspan look like a genius. IMO Bernanke knows we are heading for a total economic collapse and also knows there is nothing he can do to stop it so since he is leaving soon he does’nt want to get tagged as the guy who would not stop printing. I think he’s just washing his hands of the whole affair and getting ready to ride off into the sunset. The Federal Reserve cannot save the country from the job killing regs and practices of a Marxist govt. and a quisling Congress.
I think that's according to plan.
The US Federal Bank was made so that Congress could spend more money than taken in. Making money out of thin air and to be paid through inflation by the hapless citizens
Ambrose Evans-Pritchard, wrong again for the one millionth time in a row. This paranoid conspiracy mongering idiot does a lot of damage because people don’t know just how stupid he really is.
Everyone keeps ignoring Bernanke’s statement that tapering will only happen if the economy continues to strengthen.
GDP for the first quarter was just revised down from 2.4% growth to 1.8%.
Bernanke has jawboned some froth out of stocks, and now he will wait. He is trying to hide the fact that he had to talk this way due to bonds moving away from him even as he continued QE-infinity.
He is trying to keep the illusion going that the FED is in control. The bond market is in control and will do what it wants.
Bondholders are getting a bit nervous and want more yield as they see more risk of haircuts in the future.
The squeeze is on, how does Bernanke wriggle out of this one? I don’t think he can.
Watch the bond market. That’s where the action is now, not at the FED.
Now that's a short and entirely accurate description of what we have come to.
The whole crazy business strikes me as just as silly as the old joke about the gal who said she couldn’t be out of money because she still had plenty of checks left.
Anyone who still has stocks deserves to go broke. The Fed has no idea what will happen to this economy when it stops printing billions of shrinking dollars. They could be consulting a Ouija board for all we know.
Exactly!
That’s where the inflation has gone, or rather where it’s hiding. Ticking time bomb. BTT
And for that he will be venerated by billions of barbarians for a millenium.
And that's reward enough for him.
the end justifies the means....the elite bankers and other crooks have taken billions from the people...
Yep, Ambrose Evans-Pritchard is a Drama Queen and mostly makes no sense.
There is a dread of the power of deflation that exceeds all expectations. What deflation is, may be defined as the anomaly of the value of a unit of currency being worth MORE in the future than it is today, and essentially, all investments are NEGATIVE, that there would be no interest paid on savings account, or the value of a mortgage grows, rather than shrinks, as the bank would have to pay out a certain sum to encourage the amortization of the mortgage.
The concept of credit is annihilated. Prices fall on a year-to-year basis.
Very well said, Georgia Girl 2!
Will the American people wake up to this fact before it's too late? This economy is being deliberately strangled, while the people are being systematically expropriated of their wealth, their liberty, and their opportunity.
Of course I blame the Obama administration, and specifically Emperor Barry himself for this deliberate state of affairs, and of course also the disgraceful, cowardly, GOP in Congress who are the chief enablers of this sort of thing.
Case in point: Marco Rubio, who should know better than to listen to the blandishments of Chuckie Schumer.
I might seriously read this article if the three charts all covered the same period of time. Drawing conclusions from charts that are not directly comparable suggests the author is hiding something.
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