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In a speech in Phoenix in early November, Governor Palin warned that inflationary pressures were on the rise, particularly in the food and energy sectors. She also noted that Ben Bernanke’s plan to print another 600 billion to as much as 1 trillion dollars via his QE2 plan would only exacerbate the problem, as monetizing the debt always does, and advised him to “cease and desist” from this ill-advised scheme. This prompted the hapless Sudeep Reddy to cry foul and claim, essentially, that there was no inflation. Governor Palin promptly took Reddy to the woodshed, an exchange Palin won going...

Last November Sarah Palin got in a spat with the Wall Street Journal about inflation in food prices—she insisted food prices had inflated dramatically over the past year, and the Journal they hadn’t. A new UN report cites food prices are on a highway to the danger zone. Was Palin right? First off, it’s important to note that an argument about food prices is really a stand-in for a much bigger issue when it comes to Sarah Palin arguing with the Wall Street Journal. Palin been derided as a lightweight know-nothing who’s clueless about pretty much everything fact-related. Since inflationary...

A fight over the budget loomed on Sunday as a top aide to President Barack Obama warned of catastrophic consequences if Republicans follow through on threats to reject an increase in the nation's borrowing limit. Republicans, who will take control of the House of Representatives this week, are demanding spending cuts to curb the $1.3 trillion budget deficit and several have said they would oppose a higher debt ceiling if Obama does not agree to a range of painful cuts. White House economic adviser Austan Goolsbee accused Republicans of "playing chicken" with the nation's financial credibility. "This is not a...

Obama aide: Don't 'play chicken' with debt ceilingThe Associated Press Sunday, January 2, 2011; 10:48 AM WASHINGTON -- The top White House economic adviser is warning against what he calls "playing chicken" with the need to raise the nation's debt ceiling. For some conservatives, refusing to raise the limit on the federal debt would be a tactic to force the government into cutting spending. Last February, Congress raised the debt ceiling to $14.3 trillion. The debt is now at nearly $13.9 trillion and growing each day. A move to raise the ceiling again is expected this spring.

Recently, Ben Bernanke indicated that Quantitative Easing II (QE2) might be followed by QE3, etc. In an interview at the beginning of December, Bernanke was asked, "Do you anticipate a scenario in which you would commit to more than $600 billion?" Bernanke's answer was startling. "Oh, it's certainly possible," he said. "And again, it depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks." The answer is interesting because it not only indicates the possibility that the Federal Reserve (Fed) will purchase more government bonds but also implies that Bernanke...

The best commentary on Fed policy currently out there is a do-it-yourself animated short called Quantitative Easing Explained. The 6-minute, 48-second cartoon features two stuffed animals, drawn in Pokémon style, talking about monetary policy. Specifically, the bears--or are they dogs?--point out the illogic in the official Federal Reserve position that today the danger of deflation is greater than that of inflation. The animals also criticize the Fed officials' recent pursuit of QE2, the acronym for its decision to inject $600 billion into the economy. More than 3.5 million people have watched the video, and it was posted on YouTube in...

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President Obama and his wife Michelle will not be invited to Prince William's wedding next year. Because Prince William is not yet heir to the throne, his wedding to Kate Middleton is not classed as a ‘state occasion’ – and the couple feel under no pressure to fill the 2,000-strong guest list with heads of state, the Mail understands. They are more eager to ask ordinary citizens and charity workers than foreign dignitaries and VIPs to what will be the first royal ‘people’s wedding’, courtiers suggested. A handful of heads of state are likely to be invited in line with...

Posted on Thu, Dec. 02, 2010 Hoenig: ‘Too big to fail’ is still too big a threat THOMAS HOENIG COMMENTARY The world has experienced a severe financial crisis and economic recession. The Treasury and the Federal Reserve took actions that saved businesses and jobs and may very well have saved the economy itself from ruin. Still, the public seems ungrateful, expressing anger at these institutions that saved the day. Why? Americans are angry in part because they sense that the government was as much a cause of the crisis as its cure. They realize that more must be done to...

A significant production problem with new high-tech $100 bills has caused government printers to shut down production of the new notes and to quarantine more than one billion of the bills in huge vaults in Fort Worth, Texas and Washington, DC, CNBC has learned. Initially scheduled for release in February of 2011, the new bills were announced with great fanfare by officials at the Treasury Department and the Federal Reserve in April. At the time, officials announced the new bills would incorporate sophisticated high-tech security features, including a 3-D security strip and a color-shifting image of a bell designed to...

The US economy added a worse-than-expected 39,000 jobs in November, as the unemployment rate edged higher, underscoring the weakness of a labour market recovery that is struggling to gain traction. snippet... “Any thought that the Fed would scale back its QE2 purchases of Treasuries in the coming months has to be dashed by this report,” said John Ryding and Conrad DeQuadros, economists at RDQ Economics. snippet... “Today’s numbers underscore the importance of extending expiring tax cuts for the middle class and unemployment insurance for those Americans who have lost their jobs,” said Austan Goolsbee, head of the White House’s Council...

Unlike Zimbabwe, the U.S. can easily get the currency it needs without being beholden to anyone. But wouldn't that dilute the value of the currency? No... ...If the Fed were to follow the lead of Japan and hold federal debt equal to the country’s gross domestic product, the Fed would be holding $14.75 trillion in federal securities, enough to refinance the ENTIRE U.S. federal debt of $13.8 trillion virtually interest-free. The federal debt hasn’t been paid off since the 1830s under President Andrew Jackson. It is just rolled over from year to year. An interest-free debt rolled over indefinitely is...

HOW will you know whether the Federal Reserve’s plan to reinvigorate the economy by buying Treasury debt is working? Simple: Look at how foreign stocks are behaving. Based on their performance last week, the Fed could be running into a problem. Although one goal of the Fed’s $600 billion monetary stimulus is to restore confidence in domestic stocks — in the hope of bolstering consumer confidence and spending here at home — the real canary in the coal mine for the central bank’s plan is the performance of overseas equities. Why? Market strategists say they believe that the Fed’s effort,...

The CPI was out this week, and it showed a continued drop in inflation. There were those who immediately pointed out that this vindicated the Fed's move to QE2. We have to get ahead of this deflation thing, don't we? Well, maybe, depending on how you measure inflation/deflation. This week we look deep into the BLS website on inflation to see just exactly what it is we are measuring, and then take a walk down Nostalgia Lane. But first we look at what I think we can call The Sputtering Economy, because that will tie into our inflation discussion. My...

Ben Bernanke has made a very dangerous bet. The Fed’s Quantitative Easing 2 announcement of $600 billion in additional Treasury purchases is literally a “bet the farm” move. True, the Fed had already engaged in an unbelievable amount of bailouts both known and unknown. However, the Fed’s previous moves were all made when 1) the world financial system was teetering on the brink of collapse and 2) other countries were engaging in similar practices. In contrast, the Fed’s new QE 2 announcement comes at a time when the consensus is that the US economy is recovering (I don’t buy it,...

The "new" spin from the White House is fresh off the presses. Of course it's nothing new, just the same ole same ole "Republicans are evil" crapola. And speaking of crapola, here is Krugman and the spin: What do the government of China, the government of Germany and the Republican Party have in common? They’re all trying to bully the Federal Reserve into calling off its efforts to create jobs. And the motives of all three are highly suspect. ~~~ So what’s really motivating the G.O.P. attack on the Fed? Mr. Bernanke and his colleagues were clearly caught by...

At Tea Party rallies and at other get-togethers over the last two years, one could often see placards reading "End the Fed." That also happens to be the title of a worthy book by Rep. Ron Paul. If one googles those three words within quotation marks, one should get nigh on a million hits. One might conclude that there's a movement afoot in America to abolish our central bank, the Federal Reserve. Why are folks getting so exercised about this secretive quasi-governmental agency? One reason folks are riled at the Fed is that the Fed sets interest rates, and rates...

California’s fiscal crisis is mounting. Instead of dealing with the high cost of social engineering and illegal immigration, they have issued $10 billion in short term debt. Unfortunately, they are forced to deal with the consequences of QE II: they had to pay a higher interest rate in order to sell their bonds. As most state, local and federal debt is being refinanced over the next three years, the higher interest rates that will be required to offset hyperinflation and their lowered bond credit rating will accelerate the “decline of the dollar”. Redistribution of wealth will be exposed as a...

While on a United Airlines flight from New York City to Los Angeles this week, a fellow passenger handed me a copy of the The Wall Street Journal Nov. 15 op-ed by Alan Blinder—"In Defense of Ben Bernanke"—and suggested that I write a letter to the editor if I disagreed with the Princeton University professor's claims. Having read the piece, I told the passenger over my shoulder, "You bet I will." Prof. Blinder seems blind to the clear and present dangers of QE2. Instead of seriously discussing these dangers, he takes us on an excursion to a Keynesian utopia, a...

While on a United Airlines flight from New York City to Los Angeles this week, a fellow passenger handed me a copy of the The Wall Street Journal Nov. 15 op-ed by Alan Blinder—"In Defense of Ben Bernanke"—and suggested that I write a letter to the editor if I disagreed with the Princeton University professor's claims. Having read the piece, I told the passenger over my shoulder, "You bet I will." Prof. Blinder seems blind to the clear and present dangers of QE2. Instead of seriously discussing these dangers, he takes us on an excursion to a Keynesian utopia, a...