Posted on 11/21/2010 9:39:15 AM PST by deniss60
Fed chairman Ben Bernanke's big speech... leaves U.S. policymakers off the hook and takes their focus further away from the free-market reforms within their control to make -- the policy changes that would do much more to save what's left of the U.S. economy than anything China might do.
Bernanke would have been more constructive taking direct and sustained aim at U.S. policymakers in both parties -- it's their bad policy moves and avoidance of tough decisions over more than 30 years that's responsible for America's economic underperformance.
The metaphor that comes to mind is of an overweight runner blaming the fact he keeps coming in dead last on a few cheaters taking stimulants. Those other runners will eventually pay for their drug abuse in future races. Wouldn't Mr. Overweight be better off losing weight? And why aren't other racers complaining about the cheaters to the extent we are?
...how is more money printing the real solution to this problem? What good has it done for the U.S. economy so far? Why stop at printing around $600 billion out of thin air? Why not let her rip and add another $1.2 trillion, $2.4 trillion, $4.8 trillion?
There is no free lunch....
[...]
The only positive in all this is that America's politicians are losing their margin for policy error and folly...
Generating economic growth the old fashioned way -- by earning it and improving our business climate -- is becoming one of the few options left. The only question is, how long will it be before the option of improving the business climate -- inconvenient and painful for many politicians -- becomes the only viable one left and whether the U.S. will be too badly degraded at that point, too much of a banana republic, to fix itself.
(Excerpt) Read more at seekingalpha.com ...
Bernanke’s ideas worked so well in Weimar Republic Germany and in Mugabe Zimbabwee....so should work just as well here and now.
But, Soros is also trying to destroy the Euro at the same time. He will attempt to crash BOTH currencies at once.
What the Fed is doing is allowing those politicians to continue their spending while at the same time filling up the coffers of it’s member banks balance sheets. The Banks are parking the money he prints and earning interest on it not lending it out. So Bernanke is not helping the economy one bit!
He is helping the Banks that own the Fed and allowing the liberals to continue their spending in the meantime the feds policy’s are hurting Americans with inflation, hurting seniors who saved money.
Speaking of those GSE’s who do you think dumped all the toxic mortgages in them the Banks the same Banks who donated to Obama and funded Acorn.
Bank of America is ACORN ‘Partner’ and Major Funder
http://nlpc.org/stories/2009/09/21/bank-america-acorn-%E2%80%98partner%E2%80%99-and-major-funder
Bailed Out Citigroup Won’t Rule Out Giving More Money to ACORN
http://www.cnsnews.com/news/article/59443
JPMorgan Chase Asked to Stop Funding ACORN
http://nlpc.org/stories/2009/09/15/jpmorgan-chase-asked-stop-funding-acorn
Barack’s Wall Street Problem is Now America’s
http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/
JPMorgan CEO Jamie Dimon Donates Serious Cash to Democrats .
http://www.opensecrets.org/news/2009/07/jpmorgan-ceo-jamie-dimon-donat.html
Wall Street Is Big Donor to Inauguration - WSJ.com
http://online.wsj.com/article/SB123146096981566339.html
To quote another freeper...
It’s interesting how many forget that the Fed is right out of Marx’s Manifesto:
“The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralize all instruments of production in the hands of the state, i.e., of the proletariat organized as the ruling class; and to increase the total productive forces as rapidly as possible.
Of course, in the beginning, this cannot be effected except by means of despotic inroads on the rights of property, and on the conditions of bourgeois production; by means of measures, therefore, which appear economically insufficient and untenable, but which, in the course of the movement, outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionizing the mode of production. ... “
Measure No 5 of 10 to achieve the above in advanced nations =
“5. Centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”
http://www.marxists.org/archive/marx/works/download/pdf/Manifesto.pdf
Small Business Can’t Get Loans From Bailed-Out Banks
You don’t understand economics, sorry. It’s tough to be blunt, but a lower Dollar means higher stock prices and lower debt values.
So your 401k would be worth more and your house debt would be worth less and easier to repay, as would your credit card debt, if the Dollar plunged.
Won’t happen, but that’s how economics would work if the Dollar did plunge.
If QE worked it would be a wonderful thing, but Japan’s been doing QE for 21 straight years without plunging the Yen.
Quite the opposite: the more debt that Japan runs up, the more deflation they get. The Yen appreciates.
2011 will be scary.
IN WHAT CURRENCY?
In the currency that you spend each day...presuming that you aren’t an illegal alien.
Government controls the spending, not the Fed. The politicians were not asking permission to spend from the Fed. Didn't ask before the Fed was in existence, don't ask the Fed now when they run deficits, won't have to ask in the future if the Fed is somehow "abolished". Currently the Fed is "audited" at least twice a year by members of both chambers of Congress by an otherwise stupid law (because of an impossible, contradicting dual mandate), formerly known as semi-annual Humphrey-Hawkins testimony...
And will we finally resolve who "owns" or controls the Fed -is it the evil Rothschilds (and what percentage of the Fed do they own?) or did the bloody Marxists somehow steal it from the Rothschilds, using "Measure #5"... or are the Rothschilds and the Marxists really one and the same?
And why then do they allow the U.S. Presidents nominate and the U.S. Senate to confirm the Fed Chairman and members, if it's a "private bank"? And do they (Rothschilds and/or Marxists) also own central banks of other countries and economic unions?
That's exactly right....nice summary.
The Fed politicized itself when it decided to bail out banks and further, to monetize federal spending.
Is The Fed Monetizing the Debt? According To The Fed They Are
http://www.jrdeputyaccountant.com/2010/11/is-fed-monetizing-debt-according-to-fed.html
Obama defends the Fed too.
http://www.guardian.co.uk/business/2010/nov/08/obama-defends-qe2-g20-summit
Makes no mention of how the Fed is devaluing the dollar and how that affects us all!
The Coming U.S. Dollar Devaluation - A Major Impact on All of Us
The result is hyper inflation. Many Americans don’t remember this type of inflation unless you remember the 1970s. I do remember it, and it’s not pleasant.
Many people will see their lifetime savings wiped out. This will primarily hit seniors and those living on fixed incomes.
Even those who have built up a nice nest egg for retirement will be hurt. As the prices for goods and services soar, they will find that they haven’t saved enough money to cover their accelerating costs.
But inflation will hurt all of us. Because of the coming dollar devaluation, the price of imported goods will rise. That means that we will be paying much higher gas prices at the pump.
http://hubpages.com/hub/The-Coming-US-Dollar-Devaluation-A-Major-Impact-on-All-of-Us
lol the Fed hasn’t had a REAL physical audit in years. Monetizing the debt allows obama to keep on spending but then quid pro quo obviously it allows the Fed to come back to the people to bail them out again.
How did it "politicize" itself by doing exactly what's in its charter and with the blessing of Congress trying to inject temporary liquidity into the banking system solvent and prevent collapse of make the U.S. financial system and save millions of Americans and businesses from financial ruin as the result (401k's, MMFs / MM accounts etc.)?
That's the same kind of twisted "pretzel logic" that blames Bernanke himself for Bernanke/Fed-bashing by politicians because this Fed-bashing makes us "lose focus" on politicians who created the crisis with their "ownership society" loose lending policies and regulations and Fannie-Freddie-FHA-HUD underwriting and securitizing them...
Monetary policy actually would be politicized if the Fed was "abolished" and its functions were to be transferred to an agency of Treasury and/or Congressional committee, as some suggest doing.
lol the Fed hasn’t had a REAL physical audit in years.
"REAL physical audit" like what? What would Ron Paul expect to find with "REAL physical audit" that he couldn't ask to be produced on all the semi-annual testimony by Fed Chairmen he's been sitting on? $100,000 stashed in the Fed's freezer or $80,000 stuffed in employee's wife's bra? On the other hand, I would love to see the REAL audit of various agencies of Federal government, like the one GSA underwent few years ago - it would be much more educational for people to see the REAL waste, fraud and abuse and the bureaucracy they actually spend the money on.
Makes no mention of how the Fed is devaluing the dollar and how that affects us all!
Reread these posts from Weaker Dollar Seen as Unlikely to Cure Joblessness - FR, 2010 November 16
Dollar has been deliberately devalued all during Bush administration and Republican Congress, from 2001 to 2007-2008, well before TARP, Obama's stimulus, QE1 or QE2... As a matter of fact, USD$ is now slightly higher than it was before financial meltdown. If QE2 was so destructive, this wouldn't be the case.
All that without the "benefit" of TARP, QE, or QE2... The U.S. dollar has been "competitively devalued" starting with Bush administration (despite all his Treasury secretaries having to assure with a more-or-less straight face that they had a "policy of strong dollar") and this devaluation was well before and had nothing to do with TARP, QE1 or QE2... So, why all this hand-wringing about U.S. dollar "devalued due to QE2" now? Because the politicians found they can have a convenient boogieman and scapegoat - the Fed and QE2 - rather than having to explain their reckless fiscal policy of higher spending, deficits, and onerous regulations which make it very difficult for companies to expand, hire or start business in the U.S. when it's so much easier and more profitable to deploy capital where it's welcome and, for now, is well treated. < snip > ..... The USD$ Cash Index is slightly higher now (~ 78) than it was at the end of 2007 (~ 76), and has been higher ever since the multi-decade bottom in March-July of 2008 (~ 72), and the peak was in June 2001-February 2001 (~ 120) ...
Crude Oil was about US$27 in January 2001, $20 in January 2002 (post-9/11) and peaked at US$145 in July 2008 (pre-crash).
Gold was around US$260 in early 2001, US$1030 in March 2008, and broke US$1400 in Novemebr 2010.
Silver was about US$4.50 in early 2001, US$21 in March 2008, and broke US$29 in November 2010.
The interview with Bill Dudley Fed Easing Is Not Aimed at Weakening US Dollar: Dudley explains why QE2 is not inflationary (there are already enough reserves in the system, and new money is not "printed" if banks don't lend them) and what the positives of QE2 are and what negatives the Fed is watching for so they can take action at the appropriate time.
Good comlementary pieces are Bernanke Takes Off the Gloves After Becoming Global Target - CNBC, by Albert Bozzo, 2010 November 19, and particularly interview with [Judd] Gregg: The Case Against Monetary Populism - CNBC, by Lori Ann LaRocco, 2010 November 17
JG: There is a variety of grades. The TARP did what it was suppose to do. It did well and the taxpayers are going to get their money back. The financial system was made solvent and stabilized. The failure to pick up Fannie and Freddie and address that, and real estate underwriting has been a huge mistake I think and will harm us again undoubtedly. The recent regulatory reform bill I believe will end up contracting credit on main street significantly for a lot of reasons, and making it much more difficult for the people who are the job creators in our society to get credit. ..... < snip > < snip > .....LL: Looking back at the regulations that been passed on financial reform, how would you grade the bill since Fannie and Freddie were never a part of it?
Sen. Gregg also addresses the dangers of establishing an unaccountable "consumer czar" (Elizabeth Warren) office inside the Fed as part of FinReg / Dodd-Frank "reform" and other harmful legislations and regulations, none of which have to do with the Fed. Well worth reading in full.
The result is hyper inflation. ... But inflation will hurt all of us. Because of the coming dollar devaluation...
As I have already shown above, the devaluation of USD$ has been happening in the 2000's well before TARP, QE1 and QE2 (USD$ Cash Index went from 120 in 2001 to 72-76 in 2007-2008, losing more than one third of its value), and QE2 in and of otself doesn't do one iota to devalue the dollar (again, see the links above).
So the USD$ (now at 78) didn't weaken and the consumer inflation has not risen because of QE2, in fact it's one of the mildest on record, which makes Inflation in Real Time - B, by Robin Goldwyn Blumenthal, 2010 November 13 - FR, 2010 November 17:
< snip > ..... Interestingly, the MIT Sloan index has been "very close" to the oft-maligned government indicator [BLS' CPI], Rigobon says. As for Palin's and others' contention that food prices have risen "significantly" over the past year, Rigobon begs to differ. After a fast start, they've been flat since July, up for the year about 1%. Says he: "I'm a Republican, but I think Bernanke is doing the right thing."
The idea that, if the Fed doesn't "monetize" the deficits, then Congress and Presidents can keep spending Other People's Money stands the relationship of fiscal and monetary policies on its head, kind of like blaming Bernanke because the people are so busy bashing the Fed and Bernanke that they are "losing focus" on politicians. Just like blaming the "fat cat" bankers for making "unaffordable" loans to the people that government forced them to make, as long as the loans can be repurchased by / "dumped on" the GSEs (Government Sponsored Enterprises) or government agencies.
s/b:
How did it “politicize” itself by doing exactly what’s in its charter and with the blessing of Congress trying to inject temporary liquidity into the banking system and make it solvent and prevent the collapse of the U.S. financial system, and save millions of Americans and businesses from financial ruin as the result (401k’s, MMFs / MM accounts etc.)?
the QE that Bernanke is implementing has nothing to do with running up more debt or spending more money. So comparison to Japan doesn’t hold.
Increasing the money supply ... to offset the decrease in money supply over the past 2+ years due to the “hoard cash” mentality that has developed.
If we are not in a deflation, then the critics have a point. And there are others who argue that it is best to let the deflation run its course. I do not agree.
Europe is less concerned about a deflation because they have always dealt with their unemployment by sending foreign workers home.
Both have failed; leaders in both nations clamor for more of the same.
Draw your own conclusion on the results.
But you said the 401k would be “worth more” - But in dollars that are worse less - That’s hardly wealth creation
‘,
we are only talking here about increasing the money supply.
Others bring up the low short-term interest rate policy of the fed and the so-called stimulus spending. That is confusing the issue discussed in this article which nothing to do with “stimulus” spending.
If people oppose increasing the money supply under all circumstances, do they also always oppose tightening the money supply? Is it the “Never loosen, never tighten” school of thought?
If you look these up I'm sure you'll see that your previous statements are invalid. Check the late 1990's Us Dollar index - the DXY was at 120 btw. What is trading at todfay?
tell me relative of value of the DJIA 2000 to 2010 DJIA in the dollar index.
don't even look at the value in gold because it's a scary picture.
I think my 401k was worth more in 2000 than now even at the SAME NUMBER. Can you see how a fall in DXY would make your 401k worth LESS not "worth more"
You’re only talking about increasing the cash supply. The effective money supply is all cash plus all credit, though, and credit availability has decreased...there are more strict rules in place for lending, on the one hand, and there is less demand for loans for business expansion on the other hand.
In financial circles, lowering interest rates and engaging in QE during the above scenario is commonly derided as “pushing on a string” because you can’t force businesses to take out new loans.
Thus, common folk wisdom is that QE always fails. Interestingly enough, QE has failed every year for the past 21 years in Japan, and QE has failed for each of the past 3 years here in the U.S...almost as if the common folk wisdom was onto something that esteemed policy-makers couldn’t comprehend.
Along that line of thought, MBA kiddies have promised the public for decades that “deflation is dead” because of that magic invention known as the printing press.
But someone forgot to tell real-estate investors in Ireland, Spain, Greece, Japan, and the U.S. that “deflation is dead.”
Of course, seeing that deflation is alive and well has frightened the MBA kiddies of the world...all of whom are desperately begging for more QE in order to expand the money supply (forgetting that the money supply includes credit availability) in a Hail Mary plea for government-induced inflation.
So it turns out that deflation isn’t dead, after all.
The shaky, craven cries for more QE prove that point, as if falling employment and lower payrolls hadn’t already made it.
You are an odd bird to criticize my correction of another poster without even grasping the content, much less the context.
Presuming that either one of your attention span or intellect has missed the obvious, I’ll repeat it:
The other poster claimed that a plunging Dollar would reduce the value of his 401k and would reduce the price of his house.
Of course, that’s not true, which is why I corrected him. A plunging Dollar (i.e. “inflation”) would raise the price of his house and would raise the nominal value of his 401k.
This is *not* to say, as you are wierdly doing, that wealth has been created by a falling Dollar.
In contrast, it *is* to say that asset prices increase during inflation.
Likewise, debt burdens are decreased by inflation.
Viewed statically by the average college mind, the above facts make inflation desired, especially for the political class. Such minds clamor for more QE and for massive new government spending (read: Paul Krugman).
But to even understand why Krugman is wrong requires that one first understand what inflation does to prices and debt (hence my post).
...now you can make whatever snide comments that you are want to make about me, as you will no doubt be insulted that you’ve been schooled in the above and your weak willpower will compell you to lash out at the first adult that you’ve seen in the room.
Carry on.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.