Posted on 06/24/2010 5:14:58 PM PDT by bruinbirdman
Federal Reserve chairman Ben Bernanke is waging an epochal battle behind the scenes for control of US monetary policy, struggling to overcome resistance from regional Fed hawks for further possible stimulus to prevent a deflationary spiral.
Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.
Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion. But they are certain to face intense scepticism from regional hardliners. The dispute has echoes of the early 1930s when the Chicago Fed stymied rescue efforts.
"We're heading towards a double-dip recession," said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. "The party is over from fiscal support. These hard-money men are fighting the last war: they don't recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again."
Mr Bernanke is so worried about the chemistry of the Fed's voting body – the Federal Open Market Committee (FOMC) – that he has persuaded vice-chairman Don Kohn to delay retirement until Janet Yellen has been confirmed by the Senate to take over his post. Mr Kohn has been a key architect of the Fed's emergency policies. He was due to step down this week after 40 years at the institution, depriving
(Excerpt) Read more at telegraph.co.uk ...
Ben ! You and zer0 shot our wad.
Bad things are going to happen, and you can look in the mirror and see who did it
Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam.
What, they can’t hire any more census workers? No more shovel ready projects? Unemployment can’t be disguised any more by extending unemployment benefits? /s/
I'm not sure what this means - are they actually suggesting more 'pump priming'?
I’m against Ben Bernanke and with Andrew Mellon.
Mr. Mellon had only one formula: “Liquidate labor, liquidate stocks, liquidate the farms, liquidate real estate.”
He held that even a panic was not altogether a bad thing. He said: “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people”...
Stop the stimulus and get the depression going full force!!!!
You order stuff, you can’t get stuff, everything is in short supply.
Why?
Because everyone fears this government and don’t want to make anything.
Everyone is selling what they have out of fear and not making new. Obama is scaring people so bad, they are cashing out.
This is the proverbial run on the economy.
What recovery? All I've seen is massive borrowing to fuel massive spending. Has Mr. Bernanke ever, during personal tight times, taken out loans and spent all his credit cards to the limit to try to avoid cutting back or otherwise controlling spending? That approach doesn't work, does it--because massive borrowing doesn't replace an income. Most people cut back on spending when their income drops. If borrowing and uncontrolled spending don't work on a household level, how can they possibly work on a large scale level?
More like one big dip with a dead cat statist pimple near its bottom.
asset purchases = print more dollars
Yep. These idiots think debts are assets.
“Growth could be negative again as soon as the fourth quarter. There is no easy way out since fiscal stimulus has already been pushed as far as it can credibly go without endangering US credit-worthiness...the Obama fiscal boost peaked in the first few months of this year. It will swing from a net stimulus of 2pc of GDP in 2010 to a net withdrawal of 2pc in 2011. “
The Keynesian fake economy? Fails every time. So, the messiah spent what, 2 Trillion dollars and it did nothing to avoid the inevitable.
Worst President, EVER and MUST be Impeached to avoid destroying the USA completely
That is not how progressives think.
When their nutty ideas go bad, they immediately say that their idea did not work because they did not spend enough money on it.
They immediately demand more money.
No matter how bad the idea proves to be, they never ever admit that it was a bad idea.
The collectivist says that as long as a company makes a profit, there is more redistribution to do.
Health insurance companies make a profit. That profit should go to treating patients, or lowering insurance costs.
You get the picture.
"9.7% unemployment is the new norm." -- Barack Hussein Obama
"We'll just have to change human nature." -- Hillary Clinton
"We can live with a nuclear armed Iran, so can you." -- Barack Hussein Obama to Bibi Netanyahu
yitbos
I'm not sure what this means - are they actually suggesting more 'pump priming'?
They are referring to "quantitative easing" - something that Keynesian economists do after they have cut the interest rates to zero and thus run out of other options.
The Fed builds bank balance sheets by giving banks money (which the Fed creates out of thin air) in the hope banks will then undertake loans (lending a multiple of the donated funds) and thus stimulate the economy. A low interest rate loan will not work because it counts as debt and not equity, and because most banks will often not borrow money they do not need, even to invest it at a higher rate interest with the Fed. Therefore, the Feds make an outright gift, disguising it to look like something else to make it politically acceptable to the naive masses.
The preferred method at the present time is to buy "toxic assets" - i.e. non-performing loans and repossessed property - at full value rather than at a discounted (for what they are actually worth) amount (say, 20 or 30 cents on the dollar).
The fat bankers have used some of their booty to buy Treasuries (what the Fed wants). But a sizable chunk has been plowed into the stock market, creating another massive bubble (which appears about to pop), and paid to officers as bonuses for brilliant management (by screwing Uncle Sam). Very little has actually gone to bolster the economy.
Adding insult to injury, the Feds do not count the money spent this way as cash outflows contributing to the deficit. Their rationale - it will all be paid back sometime and therefore is not really cash out of pocket.
Underlying all of this is the Keynesian hope that the "stimulus" will enable the economy to grow large enough and fast enough to pay everything back quickly. If they are wrong, and there is no instance in history where this has worked, then the United States is in for the mother of all economic corrections including, in all likelihood, hyperinflation.
To add to that, I believe an his "grandson" Thorton said... to look thin you gotta hand out with fat people!
There's no doubt, its coming.
Thanks for the info.
$5 TRILLION DOLLARS!!!! IS HE OUT OF HIS *@^%$*&! MIND!?!
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