Posted on 08/25/2009 12:10:00 PM PDT by Palin Republic
Grassley, speaking about the renomination of Federal Reserve Chairman Ben Bernanke to a second term as head of the Fed, asserted that Bernanke's ability to hold down inflation would be the metric by which the Fed's success would be measured.
"We won't know for a year if he's done a good job so far, because he shoveled money out of an airplane to save banks and the financial system," Grassley said in a conference call with Iowa reporters. "But shoveling money out of an airplane to solve problems can be inflationary — in this case, hyperinflationary — if he doesn't start mopping up some of the money that's out there."
Grassley, the ranking member of the Senate Finance Committee, said that inflation as a result from government spending on bailouts could result in inflation rivaling rates in 1980, when it hit a peak of 13.5 percent.
(Excerpt) Read more at briefingroom.thehill.com ...
Deflationary cycle due to contraction “Ka”, inflationary cycle due to Bernake flooding planet with imaginary money “Poom”. Think of a large rock hitting the water (itulip.com theory).
Commercial and residential real estate: DOA and going down.
Unemployment and CPI: Getting the books cooked by the government as both go up, up, up.
TBILLS: Foreign governments have quit buying them and the FED is monetizing our debt to stay afloat.
If the dollar ceases to be the world reserve currency for any reason: game over, welcome to third world status.
Retail and service sector will be survival of the fittest, lower quality goods and less of them will be sold at the same or higher price to fight over cash strapped customers. Inflation erodes purchasing power as the economy contracts, welcome to the 70’s on steroids.
hyperinflation is exactly what obama is pushing us to.
does he realize this?
is he that blind?
or does he think that the bottom will never fallout?
Do you know who the individuals were that cooked up the idea of $700 billion bailouts last year and convinced Bush to plead for it?
Paulson (dem)
Geitner (dem)
Bernanke (dem)
What is that makes you think we’ll see better times ahead??
>Inflation in the 80s was bad but it wasn’t, I don’t think, “hyperinflation”.<
I agree with that, but this time around it will be. as soon as zeros spending catches up
I'm not sure who needs remedial economics, but...
SOME markets, such as housing, are experiencing deflation; overall, the economy is NOT.
We've got a real mess on our hands, and NO ONE knows for sure what's going to happen. If history is any guide, I'm betting on a Weimar Republic situation beginning sometime next year.
The advice to put your money into real estate, and commodities is prudent.
Paulson supported Bush in '04. His wife is the one who gives to liberal causes. He hasn't said what he is so it's wrong to say he's a Dem.
However, New York Daily News and many others say Bernanke is a Repub albeit moderate.
Thus, your info about those 2 being Dems seems to be bad.
Geitner's a weasel.
What makes me think we'll see better times ahead? The stock market has come up 3,000 points from the bottom this year. That's almost a 100% recovery on the DOW. And much of that increase is because OZero's hugest socialist programs are NOT going thru.
He's becoming a maimed duck only 7 months into his Presidency. That's what makes me think better times are ahead.
The Fed is selling Treasury securities on behalf of the Federal government, so these sales do not directly affect the Fed's balance sheet.
The Fed does purchase Treasury securities from Primary Dealers (really big banks) every so often through "POMO's" (Permanent Open Market Operations). They just bought over $6 billion yesterday.
The purchase yesterday meant that the Fed created $6 billion "out of thin air" to give to a Primary Dealer (someone like Goldman Sachs).
The Primay Dealer receives a credit to their Fed account for $6 billion - which they are currently using to artificialy prop up the equities markets (yes, this "rally" is a fraud).
The Fed receive $6 billion of Treasury securities from the Primary Dealer in return. This counts as a $6 billion asset on the Fed's balance sheet.
Balance sheets must stay "in balance" - meaning their has to be a $6 billion liabiity created. In the past, the Fed has increased "excess reserves" (a liability) to the Primary Dealers to offset the asset purchase. This is how they're able to purchase hundreds of billions of Mortgage-backed securities and still keep their balance sheet intact.
The Fed has taken a different direction with their Treasury security purchases. They have decreased their "currency swap" assets by the same amount in order for things to even out. This means that foreign countries now have fewer U.S. dollars being "swapped" for their currency, which can affect international trade since most of it is done in dollars.
To make a long story longer, the Fed carries a liability entry on their balance sheet that is "currency in circulation". This number has not gone up very much since early last year.
It is impossible to have major inflation unless the amount of currency circulating in the economy goes way up - it hasn't.
There is a danger that big banks could begin using their "excess reserves" to fund loans. This would definitely drive inflation, since it would cause more money to circulate.
However, the Fed is currently paying interest on those excess reserves that discourages big banks from lending it out into the economy - or even lending it to other banks as an overnight loan.
Aren't you sorry you asked? ;-)
What bonds do you think the Fed is selling?
(and accumulating so much debt) would be very inflationary
If the Fed sells bonds, they are reducing the money supply. That would be deflationary, not inflationary.
Inflation in the 80s was bad but it wasn’t, I don’t think, “hyperinflation”.
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Well, Richard Nixon would have thought so, I think inflation was running at maybe four percent max when he deemed it necessary to slap on wage and price controls.
You're very wrong on this my FRiend. I've been writing a daily email Economic Update since last September that has laid out in very plain detail why the entire economy is seeing wealth destruction.
If history is any guide, I'm betting on a Weimar Republic situation beginning sometime next year.
The Weimar Republic debate is apples and oranges. Germany's debt was based on a foreign currency to them. Our debt is based on the U.S. dollar. We will never see a Weimar Republic - it's against the goal of the big banks - which is to keep us as debt slaves.
The advice to put your money into real estate, and commodities is prudent.
Commodities and real estate are horrible investments right now - yes, even precious metals. They both will be dropping heavily as the U.S. dollar strengthens. Yes, I know that hearing the words "strengthening U.S. dollar" doesn't make sense to most people.
Let me ask you a question. What did the U.S. dollar do against all other major currencies last September when the bottom dropped out of everything? Answer: it strengthened.
If you're right, then we should see the Dow at 20,000 before very long.
More accurately, double digit inflation occured in 1979, 1980 and 1981.
Telling the truth about Commies is partisan...don't you know.
No, it's because the Primary Dealers (big banks) have been propping up the equities markets artificially.
That, combined with the fact that the FASB (Federal Accounting Standards Board) changed their rules last March to allow banks to "mark to fantasy" - meaning banks are now able to hide their very real losses.
Have you wondered why the big banks reported horrendous first quarter 2009 results and then great second quarter results?
bfl
Really? So in your estimation when is this new house of cards due to come tumbling down?
Working just as planned by Barry, SEIU, ACORN, APOLLO, and the other radical factions that surround Barry.
They must destroy the current system(s) before they can reform it in the image they so desire to form it into.
After the Fed finishes buying their $300 billion of Treasury securities (not much longer), and either stops or slows down their purchases of agency debt and mortgage-backed securities (not sure when this will be).
When those two things happen then our economy will crumble.
Things might happen faster than that if China's economy implodes (which I completely expect).
Have you ever wondered why the trading volume on the exchanges has ramped downwards since March, while the indexes have gone up?
I wish you well if you're back into the markets, but I hope you're paying close attention to them. It can, and most likely will, fall fast when it happens.
So a Primary Dealer with ultra safe Treasury Securities is going to sell them to the Fed, take the money and invest it in risky stocks because...........?
Have you wondered why the big banks reported horrendous first quarter 2009 results and then great second quarter results?
Because their bond holdings stopped going down and started going up?
IIRC, by October.
When those two things happen then our economy will crumble.
Why?
Have you ever wondered why the trading volume on the exchanges has ramped downwards since March, while the indexes have gone up?
More buyers than sellers?
These folks are doing major harm to our counry - no doubt.
However, they are not the ones that are driving this deflationary spiral. It's the big banks, and they're doing it through the FOMC (Federal Open Market Committee) and the Fed.
The Federal government loves inflation. The big banks put up with inflation for a period of time to build economic bubbles, but then pull credit out from under economies in order to steal the wealth and create more debt slaves.
The Federal government is getting hurt by the big banks moves as well. They need money to keep their tyrannical power. Where are they going to get it?
That's what this "Health Care" issue is all about. It has NOTHING to do with doctors, treatment plans, end of life counseling, etc. That's all a ruse for the real purpose - which is to create an ENORMOUS Federal government trust fund that our government can steal from in order to keep the level of dictatorial power they've grown accustomed to. That's it.
The "Cap and Trade" legislation is along the same lines. Our government will use threats of fine and/or imprisonment to force all citizens to succumb to "green" technology - knowing that this will force a new manufacturng bubble that doesn't currently exist from which the government can generate huge revenue.
Carbon credits will become a "tradable" commodity in which the big banks receive large commissions to glean off the top.
Meanwhile, you will work longer hours for less pay.
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