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Bernanke hints again that inflation is too low

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  • Fri, Nov 05, 2010 - 08:41pm

    #1

    saxplayer00o1

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    Bernanke hints again that inflation is too low

Look at how his thinking on inflation and the economy works in the first story.

 

“JACKSONVILLE, Florida — Federal Reserve Chairman Ben Bernanke said on Friday it was “critical” for global stability that the U.S. economy regain its strength and said that will benefit the dollar.

Answering questions from college students, he was effectively defending the U.S. central bank’s decision to buy $600-billion of U.S. debt, a policy that has drawn scathing comments abroad.

“I think it’s important to emphasize…that a strong U.S. economy, a recovering economy, is critical, not just for Americans but it’s also critical for the global recovery,” Bernanke said.

He said policymakers were fully aware of the dollar’s importance in the global economy as a reserve currency as it made its policy decisions. The dollar has weakened sharply and did so again after this week’s decision on a new round of central bank bond-buying, also called quantitative easing, was unveiled on Wednesday.

“The best fundamentals for the dollar will come when the economy is growing strongly,” Bernanke said. “That’s where the fundamentals come from.”

He told the students that while commodity prices have risen sharply, they were the exception amid generally muted prices for other products and should not cause a serious problem.

Bernanke said there was ample slack in the economy that will prevent producers from being able to fully price costlier commodities into finished products that consumers buy.

He added that once inflation pressures become visible, the U.S. central bank will be ready to modify its current stance of accommodative monetary policy to block inflation. Official interest rates have been near zero for nearly two full years.

For the moment, inflation expectations appear to be quite low, Bernanke said, adding that the Fed was committed to keeping them that way.”

 

“Nov. 5 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said the central bank’s plan to purchase $600 billion in Treasuries is targeted to bring about a more rapid U.S. recovery.

“The Federal Open Market Committee voted to buy additional securities in the open market with the goal of providing more stimulus and we hope bringing about a faster recovery,” Bernanke said today in a speech in Jacksonville, Florida. Unemployment is falling “very slowly” and “inflation is very, very low, probably below the level that is healthy for the economy in the longer term.””

 

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…………………..Here’s his picture, so I win on this game show.

 

 

  • Sat, Nov 06, 2010 - 06:49am

    #2
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Bernanke hints again that inflation is too low

(totally unconnected) *cough*

 Editors choice on the Telegraph yesterday.. intentional irony..? with interesting currency action (relative to static frame-of-reference) gold..

 

 http://www.telegraph.co.uk/culture/8112687/Bonfire-Night-the-joy-ofwatching-money-burn.html

 shadenfreude ?

 Twilight of the papergods…

 

  • Sat, Nov 06, 2010 - 12:32pm

    #3
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Bernanke hints again that inflation is too low

[quote=saxplayer00o1]

Bernanke said there was ample slack in the economy that will prevent producers from being able to fully price costlier commodities into finished products that consumers buy.

[/quote]

I’m not sure that’s a message consistent with his desire to see higher stock prices.

Here’s the translation:  “Corporate profits are going to tank!  Tank, I tell you!!  They’re caught in a price vice. Sell your stocks now!  Now!!  While you still have time!”

  • Sat, Nov 06, 2010 - 12:48pm

    #4
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Bernanke hints again that inflation is too low

Is it too much to suppose that current equity prices are due to corporate profits?  Not being a savy invester, it seems that stock prices might be as much due to idle fiat dollars having no where else to sit.

guess i’ll go fix my combine and finish my beans. Robie

 

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