Bernanke's Folly

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machinehead's picture
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Bernanke's Folly

A few lonely voices speak up against Bernanke's QE2 folly:

In some of his strongest words yet, Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said Monday that more expansive monetary policy was a "bargain with the devil."

In the next few months, internal opposition to Mr. Bernanke's approach could intensify as presidents of three regional Fed banks who have expressed skepticism about the plan—Narayana Kocherlakota of Minneapolis, Richard Fisher of Dallas and Charles Plosser of Philadelphia—take voting positions on the Fed's policy-making body. There are 12 regional Fed banks, and five voting seats on the Federal Open Market Committee rotate among them every year, with New York always keeping one.

http://online.wsj.com/article/SB10001424052702303891804575576533845166848.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Since I'm not known for mincing words, let me demolish Bernanke's folly in a single sentence: it's a declaration of intellectual and policy bankruptcy, which will end up shutting the coffin lid on the US dollar's reserve currency role, and ultimately on the Federal Reserve itself.

A perfect example of why the US is transitioning into Third World status is provided by bond manager Bill Gross's commentary:

The Fed, on Wednesday, however, will decide that it is better to keep the patient on life support with an adrenaline injection and a following morphine drip than to risk its demise and ultimate rebirth in another form. We at PIMCO join with Ben Bernanke in this diagnosis. Next Wednesday’s announcement will carry our qualified endorsement.

Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic. Now, however, with growth in doubt, it seems that the Fed has taken Charles Ponzi one step further. One and one-half trillion in checks were written in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves.

I ask you: Has there ever been a Ponzi scheme so brazen? There has not. This one is so unique that it requires a new name. I call it a Sammy scheme, in honor of Uncle Sam and the politicians (as well as its citizens) who have brought us to this critical moment in time. 

http://www.pimco.com/Pages/RunTurkeyRun.aspx

Listen to what Gross (manager of the world's largest bond fund) is saying: I know this is a scam, a 'brazen' scam. But my investment firm approves of it.

This is the demented logic of cultural decline in a nutshell. Opinion leaders like Gross openly admit that they're participating in a dishonest, morally corrupt swindle. But they cheerfully approve of it, and (as in the crass sales pitch which concludes Gross's essay) expect to get away with it on a personal basis, even if everyone else gets hurt. 

With QE2, on the 3rd of November 2010, the US officially bids farewell to any pretensions of being a serious country. With the rule of law in tatters and its central bank engaged in a half-trillion dollar program of official counterfeiting, the US increasingly resembles 'Nigeria with shopping malls.'

Many desperate, hungry Americans will turn to blanketing the rich world (i.e., Europe, Canada, Japan) with spam emails: 'I am the brother-in-law of President Obama's late second cousin. As the executor of a US$ 20 million blocked account, I will pay you $5 million to act as our trusted agent in recieving an urgent international wire transfer of these fund. Please send all your bank account detail by return. Sincerely, Dr. Joseph Nbongo Sixpack, Esq.'

Who needs to burn the constitution, when they're torching the currency? Article 1, Section 10: 'No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts.'  But we're not a state, we're the Federal Reserve -- so ha ha ha! Too bad about your screwed country. Better luck next time ... suckers!

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Re: Bernanke's Folly

"Since I'm not known for mincing words, let me demolish Bernanke's folly in a single sentence: it's a declaration of intellectual and policy bankruptcy, which will end up shutting the coffin lid on the US dollar's reserve currency role, and ultimately on the Federal Reserve itself."

I ask for  forgiveness in advance MH. So what is your point?

Is it an accident?

Incompetence?

Intention?

V

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Re: Bernanke's Folly
V wrote:

  I ask for  forgiveness in advance MH. So what is your point?

Is it an accident?

Incompetence?

Intention?

V  --  I smell fear and desperation.  They are trying to extend and pretend one more time in hopes that something will save us before the walls come tumbling down.  As they see it there isn’t anything else to do.

Machinehead  --  Preach it brother, preach it!

Travlin 

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Re: Bernanke's Folly
V wrote:

"Since I'm not known for mincing words, let me demolish Bernanke's folly in a single sentence: it's a declaration of intellectual and policy bankruptcy, which will end up shutting the coffin lid on the US dollar's reserve currency role, and ultimately on the Federal Reserve itself."

I ask for  forgiveness in advance MH. So what is your point?

Is it an accident?

Incompetence?

Intention!

V

I highlighted the answer.  

Sorry Travlin, it's not desperation.  They know exactly what they're doing.  The intention is to destroy the US Dollar as the reserve currency, in order to bring about a new world currency as the savior to our problems.  Problem/Reaction/Solution.   How everyone doesn't see this by now, is beyond me.

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Re: Bernanke's Folly

Bill Gross took a shot at 'why?' in his essay:

Escaping from a liquidity trap may be impossible, much like light trapped in a black hole. Just ask Japan. Ben Bernanke, however, will try – it is, to be honest, all he can do. He can’t raise or lower taxes, he can’t direct a fiscal thrust of infrastructure spending, he can’t change our educational system, he can’t force the Chinese to revalue their currency – it is all he can do.

So if Ben Bernanke were standing in a glass house, annoyed by a buzzing fly, and the only object in the empty house was a sledgehammer, Bernanke would shatter the walls to silence the insect because 'it's all he can do?'

Even if this claim is correct, there's a severe problem of bad judgment here. And to answer V's question, my point is that it's not merely Bernanke, it's the Fed board, Wall Street and Congress going along with this unhinged program. This is an unmistakable symptom of cultural decline. No serious country issues $500 billion in funny money on a lark, risking a Bubble as it monetizes its own debt.

Neo-Zimbabwean policies will have consequences. As usual, the unemployed, retirees and working folks will be the least able to defend themselves from the dismal fallout of the Fed's government-sponsored Ponzi scheme.

Now that the Reverend Solomon Burke has left us, somebody gotta carry on preachin' ...

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Re: Bernanke's Folly (wow!)

This is a real shocker to me:

Fed Asks Dealers to Estimate Size, Impact of Debt Purchases

The Federal Reserve asked bond dealers and investors for projections of central bank asset purchases over the next six months, along with the likely effect on yields, as it seeks to gauge the possible impact of new efforts to spur growth.

The New York Fed survey, obtained by Bloomberg News, asks about expectations for the initial size of any new program of debt purchases and the time over which it would be completed. It also asks firms how often they anticipate the Fed will re- evaluate the program, and to estimate its ultimate size.

Good grief, if there's ever an indication that the Fed is groping about in the dark, this is it.  I mean, asking the very same people who are going to front run your QE program for their own massive gain, thereby short-circuiting some of the traction, for their 'advice' on how much QE  should be done and when it's going to happen....well...that just strikes me as desperate somehow.

And it makes me queasy.

It's like groggily waking up from a nap and discovering that the captain of your ship is name Hazelwood and he's just announced over the loudspeaker that more refreshments are needed on the bridge.

Good grief.

 

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Re: Bernanke's Folly

This is just strange...smacks of "Rope-a-dope" clumisness.  Strategy is.....???????  These people may be dangerously deluded but they are not stupid.   It is possible that they are just lost, but I don't think so; it certainly does nothing boost anyone's confidence.

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Re: Bernanke's Folly

Super-bear Ambrose E-P has posted a column titled 'The Fed's Impending Blunder.'

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100008351/the-feds-impending-blunder/

'What we have is a glimpse into the Sanctum Sanctorum of money creation, a glimpse of Jesuitical fanaticism,' says Ambrose. 

Quite so. But as bloggers and a small minority of mainstream commentators cry warning, the Fed, Congress, Wall Street and the MSM for the most part are going along with the desperate insanity of QE2.

Take a look around you at all the establishment figures who are quietly going along with QE2, or even praising it. Never let them claim in the future that they weren't warned. You don't need a PhD Econ to see that the Federal Reserve has veered off into La-La Land. Abolishing this failed institution is more urgent than ever.

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Re: Bernanke's Folly

If the Fed's alleged purpose in adding liquidity is to stimulate the economy, this ploy makes it clear their only purpose is to add just enough liquidity to sop up bond sales. 

To me, this means they really are scared of adding too much more liquidity and only want to add "just enough" to avoid rising interest rates or worse, a failed bond auction.  On the other hand, this could just be a ploy to cover their rear ends, by in effect going to the PDs themselves, asking them what to do, and therebye holding themselves blameless.

But it really feels like we are near a turning point, with the Fed left with few options.  The volly shot accross the bow of the Fed yesterday by Gross, Grantham and Orszag seemed to me like exactly that:  a volley shot/warning - call it what you will.  When the world's largest bond holder calls what you, the Fed, is doing a Ponzi scheme, and he's joined by a prominent hedge fund manager, and a former Owebama economic advisor, that's got to raise some eyebrows among at least some of the Fed governors.  We know it wouldn't raise Benbabwe's eyebrows, because they're paralyzed by an inch-thick coating of ink that he can never seem to get off.

 

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Re: Bernanke's Folly - and Bill Gross's Parachute

OK, I don't know who Mike Krieger is, and I've never read him until now, but  his theory on Bill Gross's ranting yesterday is interesting and actually makes some amount of sense. Via Zero Hedge, click here for full article.

Ok, so what is Bill Gross up to you ask?  I will give you my two cents.  This guy is not as fabulously wealthy as he is for being a dope (although this cannot be said for a lot of people in this industry that are merely financial engineers that would become extinct overnight without 0% interest rates but that’s another story).  Bill Gross sees the writing on the wall.  He see the winds of change and is hedging his bets.  He is throwing out a carrot to those that criticize the completely corrupt and ponzi scheme economy and financial system we have today which benefits only those that speculate on the taxpayers dime.  We could end this fake and destructive economy by ending the Fed in its current form (at the very least everything they do must be transparent) and restoring the rule of law.  He attacks the false left/right paradigm and rightly points out that both the Democrat and Republican establishment have sold out the people to line their own pockets.  In the second quote he actually explores the notion that “our paper-based foundation of wealth deserves to be buried.”  Then finally he points out what many others have but almost no one is the mainstream ever admits.  The U.S. government is running a giant ponzi scheme with regard to its debt.  Hmmm do you want to own gold or treasuries?

Truth be told, what Bill Gross did in this letter is to create the ultimate hedge for himself.  He didn’t say these things earlier when they were just as true as they are today and certainly must have been clear to someone of his intelligence.  He said it now.  He said it now because he can see the writing on the wall.  The important thing is not that he ultimately defends what the Fed is doing (which he unfortunately does) but that he felt the need to hedge himself and distance himself from the system.  As he writes in the final paragraph, “We haven’t been around for 35+ years and not figured out a way to avoid the November axe. We are a survivor and our clients are not going to be Turkeys on a platter.”  Indeed, the axe is going to fall on the oligarchs and if you don’t want to be a turkey on a platter you had better choose sides and fast.  

 

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Re: Bernanke's Folly

Mark Gilbert at Bloomberg throws his hat in with the skeptics, in an essay provocatively titled 'Insane Fed Should Beware of Unquantifiable Outcomes':

Oct. 28 (Bloomberg) -- Albert Einstein defined insanity as doing the same thing repeatedly and expecting different outcomes. The crazy gang at the Federal Reserve should heed those words when debating how much more market manipulation to inflict on the world of fixed income.

The worrisome thing about so-called quantitative easing -- a concept still novel enough to mean whatever the Humpty-Dumptys in central banking want it to -- is that its consequences remain unquantifiable, and the perceived need for more central-bank purchases of securities should make investors uneasy.

Central banks are now one-trick ponies, stuck in a financial groundhog day with no fresh ideas. Their willingness to sacrifice their principles not only undermines their hard-won independence, it also allows their political masters to avoid the hard work of structural reform that might generate a genuine recovery.

When the law of unintended consequences kicks in, the nasty surprise is, almost by definition, unforeseen and unpredictable. I struggle to see how this movie won’t end badly.

http://noir.bloomberg.com/apps/news?pid=20601039&sid=a6bg4BtSgZMc

QE2 is a fresh milestone in the secular decline of the United States. It is so unforgivably wrong, misguided and stupid that the only appropriate response is the nuclear option: abolish the Federal Reserve.

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Re: Bernanke's Folly

Farmer, that's an excellent article by Mike Krieger. Here's another quote from it:

“I was just following orders” will not cut it when the dollar collapses and Disneyland shuts down.  There have not been any major arrests and people have seemingly gotten away with all their frauds and crimes.  This too will change and 2011 will represent a change in trend in this regard.  We have entered the terminal phase of this ponzi scheme economy and those responsible for its creation and its continued support at the expense of the vast majority of the populace will see their foul deeds rise to the surface.

Krieger says that Bill Gross, in condemning QE2 as a Ponzi scheme and the Democratic/Republican duopoly as a swindle that's unfit to govern, is hedging his future.

Maybe. But then Gross goes right on to endorse the bipartisan QE2 Ponzi scheme which he just criticized. Where's the coherence?

When I say Gross's stance reeks of Third World mentality, I have a specific example in mind. Paul TerHorst, a US expat in Argentina, described his attempt to obtain a visa to visit Paraguay. The airline required a Paraguayan visa to book the ticket. But the Paraguayan embassy required a round-trip ticket to issue the visa.

TerHorst asked to discuss his problem with the ambassador, a cultured man who invited him into his office. Told of TerHorst's dilemma, the ambassador smiled sympathetically as if to say 'yes, it's a ridiculous Catch-22,' and offered TerHorst a cigar. But the ambassador did not at all see it as his responsibility to remedy the absurd situation. He simply found it drolly amusing.

Much like the Paraguayan ambassador, Bill Gross admits that QE2 is corrupt and absurd. But he cheerfully expects himself and his customers to profit from it.

'Have a cigar, pal. And SMILE! I'm alright.'

 

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Re: Bernanke's Folly
LogansRun wrote:
V wrote:

"Since I'm not known for mincing words, let me demolish Bernanke's folly in a single sentence: it's a declaration of intellectual and policy bankruptcy, which will end up shutting the coffin lid on the US dollar's reserve currency role, and ultimately on the Federal Reserve itself."

I ask for  forgiveness in advance MH. So what is your point?

Is it an accident?

Incompetence?

Intention!

V

I highlighted the answer.  

Sorry Travlin, it's not desperation.  They know exactly what they're doing.  The intention is to destroy the US Dollar as the reserve currency, in order to bring about a new world currency as the savior to our problems.  Problem/Reaction/Solution.   How everyone doesn't see this by now, is beyond me.

I think this is a distinct possibility.  However, is it not just as (or more) likely it's a combination of all three? 

Accident.... we have a Fed Chairman (and most Fed officials) that are so confident that he knows "how the economy works", and by hell or high water he will stick to his guns and what "should work".  Only after the horrible crisis trashes the country will they say, "we misjudged the situation... it was an honest accident."

Incompetence.... for decades Congress cared more about getting re-elected and sponging off the taxpayer than they do about getting the fiscal house in order, and their inability or unwillingness to acknowledge the problem in a sense passes the buck to the Federal Reserve. 

Intention.... certain wealthy interests see QE as a great way to line their pockets thus will endorse it to the accident and incompetence crowds, and are confident that when things are about to finally turn south they can reallocate their money elsewhere into better stores of value before everyone else.  Perhaps their nominal wealth will still take a hit, but if they can move before everyone else their relative wealth to everyone else stands to increase. 

As for plans for a truly global reserve currency, I can see how all three might find the idea palatable or even preferrable.  The accident and incompetence folks will see it as a chance to maintain the status quo, not to mention getting a "fresh start" from their previous screwups ("mulligan!").  As for the "intentional" players, putting in place a global currency is simply the most convenient way to continue their game, seeing as no other currency seems up to the task of a replacement reserve currency (or at least potential nations in question might not be as cooperative as they prefer).  As a bonus they might even have more control over a new global currency than they did over the dollar, allowing them to skim more off the top.

So perhaps the driver behind it all really depends on which party we're talking about.  I can see some interests with an agenda to see the dollar topple to be replaced by a new global currency, but I don't see the need to have all parties in on such a plan.  All that's necessary is to allow or subtly encourage other (selfish and/or clueless) interests to do go in a direction they're likely to move in anyway. 

Just a thought.

- Nickbert

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Re: Bernanke's Folly

Here's an example of their "solution" in the Problem/Reaction/Solution system.

http://www.csmonitor.com/Business/The-Daily-Reckoning/2010/1028/Is-hard-currency-on-its-way-out-Introducing-the-new-virtual-world-currency

nickbert wrote:
LogansRun wrote:
V wrote:

"Since I'm not known for mincing words, let me demolish Bernanke's folly in a single sentence: it's a declaration of intellectual and policy bankruptcy, which will end up shutting the coffin lid on the US dollar's reserve currency role, and ultimately on the Federal Reserve itself."

I ask for  forgiveness in advance MH. So what is your point?

Is it an accident?

Incompetence?

Intention!

V

I highlighted the answer.  

Sorry Travlin, it's not desperation.  They know exactly what they're doing.  The intention is to destroy the US Dollar as the reserve currency, in order to bring about a new world currency as the savior to our problems.  Problem/Reaction/Solution.   How everyone doesn't see this by now, is beyond me.

I think this is a distinct possibility.  However, is it not just as (or more) likely it's a combination of all three? 

Accident.... we have a Fed Chairman (and most Fed officials) that are so confident that he knows "how the economy works", and by hell or high water he will stick to his guns and what "should work".  Only after the horrible crisis trashes the country will they say, "we misjudged the situation... it was an honest accident."

Incompetence.... for decades Congress cared more about getting re-elected and sponging off the taxpayer than they do about getting the fiscal house in order, and their inability or unwillingness to acknowledge the problem in a sense passes the buck to the Federal Reserve. 

Intention.... certain wealthy interests see QE as a great way to line their pockets thus will endorse it to the accident and incompetence crowds, and are confident that when things are about to finally turn south they can reallocate their money elsewhere into better stores of value before everyone else.  Perhaps their nominal wealth will still take a hit, but if they can move before everyone else their relative wealth to everyone else stands to increase. 

As for plans for a truly global reserve currency, I can see how all three might find the idea palatable or even preferrable.  The accident and incompetence folks will see it as a chance to maintain the status quo, not to mention getting a "fresh start" from their previous screwups ("mulligan!").  As for the "intentional" players, putting in place a global currency is simply the most convenient way to continue their game, seeing as no other currency seems up to the task of a replacement reserve currency (or at least potential nations in question might not be as cooperative as they prefer).  As a bonus they might even have more control over a new global currency than they did over the dollar, allowing them to skim more off the top.

So perhaps the driver behind it all really depends on which party we're talking about.  I can see some interests with an agenda to see the dollar topple to be replaced by a new global currency, but I don't see the need to have all parties in on such a plan.  All that's necessary is to allow or subtly encourage other (selfish and/or clueless) interests to do go in a direction they're likely to move in anyway. 

Just a thought.

- Nickbert

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Re: Bernanke's Folly

 

"There is the possibility... that after the rate of interest has fallen to a certain level, liquidity preference is virtually absolute in the sense that almost everyone prefers cash to holding a debt at so low a rate of interest. In this event, the monetary authority would have lost effective control."

John Maynard Keynes, The General Theory

......The belief that an increase in the money supply will result in an increase in GDP relies on the assumption that velocity will not decline in proportion to the increase in money. Unfortunately for the proponents of "quantitative easing," this assumption fails spectacularly in the data - both in the U.S. and internationally - particularly at zero interest rates.

How to spot a liquidity trap

The chart below plots the velocity of the U.S. monetary base against interest rates since 1947.

Few theoretical relationships in economics hold quite this well. Recall that a Keynesian liquidity trap occurs at the point when interest rates become so low that cash balances are passively held regardless of their size. The relationship between interest rates and velocity therefore goes flat at low interest rates, since increases in the money stock simply produce a proportional decline in velocity, without requiring any further decline in yields. Notice the cluster of observations where interest rates are zero? Those are the most recent data points.

 

http://www.hussmanfunds.com/wmc/wmc101025.htm

While velocity and cash flow are too separate and distinct concepts they are linked in reality.  When borrowers began defaulting on loans at a rate faster than new loans were being created the problems began - actually you could see it coming as early as 2006 in a real sense and it was highly predictable for years before - though the timing was uncertain.  They kept lowering loan standards and practices until they simply ran out of greater fools. 

Ben is drowning in a corner from which there is no escape.

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Re: Bernanke's Folly

Gonzalo Lira: Signs Hyper-Inflation is Arriving:

"He also pointed out that, with higher commodity costs and lower consumption, companies are going to be between the Devil and the deep blue sea. My own take is, if you can’t get more customers, then you’re just gonna have to charge more from the ones you got."

http://gonzalolira.blogspot.com/

Well speak of the devil! I picture Bernanke, Greenspan, senior execs of the banking cartel, in the fourth circle of Hell. Not that I actually believe any of this, but it's a pleasant visualization. I prefer it over "being in the moment", or imagining myself wrapped in a rainbow, manifesting my dreams. Nah...For deep relaxation and peace of mind, this works for me!

Wikipedia--Dante's Inferno

"… I saw multitudes
to every side of me; their howls were loud
while, wheeling weights, they used their chests to push.
They struck against each other; at that point,
each turned around and, wheeling back those weights,
cried out: Why do you hoard? Why do you squander?' "[17]

The contrast between these two groups leads Virgil to discourse on the nature of Fortune, who raises nations to greatness, and later plunges them into poverty, as she shifts "those empty goods from nation unto nation, clan to clan."[18] This speech fills what would otherwise be a gap in the poem, since both groups are so absorbed in their activity that Virgil tells Dante that it would be pointless to try to speak to them – indeed, they have lost their individuality, and been rendered "unrecognizable"[19] (Canto VII).

http://en.wikipedia.org/wiki/Inferno_%28Dante%29

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Re: Bernanke's Folly

"The contrast between these two groups leads Virgil to discourse on the nature of Fortune, who raises nations to greatness, and later plunges them into poverty, as she shifts "those empty goods from nation unto nation, clan to clan."[18] This speech fills what would otherwise be a gap in the poem, since both groups are so absorbed in their activity that Virgil tells Dante that it would be pointless to try to speak to them – indeed, they have lost their individuality, and been rendered "unrecognizable"[19] (Canto VII)."

Ah yes AP...  Ain't wikipedia just grand.  Just a few mouse clicks and we instantly raise the bar.  Talk about "living in the moment".  Thanks for this.  It really encapsulated the lucid and through provoking discussion set by LogansRun, Machinhead, Martenson, et al. and made it SO MUCH clearer for me.  

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Re: Bernanke's Folly
zoticus wrote:

"The contrast between these two groups leads Virgil to discourse on the nature of Fortune, who raises nations to greatness, and later plunges them into poverty, as she shifts "those empty goods from nation unto nation, clan to clan."[18] This speech fills what would otherwise be a gap in the poem, since both groups are so absorbed in their activity that Virgil tells Dante that it would be pointless to try to speak to them – indeed, they have lost their individuality, and been rendered "unrecognizable"[19] (Canto VII)."

Ah yes AP...  Ain't wikipedia just grand.  Just a few mouse clicks and we instantly raise the bar.  Talk about "living in the moment".  Thanks for this.  It really encapsulated the lucid and through provoking discussion set by LogansRun, Machinhead, Martenson, et al. and made it SO MUCH clearer for me.  

Thanks so much Zoticus, I am SO HAPPY you liked my post. I HOPE you post often!

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Re: Bernanke's Folly (wow!)
cmartenson wrote:

This is a real shocker to me:

Fed Asks Dealers to Estimate Size, Impact of Debt Purchases

The Federal Reserve asked bond dealers and investors for projections of central bank asset purchases over the next six months, along with the likely effect on yields, as it seeks to gauge the possible impact of new efforts to spur growth.

The New York Fed survey, obtained by Bloomberg News, asks about expectations for the initial size of any new program of debt purchases and the time over which it would be completed. It also asks firms how often they anticipate the Fed will re- evaluate the program, and to estimate its ultimate size.

Good grief, if there's ever an indication that the Fed is groping about in the dark, this is it.  I mean, asking the very same people who are going to front run your QE program for their own massive gain, thereby short-circuiting some of the traction, for their 'advice' on how much QE  should be done and when it's going to happen....well...that just strikes me as desperate somehow.

And it makes me queasy.

It's like groggily waking up from a nap and discovering that the captain of your ship is name Hazelwood and he's just announced over the loudspeaker that more refreshments are needed on the bridge.

Good grief.

 

I find this post somewhat puzzling. As the owner of this site and one who stated that "The Creature from Jekyll Island" is the book that started this particular ball rolling. this seems to be a rather plain vanilla response. Come to think of it I don't recall much in the way of deep criticism of the Fed but I don't read everything here so maybe I am missing something.

is the Fed an international cartel of mega banks? Is it an unconstitutional power grab? Should it be abolished? At least one inquiring mind would like to know.

V

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Re: Bernanke's Folly

Oh do not worry.  In more ways than one.  There are so many documents at my disposal.  Mea culpa.  I got excited by the possibilities. 

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Re: Bernanke's Folly
zoticus wrote:

  Mea culpa.  I got excited by the possibilities. 

Well, like, carpe diem, Dude!

http://en.wikipedia.org/wiki/Carpe_diem

 

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machinehead
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Re: Bernanke's Folly

As ol' Dante 'Poetry Slammah' Alighieri used to say (I'm paraphrasing slightly), 'Remember next Tuesday, for it is the beginning of always.'

Not that I care which faction of gangsters prevails, but the Fedsters might:

After the Republican victory things will change. The Fed will be hamstrung, as Ron Paul, a conservative standard-bearer and harsh critic of the Fed, will head the sub-committee overseeing its actions.

Liquidity expansion or new programs will probably drop sharply under his watch. With the Republican dominance, fiscal and monetary support will not be quickly supplied, which implies a stronger dollar. Fiscal stimulus is being withdrawn dramatically in Europe and the Eurozone is on its way to a recession as well.

Although the Euro-authorities will be reluctant to act until a crisis rattles them, Greece could do it again. As the fiscal austerity begins to bite, the ECB will eventually be forced to further inject liquidity into the banking systems and support them too. 

As the US authorities turn to a tighter monetary and fiscal policy, driving the country into a recession, causing the US and its banking system to withdraw liquidity forcing the dollar higher, the ECB will be forced to be more accommodative. Our analysis argues that the month of November will see the flash point that begins to reverse the markets’ optimistic course.

http://www.zerohedge.com/article/john-taylor-november-will-see-flash-point-begins-markets-reversal

We've all seen those kabuki-show committee hearings, where Bernanke smiles indulgently at Ron Paul's hardball questions, as if he's a harmless eccentric. But with Ron Paul chairing the subcommittee and his party in the majority, Bernanke won't be so contemptuously dismissive -- not if he wants to retain the Fed's exorbitant privileges.

For sure, Ron Paul will be renewing his 'audit the Fed' push, including a thorough investigation of how much gold is actually on hand at 33 Liberty Street, New York and at Fort Knox, Kentucky. 

No wonder Banzai Ben is acting a little antsy these days. Ron 'Joe Friday' Paul is on his tail, demanding to know 'just the facts, ma'am,' as Bernanke contemplates his chances of giving House investigators the slip in a flowery dress and a wig. As Bernanke makes a run for the door, Ron Paul winks at the camera: 'Who WAS that bearded lady?

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machinehead
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Re: Bernanke's Folly

In yet another anti-QE2 editorial at Bloomberg, gold fund manager John Hathaway takes a sledgehammer to Bernanke's delusions:

Oct. 29 (Bloomberg) -- The world’s monetary system is in the process of melting down. We have entered the endgame for the dollar as the dominant reserve currency, but most investors and policy makers are unaware of the implications.

The only questions are how long the denouement of the dollar reserve system will last, and how much more damage will be inflicted by new rounds of quantitative easing or more radical monetary measures to prop up the system.

The prospects for an orderly unwinding of the extreme posture of global monetary policy are zero. Bernanke, Jean- Claude Trichet and Mervyn King, his counterparts in Europe and the U.K. respectively, are huddling en masse upon the most precarious perch in the history of monetary affairs. These alleged guardians of monetary stability, in their attempts to shore up the system, have simply created the incinerator for paper money. We are past the point of no return. Quantitative easing may well become a way of life.

The breakdown of the monetary system will be chaotic. When inflation commences, it will be highly disruptive. The damage to fixed-income assets will seem instantaneous. Foreign-exchange markets will become dysfunctional. The economy will become even more fragile and unpredictable.

http://noir.bloomberg.com/apps/news?pid=20601010&sid=aLigPpbxbK24

Prosecute the Federal Reserve fraudsters ... or prepare for a financial future that will be nasty, poor, brutish and short.

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compinthegroove
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Posts: 113
Re: Bernanke's Folly
LogansRun wrote:

Here's an example of their "solution" in the Problem/Reaction/Solution system.

http://www.csmonitor.com/Business/The-Daily-Reckoning/2010/1028/Is-hard-currency-on-its-way-out-Introducing-the-new-virtual-world-currency

nickbert wrote:
LogansRun wrote:
V wrote:

"Since I'm not known for mincing words, let me demolish Bernanke's folly in a single sentence: it's a declaration of intellectual and policy bankruptcy, which will end up shutting the coffin lid on the US dollar's reserve currency role, and ultimately on the Federal Reserve itself."

I ask for  forgiveness in advance MH. So what is your point?

Is it an accident?

Incompetence?

Intention!

V

I highlighted the answer.  

Sorry Travlin, it's not desperation.  They know exactly what they're doing.  The intention is to destroy the US Dollar as the reserve currency, in order to bring about a new world currency as the savior to our problems.  Problem/Reaction/Solution.   How everyone doesn't see this by now, is beyond me.

I think this is a distinct possibility.  However, is it not just as (or more) likely it's a combination of all three? 

Accident.... we have a Fed Chairman (and most Fed officials) that are so confident that he knows "how the economy works", and by hell or high water he will stick to his guns and what "should work".  Only after the horrible crisis trashes the country will they say, "we misjudged the situation... it was an honest accident."

Incompetence.... for decades Congress cared more about getting re-elected and sponging off the taxpayer than they do about getting the fiscal house in order, and their inability or unwillingness to acknowledge the problem in a sense passes the buck to the Federal Reserve. 

Intention.... certain wealthy interests see QE as a great way to line their pockets thus will endorse it to the accident and incompetence crowds, and are confident that when things are about to finally turn south they can reallocate their money elsewhere into better stores of value before everyone else.  Perhaps their nominal wealth will still take a hit, but if they can move before everyone else their relative wealth to everyone else stands to increase. 

As for plans for a truly global reserve currency, I can see how all three might find the idea palatable or even preferrable.  The accident and incompetence folks will see it as a chance to maintain the status quo, not to mention getting a "fresh start" from their previous screwups ("mulligan!").  As for the "intentional" players, putting in place a global currency is simply the most convenient way to continue their game, seeing as no other currency seems up to the task of a replacement reserve currency (or at least potential nations in question might not be as cooperative as they prefer).  As a bonus they might even have more control over a new global currency than they did over the dollar, allowing them to skim more off the top.

So perhaps the driver behind it all really depends on which party we're talking about.  I can see some interests with an agenda to see the dollar topple to be replaced by a new global currency, but I don't see the need to have all parties in on such a plan.  All that's necessary is to allow or subtly encourage other (selfish and/or clueless) interests to do go in a direction they're likely to move in anyway. 

Just a thought.

- Nickbert

LR, spot on, as usual.  I have a sister-in-law who plays the same crap game- she creates a problem behind the scenes and then tries to parade as the hero when she comes up with a solution.  I don't trust her any more than I trust a central banker.  This s*** is getting really old.  Seeing so many smart people on this forum so oblivous to this con doesn't leave me very hopeful that we'll get out of this mess.

From the article you posted: "The new virtual world currency is an index of the world's 15 largest economies, weighted by their gross domestic product, adjusted for purchasing power parity." 

Translation:  put all the biggest fiat turds in the pot and stir vigorously.  Does this sound like a solution to you?

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