Jeckyl Island Celebrates Its Second Century

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machinehead's picture
machinehead
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Jeckyl Island Celebrates Its Second Century

As serious people discuss how to reform the global monetary regime, a convocation of clueless clowns celebrates the centennial of its misbegotten, undemocratic beginnings:

Nov. 8 (Bloomberg) -- The coastal Georgia island where a secret 1910 meeting produced a blueprint for the Federal Reserve led central bankers 100 years later to consider the lessons of history as they move into new monetary territory.

On the island, the organizers ensured people were surrounded by Fed history. Arriving attendees checked in at the Jekyll Island Club Hotel’s Federal Reserve Room, adorned with portraits of the “Six Men From the Elite of the Banking and Financial World” who in November 1910 avoided reporters, retreated to the isolated resort and devised a plan for a central bank.

The Jekyll Island talks, prompted by the Panic of 1907, produced the Aldrich Plan, named for Senator Nelson Aldrich of Rhode Island. The plan proposed a central bank with regional reserve banks, forming the core of what would become the Fed. While the Senate didn’t act on the plan, in 1913 Congress approved a Fed that ensured federal control of the system with some bank representation.

The latest conference took place in an indoor tennis court turned into a banquet hall and named after financier John Pierpont Morgan. Toward the rear of the hall stood an exhibit on the 1910 expedition, created by the Jekyll Island Museum for the conference.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aBTM9TuzhmXI&pos=

How ironic that the Fed is planting the seeds of its own destruction, on the hundredth anniversary of the conspiracy which founded it:

Bernanke used an unscripted appearance at the conference to expand his defense of the Fed’s Nov. 3 decision to buy $600 billion of Treasuries in a bid to lower unemployment after reducing the benchmark rate almost to zero in 2008 and purchasing $1.7 trillion of securities through March 2010.

“There is not really in my mind as much discontinuity as people think” with past policies, Bernanke said in a panel discussion with his predecessor, Alan Greenspan, and former New York Fed President E. Gerald Corrigan. “The standard considerations suggest that we should be using expansionary monetary policy, and that was the purpose of the action. Again, nothing extraordinary, just a different set of tools to achieve essentially the same kind of results.”

“It will be at least 50 years before we really understand very well what happened in 2008-2009, and we will be interpreting for another 50 years as to whether the Federal Reserve undertook the right policies or the wrong policies,” Plosser, 62, the Philadelphia Fed chief since 2006, said during an audience discussion at the conference, co-sponsored by the Atlanta Fed and Rutgers University. “There’s a lot of history left to be written.”

Bernanke's adjective 'expansionary' can be translated in standard English as 'inflationary.'

Physicians know that Rule #1 is 'First, do no harm.' Fed guv Plosser says it will be 50 years before the Fed's eggheaded wankers figure out what was going on. 

So what on earth are these harebrained hooligans doing, slinging trillions of thin-air currency onto a raging inferno, just to see whether it will explode? Dastardly vandals! OFF WITH THEIR POINTY HEADS!

Frown

machinehead's picture
machinehead
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Re: Jeckyl Island Celebrates Its Second Century

Dr. John Hussman whales Buffoon Bernanke with a rubber hose:

In response to an Op-Ed piece by Bernanke that was published Thursday morning in the Washington Post -- these are undoubtedly among the most ignorant remarks ever made by a central banker.

Let's do the math.

Historically, a 1% increase in the S&P 500 has been associated with a corresponding change in GDP of 0.042% in the same year, 0.035% the next year, and has negative correlations with GDP growth thereafter (sufficient to eliminate any effect on the long-run level of GDP). Now, even if one assumes - counter to reasonable analysis - that the GDP changes are caused by the stock market changes (rather than stocks responding to the economy), the potential benefit to the economy of even a 10% market advance would be to increment GDP growth by less than half of one percent for a two year period.

Bubble, Crash, Bubble, Crash, Bubble ...

We will continue this cycle until we catch on. The problem isn't only that the Fed is treating the symptoms instead of the disease. Rather, by irresponsibly promoting reckless speculation, misallocation of capital, moral hazard (careless lending without repercussions), and illusory "wealth effects," the Fed has become the disease.

http://hussmanfunds.com/wmc/wmc101108.htm

Although Dr. Hussman doesn't use my label of 'Bubble III,' he says the same thing I do -- in the absence of any competent treatment for a moribund uncompetitive economy, the Federal Reserve's only plan is to create a new bubble.

And just as the previous two Bubbles did, Bubble III eventually will burst, creating a fresh economic crisis as asset values predictably plunge.

Depressions are caused by the preceding Bubble. Bernanke is laying the foundation for Depression III. Hussman has called him on it. My bet is on Hussman's outcome, not Bernanke's. Bernanke is Exhibit A in illustrating why economics is a medieval pseudo-science, populated mostly by deluded charlatans.

agitating prop's picture
agitating prop
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Re: Jeckyl Island Celebrates Its Second Century

Sooo....I guess happy anniversary! Or are congratulations in order, for the mothers of a new a gold backed international currency? The ptb are talking it up through the child bearing lips of the head of the world bank, Robert Zoellick. Cigars anyone?

agitating prop's picture
agitating prop
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Re: Jeckyl Island Celebrates Its Second Century

And the barbarous relic likes what it's hearing! Keep talking Zoellick! It's up over 12.00   to 1405. U.S. Sweet!

jumblies's picture
jumblies
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Re: Jeckyl Island Celebrates Its Second Century

A daft question, no doubt, but I think worth punting out there to be shot down...what are the chances of Bernanke et al backpeddling, given the increasing international vocalisation of dismay? Perhaps not a retreat in word but in deed?

 

jumblies's picture
jumblies
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Re: Jeckyl Island Celebrates Its Second Century

[Reuters] Fed divided on bond buying risks/benefits

(Reuters) - Top officials at the Federal Reserve on Monday sounded differing notes on the central bank's bond-buying program, with one arguing it was an effective way to fight deflation risks and another warning it might need to be curbed.
The remarks from St. Louis Federal Reserve Bank President James Bullard, Dallas Fed chief Richard Fisher, Fed Governor Kevin Warsh and Thomas Hoenig of the Kansas City Fed underscored tensions within the central bank over the wisdom of the decision to buy a further $600 billion in government debt.

 

(Reuters) - Top officials at the Federal Reserve on Monday sounded differing notes on the central bank's bond-buying program, with one arguing it was an effective way to fight deflation risks and another warning it might need to be curbed.

The remarks from St. Louis Federal Reserve Bank President James Bullard, Dallas Fed chief Richard Fisher, Fed Governor Kevin Warsh and Thomas Hoenig of the Kansas City Fed underscored tensions within the central bank over the wisdom of the decision to buy a further $600 billion in government debt.

There certainly seems to be some lively discussion inside the Fed. I wonder what the conversations are like behind closed doors...

 

Farmer Brown's picture
Farmer Brown
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Re: Jeckyl Island Celebrates Its Second Century

So it's going to take them 50-100 years to figure out what 3rd grade math can tell us today!?  Unbelievable!  

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