Home » Posts tagged 'Ben Bernanke' (Page 7)

Tag Archives: Ben Bernanke

Even the Fed Admits QE Doesn’t Work

The Vice President of the Federal Reserve Bank of St Louis (Stephen Williamson) writes in a new Fed white paper (as explained by Zero Hedge):

The theory behind Quantitative Easing (QE) is “not well-developed”

The evidence in support of Ben Bernanke’s views on the transmission mechanisms whereby asset purchases affect outcomes are “mixed at best”

“All of [the] research is problematic,” Williamson continues, as “there is no way to determine whether asset prices move in response to a QE announcement simply because of a signalling effect, whereby QE matters not because of the direct effects of the asset swaps, but because it provides information about future central bank actions with respect to the policy interest rate.” In other words, it could be that the market is just reading QE as a signal that rates will stay lower for longer and that read is what drives market behavior, not the actual bond purchases.

“There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed inflation and real economic activity. Indeed, casual evidence suggests that QE has been ineffective in increasing inflation. [Background.] For example, in spite of massive central bank asset purchases in the U.S., the Fed is currently falling short of its 2% inflation target. Further, Switzerland and Japan, which have balance sheets that are much larger than that of the U.S., relative to GDP, have been experiencing very low inflation or deflation.”

…click on the above link to read the rest of the article…

Oops! Philly Fed Admits QE widens inequality

June 11, 2015

Oops! Philly Fed Admits QE widens inequality

Once again, the Federal Reserve proves that it’s the last one to know everything that we knew already. Today’s stunning announcement: The Philadelphia Fed admits they (“may have”) made the wealthy wealthier and Main Street poorer.

Oops. Sorry America.

The Philly Fed insists that “redistributing wealth” to the wealthy isn’t the main idea, but just a potential side effect of stimulus that they can’t do much about.

“Monetary policy currently implemented by the Federal Reserve and other major central banks is not intended to benefit one segment of the population at the expense of another by redistributing income and wealth,” …

“However, it is probably impossible to avoid the redistributive consequences of monetary policy”.

We’re shocked. Shocked, we tell you. It turns out that handing out free money, buying worthless assets at face value and allowing a small cabal of private banks the sole right to access your magic free-money window, “may” have given some financial advantages to “one segment of the population”. But that’s just a side effect of saving the “economy”.

Of course, it’s not just the bankers. The 1% also happen to hold vastly more financial assets than the lower 99% — so they may directly benefit from financial asset-inflating monetary policy.

…click on the above link to read the rest of the article…

The Punch Bowl Stays And The Bubble Keeps Inflating

June 10, 2015

The Punch Bowl Stays And The Bubble Keeps Inflating

It is well known that I don’t think much of the ability of government officials to correctly forecast much of anything. Alan Greenspan and Ben Bernanke have made famously clueless predictions with respect to stock and housing bubbles, and rank and file Fed economists have consistently overestimated the strength of the economy ever since their forecasts became public in 2008 (see my previous article on the subject). But there is one former Fed and White House economist who has a slightly better track record…which is really not saying much. Over his public and private career, former Fed Governor and Bush-era White House Chief Economist Larry Lindsey actually got a few things right.

Back in the late 1990s, Lindsey was one of the few Fed governors to warn about a pending stock bubble, and to suggest that forecasts for future growth in corporate earnings were wildly optimistic. He also famously predicted that the cost of the 2003 Iraq invasion would greatly exceed the $50 billion promised by then Secretary of Defense Donald Rumsfeld, a dissent that ultimately cost him his White House position. (But even Lindsey’s $100-$200 billion forecast proved way too conservative – the final price of the invasion and occupation is expected to exceed $2 trillion).

Now Lindsey is speaking out again, and this time he is pointing to what he sees as a painfully obvious problem: That the Fed is creating new bubbles that no one seems willing to confront or even acknowledge. Interviewed by CNBC on June 8th on Squawk Box, Lindsey offered an unusually blunt assessment of the current state of the markets and the economy. To paraphrase:

…click on the above link to read the rest of the article…

“Bernanke & Greenspan Have Destroyed America” Schiff & Maloney Warn “People Don’t Realize What Is Coming”

June 3, 2015

“Bernanke & Greenspan Have Destroyed America” Schiff & Maloney Warn “People Don’t Realize What Is Coming”

Ali and Frazier, Laurel and Hardy, Mayweather and Pacquiao, Liesman and Santelli, and now Schiff and Maloney. Peter and Mike join clash of the titan-like to discuss their investment strategies and expose the charts the government doesn’t want you to seeas “people like Bernanke are taken seriously still and the people that did predict [the crisis] are dismissed as lunatics half the time.” The wide-reaching conversation covers everything from gold and stocks to The Fed and The Dollar – Bernanke “took the coward’s way out because all he did was exacerbate the problems to postpone the day of reckoning.” The air is coming out of the bubble, they warn, “Bernanke and Greenspan have absolutely destroyed America. People don’t realize what is coming…”

Full transcript below:

Mike: I was in Puerto Rico a little while back and Peter Schiff invited me over to his house and we were just amazed at how we are exactly on the same page when it comes to everything economically. And so he just made a trip out to California near my offices and we decided we’d get together and discuss some of this stuff. So on your travels Peter lately you were just at a show you were speaking. Where were you at?

Peter: I was in Las Vegas. It’s great to see you again Mike. I was speaking to a very main stream audience of hedge fund managers at an annual conference there. And what was very interesting is even though the audience was, as I said, very main stream, and I was on a panel with a lot of very high profile, main stream individuals, the only person that really got applause was me.

…click on the above link to read the rest of the article or view the interview…

Something Smells Fishy

May 30, 2015

SOMETHING SMELLS FISHY

It’s always interesting to see a long term chart that reflects your real life experiences. I bought my first home in 1990. It was a small townhouse and I paid $100k, put 10% down, and obtained a 9.875% mortgage. I was thrilled to get under 10%. Those were different times, when you bought a home as a place to live. We had our first kid in 1993 and started looking for a single family home. We stopped because our townhouse had declined in value to $85k, so I couldn’t afford to sell. In 1995 I convinced my employer to rent my townhouse, as they were already renting multiple townhouses for all the foreigners doing short term assignments in the U.S. We bought a single family home in 1995 with the sole purpose of having a decent place to raise a family that was within 20 minutes of my job.

Considering home prices on an inflation adjusted basis were lower than they were in 1980, I was certainly not looking at it as some sort of investment vehicle. But, as you can see from the chart, nationally prices soared by about 55% between 1995 and 2005. My home supposedly doubled in value over 10 years. I was ecstatic when I was eventually able to sell my townhouse in 2004 for $134k. I felt so smart, until I saw a notice in the paper one year later showing my old townhouse had been sold again for $176k. Who knew there were so many greater fools.

This was utterly ridiculous, as home prices over the last 100 years have gone up at the rate of inflation. Robert Shiller and a few other rational thinking people called it a bubble. They were scorned and ridiculed by the whores at the NAR and the bimbo cheerleaders on CNBC. Something smelled rotten in the state of housing.

…click on the above link to read the rest of the article…

Blogger Ben’s Basically Full Of It

May 5, 2015

Blogger Ben’s Basically Full Of It

Ben Bernanke’s skin is as thin, apparently, as is his comprehension of honest economics. The emphasis is on the “honest” part because he is a fount of the kind of Keynesian drivel that passes for economics in the financially deformed world that the Bernank did so much to bring about.

Just recall that he first joined the Fed way back on 2002 after an academic career of scribbling historically superficial and blatantly misleading monographs about the 1930s. These were essentially zeroxed from Milton Friedman’s monumental error about the cause of the Great Depression. In a word, Friedman and Bernanke pilloried the Fed for not going on a bond buying spree during 1930-1932 and thereby stopping the shrinkage of money and credit.

In fact, excess reserves in the banking system soared by 12X during those four years, interest rates were at rock bottom and the US economy was saturated with idle cash. So there was no financial stringency——not the remotest aspect of a great monetary policy error.

Instead, what actually happened was that the US banking system was massively insolvent after a 12-year credit boom fueled by the Fed’s printing presses. This first great credit bubble arose initially from the Fed’s maneuvers to fund the massive war production surge of 1915-1919 and then from its fostering of a vast domestic and international credit bubble during the Roaring Twenties.

Alas, none of the Fed governors during the 1930-1932 credit contraction had graced the lecture halls of Princeton. But to nearly a man they knew you can’t push on a string, and that a healthy economy requires that busted loans and soured speculations must be purged from the financial system in order for sustainable growth to resume.

…click on the above link to read the rest of the article…

WSJ Slams Bernanke’s Rambling Blog Post: “Stop Blaming Everyone” For Your Mistake

May 3, 2015

WSJ Slams Bernanke’s Rambling Blog Post: “Stop Blaming Everyone” For Your Mistake

The mainstream is beginning to sound a lot like some fringe blog… A week after the world’s largest sovereign wealth fund unleashed a tirade against high-frequency trading and monetary policy distortions, The Wall Street Journal has penned an Op-Ed ramping up its war against Bernanke (and The Fed). What next? Cats living with dogs, mass hysteria, the dead rising from the grave?

Bernanke threw the first punch… and it landed. Now The Wall Street Journal counters with a colossal combination…

It’s nice to know we’re being read, and Thursday’s editorial on “The Slow-Growth Fed” sure got a rise out of Ben Bernanke. The former Federal Reserve Chairman turned blogger turned Pimco adviser wrote to defend the central bank and by implication his policies as innocent of responsibility for subpar economic growth.

This is fun, so let’s parse the Revered One’s arguments. First, Mr. Bernanke accuses us of “forecasting a breakout in inflation” at least since 2006. The central banker is getting into the polemical swing, but he’s wild with that one. We’re not always right. But we’ve been careful not to join some of our friends in predicting inflation from the Fed’s post-crisis policies. We’ve written that we are in uncharted monetary territory with risks and outcomes we lack the foresight to predict.

Our view has been that the Fed’s first round of quantitative easing was necessary to stem the financial panic—and that it worked. We were skeptical of the later bouts of QE, and in our view these have been notably less successful in helping the economy return to robust health. Asset prices are up and the wealthy are better off, but the working stiff is still waiting for the economic payoff.

…click on the above link to read the rest of the article…

Modern-Day Monetary Cranks and the Fed’s “Inflation” Target

April 18, 2015

Modern-Day Monetary Cranks and the Fed’s “Inflation” Target

One Bad Idea After Another

Ben Bernanke is frequently in the news these days. The latest occasion concerns his opinion on the Fed’s “inflation” target, i.e., the target for the speed at which money should be debased relative to consumer goods in order to finally attain centrally planned economic nirvana.

Price inflation is currently deemed to be “too low” by our bien pensants, in spite of the fact that the broad US money supply TMS-2 has more than doubled since 2008 (as of March, it is very close to $11 trillion, up from $5.3 trn. in early 2008). If recent CPI data are to be believed (which requires a bit of a leap of faith), consumers may actually get slightly more goods and services for their money henceforth. What an unimaginable horror!

CPI dips ever so slightly into negative territory year-on-year – the nightmare of central planners around the world – click to enlarge.

Bloomberg reports that Ben Bernanke has an idea how to combat this terrifying development. Obviously, with the CPI’s rate of change dipping a few basis points into negative territory, the end of the world is practically at hand, so something needs to be done pronto.

Bernanke delivered his remarks at a conference sponsored by another economic central planning institution, the IMF. The people running this surplus to requirement bureaucratic vampire den are dreaming of the day when the IMF will become the global central bank, in line with Keynes’ “Bancor” idea. This would allow fiat money inflation on a nigh unprecedented scale, as currencies would no longer compete and be comparable. However, we digress.

…click on the above link to read the rest of the article…

An Insider’s Take: How the Fed Ruined the Economy

April 11, 2015

An Insider’s Take: How the Fed Ruined the Economy

Let’s start this off with a quote by Ben Bernanke to get your blood boiling:

When the economic well-being of their nation demanded a strong and creative response, my colleagues at the Federal Reserve, policymakers and staff alike, mustered the moral courage to do what was necessary, often in the face of bitter criticism and condemnation.

He has a memoir coming out in October called The Courage to Act. The courage to act!? Artificially inflating the economy with worthless money is about the least courageous thing I can think of.

There was one Fed governor I actually trusted, but he resigned in 2011. His name was Kevin Warsh. Bush appointed him in 2006, making him the youngest Fed governor ever at age 35.

His view is directly in line with people like me and David Stockman. It was appropriate for the Fed to step in with QE1 in late 2008 and early 2009. It kept the banking system from totally melting down out of sheer panic. But after that, they should have stepped out of the way and let the free market engineer its own much-needed correction and re-balancing.

That’s why Warsh resigned. He didn’t believe in the Fed’s asinine policies that launched QE2.

Below is an article he ran with Stanley Druckenmiller, founder of Duquesne Capital, in the Wall Street Journal on June 19, 2014. I’ll let him make the argument himself since he does it so eloquently.

Harry

…click on the above link to read the rest of the article…

Why The Mania Is Getting Scary—-Central Bankers Are Running A Doomsday Machine

March 30, 2015

Why The Mania Is Getting Scary—-Central Bankers Are Running A Doomsday Machine

If you need evidence that we are in the midst of a lunatic financial mania, just consider this summary from a Marketwatch commentator as to why markets are ripping higher this morning:

“The dovish comments from both Fed Chairwoman Janet Yellen and People’s Bank of China Governor Zhou Xiaochuan are giving markets a big lift, and in the absence of negative data or news, I imagine this will continue to buoy the markets throughout the session,” Erlam said in emailed comments.

Yellen said gradual hikes are likely this year, but that the central bank will movecautiously……. the PBOC governor said he saw “more room” for China to ease policy if the economy stays soft and inflation continues to weaken.

Its just that frightfully simple. If any of the major central banks anywhere on the planet ease or even hint they might, the robo machines and day traders unleash an avalanche of buy orders and the stock averages jerk higher.

Indeed, Zero Hedge captured the motion succinctly this AM. In keeping with Bernanke’s inaugural blog revelation that 98% of monetary policy consists of “open mouth” operations, the markets leapt upwards on cue. That is, if central banker jaws are flapping, then buy!

…click on the above link to read the rest of the article…

Santelli Stunned As Janet Yellen Admits “Cash Is Not A Store Of Value”

March 28, 2015

Santelli Stunned As Janet Yellen Admits “Cash Is Not A Store Of Value”

Intended warning or unintended slip? After Alan Greenspan’s confessional admission that

“Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it,”

we found it remarkable that during the Q&A after her speech today that Janet Yellen, when asked about negative rates, admitted that

“cash in not a very convenient store of value,”

seemingly hinting at Bernanke’s helicopter and that there will be no deflation in The US ever…

Rick Santelli then sums it all up perfectly…

“deflation is clearly the boogeyman… and the only thing that will save the middle class.”

* * *

Yellen: “cash is not a convenient store of value”

* * *

So if cash is not a very convenient store of value… what is? Biotechs? As Rick Santelli explains… this is the scariest thing she has ever said…

Santelli: “deflation is the boogeyman… and the only thing that can save the middle class is lower prices”

…click on the above link to view videos…

The Great Immoderation: How The Fed Is Sowing The Next Recession

March 12, 2015

The Great Immoderation: How The Fed Is Sowing The Next Recession

In February 2004 Ben Bernanke famously declared the business cycle had been tamed and took a bow in behalf of enlightened monetary management, claiming it was the principal source of this beneficent development. Exactly 55 months later, of course, he terrorized the Congressional leadership and a clueless President with the frieghtening proposition that a Great Depression 2.0 was just around the corner.

As to why he had been so stupendously wrong, Bernanke did not say. Nor did he explain why the brilliantly “stable” US economy had suddenly stumbled to the edge of an abyss despite the Fed’s energetic money printing in the interim. And the Fed had not been stingy in the slightest; it balance sheet had actually expanded by $150 billion or nearly 4.5% annually between February 2004 and the Lehman bankruptcy.

Indeed, six and one-half years on from the financial crisis—-events that made a mockery of the Great Moderation—–the monetary politburo and its acolytes on Wall Street have offered no coherent explanation as to why Armageddon loomed nigh and why the worst business cycle plunge since the 1930s actually materialized. Certainly their lame Monday morning claim that “prudential regulation” had failed doesn’t cut it.

…click on the above link to read the rest of the article…

Happy 6th Birthday: The Day FASB Folded & “Mark-To-Fantasy” Was Born

March 10, 2015

Happy 6th Birthday: The Day FASB Folded & “Mark-To-Fantasy” Was Born

The captured corporate MSM is celebrating the six year anniversary of when the stock market bottomed in March 2009. They will spin a false narrative of Bernanke, Obama and Geithner saving the world with TARP, QE, and the $800 billion Porkulus bill. What great heroes. Bernanke now gets $300,000 for a lunchtime speech at Bank of America gatherings. He is raking in north of $10 million per year now. He made $200,000 per year as the Fed Chairman. His wisdom must be on par with Jesus Christ to get $300,000 for a one hour speech. Bernanke’s Sermon on the Mount tour:

The millions he is getting paid by the Wall Street banks for speeches isn’t a payoff. Right?

Bernanke and Geithner stopped the market from falling in March 2009 by threatening the accounting geeks at the FASB and forcing them to allow fraudulent reporting by the insolvent Wall Street banks. The crisis ended – precisely – on March 16, 2009, when the Financial Accounting Standards Board abandoned FAS 157 “mark-to-market” accounting, in response to Congressional pressure from the House Committee on Financial Services and threats from Bernanke and Geithner on March 12, 2009. That change immediately removed the threat of widespread insolvency by making insolvency opaque. Mark to fantasy was born. Profits for everyone!!!

…click on the above link to read the rest of the article…

At the Fed in 2009, Rolling Dice in a Crisis

March 8, 2015

At the Fed in 2009, Rolling Dice in a Crisis

Ben Bernanke and his colleagues at the Federal Reserve Board have earned accolades from all corners for the extraordinary actions they took to rescue the financial system in 2009. While 2008 was the Fed’s annus horribilis, exposing how unaware the central bank had been of the risks building in the financial system, 2009 was its year of redemption.

So it was interesting, last week, to read the newly released transcripts from Federal Reserve Board meetings in 2009, which include some of the darkest days of the mess.

With the economy now on a sound footing and the stock market near a record high, the decisions made by the Fed to shore up credit markets in the aftermath of the 2008 crisis look even better.

But the transcripts also reveal for the first time what critics within the Fed were saying about some of the trillion-dollar programs. And even though the critics’ worst fears did not come to pass, their concerns are worth exploring. For this reason alone, the transcripts make for fascinating reading.

There were two basic camps within the Fed. On one side were the reserve bank presidents who wanted to throw anything and everything at the crisis. For the most part, these officials came from regions — like New York and Boston — that are home to big financial firms. They contended that the financial system was in such peril that big substantive action had to be taken, pronto.

…click on the above link to read the rest of the article…

BREAKING BAD (DEBT) – EPISODE THREE

March 3, 2015

BREAKING BAD (DEBT) – EPISODE THREE

In Part One of this three part article I laid out the groundwork of how the Federal Reserve is responsible for the excessive level of debt in our society and how it has warped the thinking of the American people, while creating a tremendous level of mal-investment. In Part Two I focused on the Federal Reserve/Federal Government scheme to artificially boost the economy through the issuance of subprime debt to create a false auto boom. In this final episode, I’ll address the disastrous student loan debacle and the dreadful global implications of $200 trillion of debt destroying the lives of citizens around the world.

Getting a PhD in Subprime Debt

“When easy money stopped, buyers couldn’t sell. They couldn’t refinance. First sales slowed, then prices started falling and then the housing bubble burst. Housing prices crashed. We know the rest of the story. We are still mired in the consequences. Can someone please explain to me how what is happening in higher education is any different?This bubble is going to burst.” – Mark Cuban

Now we get to the subprimiest of subprime debt – student loans. Student loans are not officially classified as subprime debt, but let’s compare borrowers. A subprime borrower has a FICO score of 660 or below, has defaulted on previous obligations, and has limited ability to meet monthly living expenses. A student loan borrower doesn’t have a credit score because they have no credit, have no job with which to pay back the loan, and have no ability other than the loan proceeds to meet their monthly living expenses. And in today’s job environment, they are more likely to land a waiter job at TGI Fridays than a job in their major. These loans are nothing more than deep subprime loans made to young people who have little chance of every paying them off, with hundreds of billions in losses being borne by the ever shrinking number of working taxpaying Americans.

…click on the above link to read the rest of the article…

Tag Archives: Ben Bernanke

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Getting a PhD in Subprime Debt

Post navigation

Latest Posts