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Is Bernanke To Blame For The Rising Global Revolutionary Wave?
A topic which we anticipated last summer, and which has come to shocking and rapid fruition ever since the beginning of the year with the self-immolation of a Tunisian protester, resulting in a tsunami of violent revolutionary uprisings across the developing world, has been the question of whether and to what degree Bernanke's monetary policies are responsible for what is becoming an indirect wave of suppressionary genocide (today alone, between Libya, Yemen and Bahrain over 500 people have been killed). And while Zero Hedge is far less ambivalent about the underlying cause of the surge in anger (in most of the affected countries, the bulk of their population has to spend well over half of its income on food and energy), and when people who already have nothing, see whatever little they have left taken away as well, they see no downside in violent revolution, there are some more moderate views.
Below we present one, courtesy of reader Chindit13.
While it is a stretch to put this squarely on Bernanke's shoulders,
it is absurd to say that he has no part at all. Yes, it is a convoluted
path that goes from QE to rising food prices that fan the flames of
already-existing anger and resentment of tyranical and oppressive
governments, but it is a path on which his footsteps are clearly
visible. The rage may have been simmering with or without higher food
prices, and food prices might have risen somewhat due solely to weather
concerns, but there is more to it.
What exactly does QE achieve on the ground? What is its stated
purpose vs. what it achieves? Does it differ from pre-crisis open
market operations?
QE is carried out almost exclusively through the PD's, who also
happen to be the TBTF. That's the same as pre-crisis OMO, albeit there's
a catch. There is stated intent, as well as Fed announcements that
attempt to create a link between QE and traditional Fed mandates (price
stability and maximum employment). That is the Fed saying that, so
let's see how well they've done.
The TBTF, who should no longer exist, are being handed free money by
the QE program via sure-thing trades with Bernanke. What differs from
pre-crisis OMO is that Bernanke buys nearly entire runs, and everyone
knows beforehand what his purchases will be, thus guaranteeing he pays
too much and hands the PD's free money. Where do the increasingly
liquified banks put this cash generated by Bernanke? New Loans? The
data says no, thus, strike one for the Full Employment Fed mandate. In
fact, what possible incentive do the TBTF banks have to lend? Why
bother to try to make a cheap spread on a risky loan, when you can go
for broke on the prop desk, knowing that if you win you'll win big
(bonus time) and if you lose you'll be covered? A quick look at the
revenue sources of the TBTF banks shows where their minds, and actions,
are at.
Incidentally, even the pundits say most new employment in the US is
generated by small business, and small business has traditionally been
funded by less than TBTF banks. These TBTF banks are not playing
QE. They are being allowed to go belly up, as we see every Friday
evening in the "Georgia" Report. In addition, their demise is being
exacerbated by the combination of QE and Geithner's work, since the
marketplace now knows they are not favored institutions and must work
hard to merely survive, much less make money. In other words, they are
the handicapped capitalists, playing against the Cronyalists. For those
depositors still playing the game, doesn't it seem likely that they
would be LESS willing to hold assets in a <TBTF bank, even if
insured, since they could avoid the hassle of clearing their accounts if
their little bank went bust? Fully funding the TBTF actually makes
funding for small banks more difficult. Don't forget they are all
capped on the other side of the spread by market rates for loans.
Thus, following the money, it is clear to everyone that QE is not
only having zero effect on employment, by its very nature it is unlikely
to ever do so. Bernanke fails to ever mention this, though he
undoubtedly can see it. His theory fails, and all that is left is
gift-giving to the TBTFs, something of which he is well aware.
So what do the TBTF's do with the money if not lend (and do not hold
it as excess reserves)? Look at their quarterlies. Prop trading is the
answer. The stock market is one place where this shows up, much to the
delight of Bernanke who wants us all to be of the belief that the
market predicts the future. Commodity speculation is another. Too bad
the curtains were not fully off prop desk positions, both domestic and
those held via offshore accounts. Every indication is that the TBTF's
are smack in the middle of the commodity boom. It really doesn't matter
that "weather" concerns might have driven them to take these
positions; the fact is they are flush with cash and indirectly
discouraged by government policy from making loans. Yes, prices were
soaring in many commodities before the crash, but these commodities were
also being shipped around the world by virtue of end-user
demand. I periodically wonder if the BDI graph is telling me "stuff" is
being shipped less and stored more often. Major players in the
commodity market do seem to be buying storage facilities, whether it is
grain silos or ULCC oil tankers. Even some hedge funds now own ULCC's.
On the margin, this speculation for speculation's sake is going to
drive prices even in the absence of an end user.
So has QE helped in the Fed's other mandate of price stabilization?
Yes, but only because Bernanke creates the standard of measurement by
using a selected basket of goods that may not even represent a US
consumer's expenditure pattern. Certainly it does not represent an
Egyptian's expenditure pattern, where food absorbs at least five times
as much income as a typical US consumer.
Bernanke is not stupid. He has to see what has been happening, and
he knows full well that money, especially when it is handed directly to
people who earn almost all of their money now from speculating, is going
to drive prices higher. It is this direct funding of the Wall Street
prop desks that makes monitoring traditional monetary aggregates
meaningless. A book of matches in a normal person's hands are not
dangerous; matches in the hands of an arsonist are. Bernanke also must
know that the basket of goods consumed by an American is substantially
different than what the typical Egyptian or Indian or Pakistani or
Chinese consumes, and that higher food prices more quickly and more
harshly affect these latter peoples' lives.
Sorry for the length, but it is simply a crime to let Bernanke off
scot free. Stop QE, enforce the Volcker Rules, and break up the TBTF
banks and let's see if that doesn't take some pressure off food prices.
It certainly won't do any harm.
As for some indicative food prices in countries yet to riot, below is a screenshot of what a roasted chicken costs in Shanghai. We leave the FX math to our readers, and certainly not the Chinese BLS which just reduced the food component's portion as a percentage of total CPI (h/t Erico).
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not enuf commodities to that with. add the greatest property bubble in history and simply put China hasn't solved the riddle of the sphinx either. in other words in so doing they're generating only their own inflation.
How about the level where we realize that the countries would not have to adjust their currencies if the reserve currency wasn't being expanded? You are blaming the reaction for the cause.
Exactly. But wasn't that what Bernanke told all the third-worlders to do in his Paris speech? He's forcing everyone to play a game when, especially for the developing countries, he is holding the biggest hand. Even Japan can't compete with the size of his QEs.
Exactly
They can't NOT inflate, at least if they value employment in and revenue and goodwill from their export sector. But you already know this.
If they had not engaged in malinvestment in their export sector, because price signals from a deliberately undervalued currency were distorted, then there would be no problem.
As it is all these third world countries took the easy way out. "Let's make our currency deliberately too cheap. Sure it will cause our people to work harder and have less than they might otherwise have. Sure it will benefit the United States in the short term to be able to buy deliberately underpriced goods subsidized by our long suffering population, but eventually we can build an industrial base and quit manipulating our currency. We must take the long view."
Unfortunately every third world country piled onto that type of thinking and now there is gross over investment in export sectors. If supply and demand were reasonably balanced then a little inflation just takes the final demand level to a higher price level. When you have overcapacity in manufacturing deliberately induced by an undervalued currency, then dollar inflation puts the squeeze on you. So those third worlders did it to themselves. Now they have too much capacity to deal with the final demand out there. They are going to face a bigger adjustment than us. They either revalue and suffer, or face even more margin squeeze.
Nicely said Chindit. Of course there's the Hate Department of the Empire's role...erm...State Dept...role as well.
In case you missed this amazing indictment against Bernanke by Steve Keen...
Debtwatch No. 42: The economic case against Bernankehttp://www.debtdeflation.com/blogs/2010/01/24/debtwatch-no-42-the-econom...
Great article. I hope that some day Keen will be recognized as one of the great economists of our time. Always a must read.
the bernank is not the quarterback in all of this, he is more like the water boy:
http://www.youtube.com/watch?v=bT4IMWzRvsk&feature=related
I see him more like Mr Creosote's waiter...It's only waffer thin:
http://www.youtube.com/watch?v=rXH_12QWWg8
Can someone please present this piece to the New york Times?
"Americans are so enamored of equality that they would rather be equal in slavery than unequal in freedom."
Alexis de Toqueville
Truer words have rarely been said. And to think he lived in the early to mid 1800's is amazing. What foresight.
Ultimate equality is in itself a form of slavery. But American society now, as then, is fractured more than ever into a two class system of the rich and the functionaly poor. So no we seem to be unequal in slavery.
the women were better back then. Even A deT admitted that.
I guess then he has had the dubious pleasure of meeting Hillary?
he certainly foresaw her.
In capitalism man exploits man. In communism it is the exact opposite.
Get used to inequality. It is like gravity and will always be around.
QE and funding of the Primary Dealers is sending water falls of money everywhere including the commodity markets. No doubt. But this supercycle in commodities was predicted by Jim Rogers in 1998, based on history and simple supply and demand. Excess money printing by Bernanke and other central banks just makes it worse.
We wouldn't need QE if the Congress and the President were not deficit spending about 100 billion dollars plus per month. There's no market for that much debt week after week and month after month. Ben has to buy it back.
No doubt Ben saved the Banks during the crisis, and is still reliquifying their balance sheets now, as is Europe, and Japan, but if Ben stopped QE tomorrow the bond market would collapse, I'm not sure what would happen to the US Dollar.
No doubt that big traders are hoarding commodities for future gains. Countries are hoarding commodities as a means of national security.
Tell me what Bernanke should do, in your opinion, different than he's doing now, and tell me what you think the consequences of that would be.
Bernanke needs to stop. Our country needs to hit the reset button.
The TBTF banks need to be broken up. Investment banks such as GS and MS need to have their FSB moniker taken away.
The bad loans need to be liquidated. Haircuts taken. It will be painful. But life will go on. The US economy will not implode. Americans are resourceful.
Your rationalizations remind me of the George Orwell book 'Animal Farm.'
"All animals are equal, but some are more equal than others."
So I posit this question to you-
Why kick the can down the road if the outcome is inevitable? I think you might agree that whe the day of reckoning comes it will be far worse the longer put it off.
Why kick the can down the road if the outcome is inevitable?
Because those that kick the can know that others will have to deal with the day of reckoning. Obama doesn't care about 2020, all he thinks about is 2012. The last president to actually have the guts to consider what is necessary for the longer term picture was Carter, and this and GHWB's CIA fixed it so he was a one term wonder.
except the exact opposite happened. with the end of qe 1 and the endless reams of money added to the system bond prices dropped at the long end.
Weak US President and foreign policy leaving a global power vacuum; Obama spending; Bernanke QE; European meltdown; leading to higher food prices with riots as a trigger to set off decades of seething hatred and angst.
Or, just press the Easy Button: Paul Krugman in the NYT --- "It's all caused by global warming!"
Its about $34 if anyone is interested.
Fields, with a mostly Western and Shanghai-elite customer base, is hardly representative of food prices for the other 1.3 billion Chinese who's weekly food budget, even in Shanghai, means they would only know about Fields from nearly getting run over by one of their delivery trucks.
The US is in a currency war against China to get them to de-peg. Bernanke is in charge of the stealth weapons.
It's not so much a war as a disagreement about who bears the brunt of the political instability inherent in the convergence in standards of living.
On one side China recognizes that they are the low cost provider and it is not their fault that Americans (Westerners) have become accustom to wages that are globally uncompetitive. China has their labor base well conditioned to accept a deplorable life style.
On the other side America would like to see China either de-peg or more rapidly raise the standard of living of their middle class (share the wealth) to better reflect that of the Western middle class. Americans have the right to own guns, and a rapid readjustment in wages and standard of living more in line with their global counterparts would likely end in bloody mess.
I understand the differing sides. I'm only suggesting that, since the Chinese aren't moving fast enough to strengthen to suit the US and the US has few direct means of forcing them ala the 1985 Plaza Accord, this is just another tactic. Whether this is the primary objective of all the easing or just a feature, it is having the desired effect of exporting inflation to China...and everywhere else.
Have really thought through what happens if China de-pegs?
Poor Bennie! He gets more flack these days than Meredith Whitney.
He gets blamed for everything! What about that snow? The Redskins suck, its got to be Bennie's fault.
Well, Dan Snyder is probably more disliked worldwide than Bennie but not by much! Peeps hate Bennie so much I almost feel sorry for him, like that Krugman fellow. C'mon, haters! Give the man a break!
I gotta give the Bernank credit. He's managed to 'snow' everyone with the QE which really doesn't accomplish anything. It's a swap of a debt security with one maturity for another debt security with a different maturity. That's it!
Making this swap has convinced the world that Zimbabwe is one tick over on the dial and that has everyone overreacting. Just like Bennie wanted.
As for problems/blame the nit I have to pick w/ Bennie is ZIRP. Bennie is fighting the last war with ZIRP and he's put himself into a real box. He cannot afford to raise rates @ the same time if rates rise on their own all his grand plans to help his 'friends' (the gangsters who own/run the 20 largest banks) will instantly be underwater. His friends, you see, are all lending 'long' and borrowing 'short'. This means ZIRP forever or die!
Japan sez Bennie can keep short rates @ zero forever. Hmmm ... sorry Bennie, USA isn't Japan. Japan has a trade surplus. USA doesn't, it's a debtor nation. The only thing the USA makes any more is fighter jets, dollars and food stamps.
As for commodities and food prices; the real prob here is Peak Oil which on a dollar basis took place in 1998. Don't believe me, look it up for yourself! Since fuel prices are embedded in all goods including all foodstuffs, rising fuel prices have been 'having sport' so to speak with 'food consumers'.
Don't blame Bennie for this. The real problem is @ the end of your driveway.
You have a choice. You can drive or you can eat: drive or have a job. Not both. Not anymore.
Pure Sophistry.
Nothing more needs to be stated as it is self-evident.
Want to understand. Got a feeling you've discussed this at length somewhere else. Can you provide link please?
Ben's inkjets trump Japan's surplus of whatever. Ben is in total control.
Every country around the globe needs/will need dollars for a long,long time. The host banks demand/need them.
.......... " Feb 17 (Reuters) - The Federal Reserve provided $70 million of liquidity to the European Central Bank in the latest week via its swap lines for foreign central banks, the New York Fed said on Thursday. " ................
Do you think we will see dollars rolled into SDR bonds any time soon? Looks like the PTB are laying the ground work for that. They want the yuan in there too. Will the Chinese play SDR checkers or will they keep playing Solitaire?
Good post, Steve. Lots of currents at play, all contributing to the same flood. The end of cheap energy, at a time when a few billion additional people would like to use it as wastefully as Americans, is part of it. Deficit spending---and the need to find funding---is another. Then there's ZIRP, which has been giving me headaches for a few years now. Each day ZIRP continues makes it less likely it can ever be stopped without horrendous consequences. As bad as banks' balance sheets look now, imagine what they'll look like the longer ZIRP continues. Trillions of long term assets being funded by cheap ST money...then imagine everybody trying to match book at the same time. Good thing for us AIG has probably underwritten all the risk, eh? Then look at the duration profile Timmy has been constructing, and imagine the USG trying to rollover all of that. Getting back to QE, though, I just cannot see the value. There is the proverbial "butterfly flapping its wings in America causing a typhoon in China". The link between QE and price inflation---given that the money is placed directly into the hands of banks prone to speculative excess---is much closer. Besides, butterflies add some value to the world. QE does not.
good blog chindit, but Qe has prevented a 20 percent U3 unemployment rate. It is buying us some time so that luck or something may intervene, as one poster above this put it.
We aren't collapsed yet!
can someone tell me how QE creates jobs. maybe in the financial sector on the bond trading desks.
for the amount spent we could have just hired people to fix iunfrastructure, gotten more bang for the buck, bettered our long term prospects, etc.
Besides even those at the fed have recently admitted Qe can't help employment.
The only theory is as follows. no interest on savings and inflation causes people to spend their money before it is worth less and stimulate the economy. that's it.
- I think QE is a shell game. It doesn't create value so what is the point? Finance can raise its own funds, it doesn't need the Fed to create credit only suckers willing to borrow.
- ZIRP is scary: it's real message is the Fed is insolvent (it cannot clear its balance sheet) so any more deleveraging will put the Fed on the sideline.
- The Fed cannot create enough reserves to float the big banks which carry too many bad loans. How long before the banks are bankrupt not just insolvent? That's when 'Crisis 2.0' starts. Right now the Fed can keep pace with redemptions. Tomorrow?
- The other tattered rag of the Establishment is moral hazard applied with a spray gun. That's your stock mkt and junk bond rallies right there! MH is what Bennie claims is saving jobs. I don't agree with this b/c real economy as opposed to finance is undercapitalized.
Real economy relies on money markets and bank credit lines. Tech funding is V/C's and IPO's. V/C is dying and tech jobs going overseas. Stocks are primary dealer/institutional investor racket; junk bonds are cheap M&A financing. I guess Bennie counts jobs created in China. Slick move, Bennie, I like it :)
A maturity view of QE is here: http://is.gd/FCy6AG
As a good friend commented to me "QE is not monetary policy, its a funding mechanism."
As a good friend commented to me "QE is not monetary policy, its a funding mechanism."
Bernanke is just a puppet of the world elite...he is doing was he is told that's it..same with Obama
Wow. A western chicken in Shanghai is expensive. So is everything Western because the demand comes from a small amount of wealthy expats and local Chinese —although the website is in English, so they are not even selling to Chinese! I'm sure you can walk into a Whole Foods in the U.S. and find a free range/organic chicken for a similarly inflated price.
Just to give you a taste of how this pricing works. I can walk into a supermarket in Beijing and buy a half-liter (500mL) bottle of Tsingtao for about $0.70, is is cheaper outside of the major cities. This is the price for premium beer, it gets cheaper.
I can also walk into a bar, one geared towards expats, and pay $5 or more for a 12-oz bottle of Tsingtao, about 350mL.
In total, it works out to about 10 times the price.
It also has to do with big monetary (see monetarism) printing, in addition to the other 'setups' we call imperialism....err...globalization.
Free trade = Low tariffs and Low tariffs keep a population FROM producing it's own food [or other goods](since big agro can do it cheaper initially through much larger economies of scale/better labor/more capital than a local farmer, thus the countries which stopped growing (not by choice)...but because of low tariffs....when the cheap imports became EXPENSIVE imports by Ben's and other central banks monetary printing, are having problems. Remember it's a SYSTEM, that all central banks are a part of (even if it's only a relative few worse apples)
Why can't they go back and simply grow more if it becomes too expensive as the academic monetarists in a test tube think? They can...except they can't.....because they don't have access to credit for the capital investments TO produce the food.
They don't have the option of an American Credit System. WE do. They are but wisps in the wind as it concerns their food prices, they have NO sovereignty over it. That can change, but it hasn't quite yet.
So you see, for this to happen, you need metaphorically a NASCAR track, AND a NASCAR. You need the track which is imperial monetarism which free trade belongs under, and you have the NASCAR which is the central banker hitting the print button. As you can see, there is tons of NASCARS on the track, they're all flying around like madmen and when the crash happens, it'll be just as much of a spectacle.
GO SINN FEIN! Good luck this upcoming week in Ireland! Give the bankstas hell! They're already giving it to you! Share the 'love'!
Also to the author of the article....don't worry about length. If people are too filled with mental sloth, they'll use any sophistry to not figure out there is a problem, nevermind a solution. Say it how it needs to be said, fuck the rest. They're idiot sophists if 'length' somehow makes a tangible argument irrelevant in their minds.
But you need to go further. Volcker rule is not enough.
We need to Glass-Steagall the IDIOTS' monetary system.
Bernanke is a conceited fool . His is a make believe world of fanciful academic junkets and speeches where he trys to show off how smart he is. Surrounded by sychophants and traitors, he spends his time spinning tales for rooms filled with fat parasites who greedily conjure new ways to suck blood from the productive. The unintended consequences of poor monetary policy have always caused more than their share of wars and destruction throughout the ages. Bernanke, happily obliging the historical precedent, is a fool on a fool's errand.
Well said, Siz.
the stooge bernanke will have the blood of billions on his hands by the time this is over
QE is just a financial means towards some up to the last few weeks what appeared to be an amorphous political end. The sniper in me sees that House of Saud clear as day now. This policy of QE to me had nothing to do with Bennie and the Inkjets creating growth although he has provided time for what could be argued what General MacArthur called "luck that is made." It was not possible to predict what an Admiral Michael Mullen would do when "his number was called" as it was but a few short weeks ago. Yet are you surprised that when it was he did his duty? The fact that you could say "of course not" is testament to the man who occupies that Chairmanship. And I do not use the word "man" nor "Chairman" lightly. May he hold it for the forseeable future for no nation can have too many of such men. Without a doubt the events of the past few weeks have not only been a clear-cut victory for Egypt and "the Egyptian people." They're also the siren call of success for those who live to serve and serve to live in the only area of the planet (the Middle East) that matters outside of the USA. There is no other job for those that lead and command and that job has been executed to perfection.
it is a fact that banks have no incentive to tae the risks involved in making loans. good article.
I am to blame, we are to blame. Want something to change? Start with a mirror, because that is exactly what you're looking at when you open your eyes.
Of course. Ben is one of the greatest revolutionaries of all times. Problem is, this will lead , bu exporting the USA problems to the whole world, to more polarized world, less stable, since not all regimes will fall, some will become more hardened and more prone to uniting.
The fate of democracy in the USA itself is not clear, I mean,once the middle class takes over, it will be trending towards fascism more then minority right protection. Over quite long period of the time, around 2030, the USA is on its way to become the Germany of 1930-ties. And China is the modern equivalent Soviet Union of that time. And Europe, especially Germany and North, is the USA of that time. The rest of the world will align with one of these blocks.
I wonder if Russia becomes a resource base for Chinese or ally with the Europe and Japan to protect itself. Most likely, Russia will be split in 2 halves, with Chinese controlling the East, and the West part up to Urals friendly with NATO and Europe. Japan and Korea are gone deals to Chinese in years to come. Via a deal between the USA and China. May be many years, 20 or so.
The first arena for all these new geopolitics to start to play out will be Central Asia. Just have to wait when Israeli-Iran or USA-Iran conflict breaks out. Iran will break the neck of their current revolution and continue with its nuclear program. China, Russia, USA , India are all present in Central Asia. India looks a little bit like Italy in 1930, a weak potential USA ally in not so strategic place, but useful.
Always find your posts interesting, Ivars. What you say about the middle class in America makes a lot of sense, although perhaps as a foreigner you do not realize how multi-cultural the middle class has become. But there does seem to a march toward fascism in the US. People are more and more afraid to speak their mind, except for the fanatics and nut cases, of course, and there are plenty of those to keep us entertained.
To all hyperventilators:
Bernanke probably sees the following:
1. The Dollar against the Euro is about where it was in 2004 - sure it goes up and down - thats the market. But the Dollar is not getting "crushed"
2. The SPX is up abou 6% in 2011 - hardly reason for folks to foam at the mouth - unless they are short on leverage with their rent money.
3. The economy is recovering quite nicely. Sure unemployment is still high and property prices are stagnant - that will take time.
4. Inflation broadly is not rising very much. Commodity prices are up due to strong demand and - yes speculation. By the way high commodity prices is much less of an issue for the US than for the developing world.
5. If semi-skilled , poorly educated workers think they would have a better life in some other country - please name one.
6. yes the highly educated, creative, entrepreneural class probably would do better financially in other countries that have lighter taxes and regulations. We should be thankful they have chosen to stay here - for now - and try to encourage them to stay.
So , now - why all the angst? hmm?
Losers always blame someone else for the bad things that happen to them.
What Bernanke and even Greenspan might say - if they were willing to incur the wrath of the mob:
1. The world has changed dramatically in the past 20 years - with the arrival of 2 - 3 billion people on the world economic scene ( China, India, Brazil etc). These populations are hungry to improve their lifestyles and willing to work very hard and improve their skills to upgrade their living standards.
2. In absence of any central bank interventions - one might reasonably expect American wages ( particularly for semi-skilled work) to rapidly converge to Chinese levels.
3. We have tried our utmost to buy time. We have been remarkably successful in this regard. Indeed over the past 20 years - wages in America have not declined to Chinese levels. Our fervent hope was that by buying time ( enabling folks to extract cash flow from appreciating assets etc) - the population would use this time to figure out ways to outcompete and out-smart the large Asian workforces.
4. We unfortunately overestimated the population's intelligence and discipline. The population here , instead, squandered the 20 years of time we bought them. They did not upgrade their skills, they did not upgrade their physical fitness. They instead chose to be slothful, indulging in speculation and fraud.
5. Central bankers are not magicians. We cannot fix your lives. We cannot motivate you to educate yourselves. We do not control much in the economy. But we have done our best.
How do you respond to that?
I would respond that not all americans wasted their money and spent their time in idle pursuits. There are still a few who took this time to upgrade their skills and get ready for global labor arbitrage. Roach was screaming about this for over ten years at JPM. YOu people had plenty of warning.
Capital will go to where capital is treated well.
4. We unfortunately overestimated the population's intelligence and discipline.
Let's look at a chart of the purchasing power of the US$ since the Fed was created, then lets talk about intelligence and discipline. Of course it would be a moot discussion because the result is perhaps exactly what was intended.
This chicken only sold to those who cannot read and speak Chinese. Seriously. How would an ordinary Chinese (out of 1.3 billion population) visit an English website to buy roasted frozen chicken?
If semi-skilled folks are feeling frustrated because they dont have the same lifestyle of 30-40 years ago - its noyt because of "oligarchs" or some vast conspiracy. It is because things are vastly different now - compared to 40 years ago. India and China shook off paralysing socialism and British Rule.
So folks now have competition that they did not have 40 years ago. Is this controvertial? Is this hard to understand?
The generation that lived in the 1950s-1960s had is really really good because two-thords of the world population vas enslaved , shackled. They are not shackled now. China was the largest economy in the world for 18 of the last 20 centuries.
Things are vastly different now and to blindly thrash around looking for villians in all the wrong places is not constructive.
Lets go through the checklist:
Printing the worlds reserve currentcy: check
Leading to rising food prices: check
Monetisation of debt: check
Doesn't care about globlal instabilities or did not think that far ahead: check
Rising food prices lead to political instability: check
I think 'yes' is the answer to this one.
Politicians who make hay form the fact that Americans now hav emore - vastly more - competion for labor and skills - are just misleading people.
You see - there is no birth right to the so called 1950s "middle class" way of life simply because one happens to ocuupy space in this particular spot of the North American continent. The current generation is extremely spoiled. Think they are entitled to all kind of goodies merely because they occupy a particular spot on planet earth. And like spoilet children are throwing temper tantrums because they wont accept the reality of the moment.
If things go well the US wil be like Brazil. If things dont go as well it will be like Indonesia .
America was essentially an industrial and financial monopolist in the 1950's. Mid to late 20th century was a special time that will never be repeated.
I am optimistic and hope that we meet brazil halfway. They come up a little. We go down a little. Not a bad outcome. Meeting Indonesia or china halfway in the middle would suck.
Tyler, do you think Gadaffi is more culpable than Bernanke? Could the shooter of the 10 year old have been carrying on some kind of family vendetta or feud? The wider you cast your net in assigning guilt, the less plausible it becomes. Can Bernanke legitimately get away claiming the "Keynisan's said so" defense? And can you tell me what would have happened in Libya in 2008 if Bernanke and Paulson hadn't bailed out the TBTF's? Can you be certain the Libyans wouldn't be worse off right now? And what about if G.W hadn't taken away Gadaffi's nukes? And like G.W. never got Bin Laden, so did Reagan miss on his assasination attempt and only got one of Gadaffi's dozens of spawn. Is Ronnie to blame too? And Italy's action's as Libya's colonial master? Muslim conquerers played a role in this too. What the hell, what about the Romans? And before them the Carthiginians? Why does the fickle finger of guilt always point back to the Fed and the US here on this blog?
For people worried about "class warfare " in the US here is my rough comparison:
1. Semi-skilled labor:
US: House, car, credit card . Meat diet. Lots of worries sure about being able to retire and play golf
Everywhere else in the world: Sleep in the corner of a warehouse, noodles 3 times a day ( thank god !!), bicycle. Glad to be alive.
2. Entrepreneurs/Top Guns:
US: heavily taxed, not much in the way of household help, take train in to NYC like everyone else. Nice house, nice car - sure. Still worries about US tax policy, social securit etc etc
Elsewhere in the world: Bungalow, 3-4 servants ( cook, gardner, factotum, maid), Never have to take public transport. Zero or very low taxes. Invest in whatever, start busineses etc without primarily worrying about taxes. Feel really really elite/special.
My colleagues from pakistan say that our middle class life is very hard here compared to pakistan. When even the average middle class can afford a few peons it makes life much easier.
People don't realize the life of luxury the middle and upper classes live in the third world.
225 yen is 34.20 US
34.20 chicken
holy crap
theres a racist joke here that i will leave for the next guy
example:
chicken at 34 bucks,if watermellon hits that price even obama will be out in the streets protesting
what was in michelles garden anyway?
i know, i know....junk me
Cucumbers.
Is that one dash (Yuan) or two (Yen)? There's an order of magnitude difference, and about what I might expect to pay for a chicken in China if yen (though no explanation as to why I'm paying in yen...)
Nicely written post Chindit - Thank You.
Let's not forget "O" and his push to "organize" the youth across the globe. Obama freightens me, he should do the same to you...
Don't take my word for it, go to his web site, www.barackobama.com
If that doesn't bother you, nothing will!
"Sorry for the length, but it is simply a crime to let Bernanke off scot free. Stop QE, enforce the Volcker Rules, and break up the TBTF banks and let's see if that doesn't take some pressure off food prices. It certainly won't do any harm."
Yes, I agree prop desks don't help the matter however, if I ran a prop desk I'd be doing the same, go where the profits can be made right. Also, many of the banks are already scrapping their prop desks anyway. This QE shit needs to stop though as none of us know how this will end, I do suspect it will end badly!
if qe stops you might want to prepare for a 20 percent U3 unemployment rate.
QE and the bailout is being executed to give the illusion of recovery but the real purpose is to strip what assets the average joe has left.
"So has QE helped in the Fed's other mandate of price stabilization? Yes, but only because Bernanke creates the standard of measurement by using a selected basket of goods that may not even represent a US consumer's expenditure pattern".
No chindit, Bernake hasn't even done that.
stable
adjective /?ste?.bl??/ adj
• firmly fixed or not likely to move or change
(From Cambridge Online Dictionary).
So, even at his admiited level of minor(!) inflation, he hasn't created price stabilization.
DavidC
I admire Meredith, I can't understand why anybody puts her on par with mad Ben in the public's eye (oops, didn't mean 'pubic', even though it was a freudian slip). Pretty jaundiced eye, biased and Rooster Cogburned.
The financial elite love to create illusory democracies, much easier to corrupt and control rather than dictatorships and monarchies.
The short answer to the question:
YES.
Sorry for shouting.
I love the ZH site and the posts. Reading and posting from USFOR-A is a little tricky and dangerous but it lets us now that civilians back home are just as bat shit crazy as we are, and it saves on cigarettes.
Glad you enjoy it!
An example of why it is not U.S. dollar inflation as the root of all evil with clownbux and gruel.
Let's say BFE has a currency the BFEbux that freely floats. Two BFEbux will buy one Federal Reserve Clownbux.
If the Great Satan inflates the money supply in the USA by 100 percent, then clownbux buy only half of what they used to buy.
You used to get two bowls of gruel for one clownbux. After 100 percent inflation you can only get one bowl of gruel for a clownbux.
However BFE is smart. Their currency is fully floating. Clownbux now only buy half as many BFEbux also, because Clownbux have lost half their value with the horrendous 100 percent inflation rate in clownbuxland.
Where last year you could buy two BFEbux with one clownbux, now you can only get one BFEbux for one clownbux.
Now from the BFEbux perspective there is no inflation. Two bowls of gruel cost one clownbux before inflation, two clownbux after inflation in the USA
In BFE two bowls of gruel still cost two BFEbux, because two BFEbux now buy two clownbux.
No inflation transmission if currencies are fully floating and not manipulated.
May I suggest we start sending toy handcuffs to our elected officials.
http://www.windycitynovelties.com/237342p/toy-handcuffs.html
Buy a dozen and send them to every elected official you know asking why real ones aren't being used.
hi, peakoil is here, closer than we thought..
http://www.bloomberg.com/news/2011-02-19/opec-s-december-oil-exports-fall-2-as-shipments-from-saudia-arabia-drop.html
That was for exports. SA at a two year high for production. Difference could be internal consumption
Fixed it for ya.
I am beginningto have doubts about this site. Is the question,so long drawn out, some kind of filling the page? Tell me this, have food prices got anything to do with the prblem? The question suggests that it may not be Bernanke. Is the asker feeling intimidated??
In his never ending battle against the evils of deflation, Ben Bernanke unveiled the newest trick from the Feds toolkit - legalized counterfeiting in a recent press conference."listen, I've already stuffed the pockets of the banks and big business with trillions of freebee dollars and excuse me for assuming a few bucks would trickle out to the real economy. Who knew those stingy bastards would hold onto that cash tighter than Charlie sheen to A crack pipe."
Bernanke also eluded to his printer being in dire need of a few days rest and the added benefit avoiding a few ledgers from ending up on the ol balance sheet.
"Now all i ask is that you replace Washington with a an adulatory portrait of yours truly. this new dollar will be known as the Bernanke buck. "I will not have my new currency replicated in the form of ripped pieces of loose leaf, napkins or small rocks." These will not be permissible means of exchange. "I think it's reasonable to assume we all have access to Photoshop people?" Bernanke ended the press conference with a stern warning. "Any proprietor caught refusing to accept Bermanke bucks will be shot on the spot. "the Feds full faith and credit is no different than that of Joe the six pack plumber" he said sternly pointing his finger at a camera man in the front row.
The staunch defenders of the genocidal Bernanke defenders kill me. Oil shot up to 147 when Bernanke opened the liquidity floodgates despite the start of the financial crisis. it has since shot up directly associated with QE. as have other commodities.
I mean how much evidence do people require. I made public predictions this stuff would happen before it happened, then it happens, and I stated why. hypothesis, experiment, confirmed. Boom, that is called the scientific method.
The Bernake says wyhat he saus because he is owned by the banks and serves no other masters. He is sack of crap and almost every other word out of his mouth is and has been a lie. At this time with all of the evidence in place, including those who warned about the crisis beforehand, those who warned of epidemics of mortgage fraud, and the statements that the crisis would be contained whiloe he was infact planning for a deeper crisis, show the man is a sociopathic liar by any psychological definition of the subject. warned by BIS, warned of securitization creating instability, warned by the FBI, even the fed reserve minutes show they joked and made light of the housing bubble and were aware of it but did nothing.
This man should be tried and receive just punishment for crimes of economic treason against the united states and the world. Even now it is all about the banks. The man has had multiple chances and at every turn has shown himself to be a sociopath and a screw up at every turn.
Even worse he has continued to engage in policies that ensure a futire crisis by making sure we don't deleverage. yeah it will be an inflationary crisis, hurting the majority, but protecting the TBTF. when it happens I hope and pray the mob catches up to him and know there is a special place in hell for that bastard. When it does, I will sleep well and know that justice has been done.
Question: Is the Bernank to blame for the rising global revolutionary wave?
Answer: Directly.
Rothschilds Stage Revolutions in Tunisia and Egypt To Kill Islamic Banks In Emerging North African Markets
http://www.puppet99.com/?p=126
This is exactly where I am left currently. What do we replace the exisiting system with? How will money production actually happen. I agree with most everything Ron Paul has to say, with the exception of going back on the gold standard. I think its safe to say, if we try to go back on the Gold Standard here, it will end much the same way it did when Great Britain tried after WWI.
I am exploring the idea of Abe's Greenbacks. However, the idea was introduced counting on fabrication or counterfeiting and ALSO during war time.
What are your suggestions?
To All My Fellow Human Beings. just stop watching any and all TV,
stop buying shit you simply do not need.
Tyler has some 18,000 thousand followers on Twitter. Become one†
Of course there are other causes to rising food prices. Just as there were initially other causes to rising stock and home prices in previous Fed-enhanced speculations. The Fed provides the fuel without any idea of where it will burn. As a result of QE, all the prop desks needed was a shortage, any shortage, and they were ready to go. So of course the shortages showed up before QE -- QE is merely the jet fuel that gets existing speculative trades, and profits, to the moon.