Full Ben Bernanke Speech Before National Press Club

Tyler Durden's picture

The lies come hot and heavy:

  • Initial claims for unemployment insurance have generally been trending
    down, and indicators of job openings and firms' hiring plans have
  • QE 'Effective at easing financial conditions'
  • Recovery likely to be 'more rapid' in 2011 than 2010
  • 'Overall inflation remains quite low'
  • Recovery in consumer, business spending may be solid
  • Economy seems to have strengthened in recent months

But here's the only one that matters:

  • Unemployment, inflation likely to defy Fed mandate

Which mandate is that Genocide Ben: would that be the mandate to kill off half the world with your revolutionary policies before the Russell hits 36,000?

Full remarks to be presented by Dictator Ben at the National Press Club, Washington, D.C.

The Economic Outlook and Macroeconomic Policy

Good afternoon. I am pleased to be here at the National Press
Club, and I'm especially glad for the opportunity to have a conversation
with journalists who write about economic policy from our nation's
capital. Your job is not easy, but it is essential. Virtually every
American is affected by developments in the economy and in economic
policy. But contemporary economic issues can be highly complex, and few
nonspecialists have the time or the background to master these issues on
their own. The public must therefore rely on the diligent reporting,
clear thinking, and lucid writing of reporters determined to go beyond
dueling bumper stickers and sound bites to help people understand what
they need to make good decisions, both in their personal finances and at
the polls. These are weighty responsibilities, and the journalists I
know take them very seriously.

Today, I will provide a brief update on the economy and how I
expect it to evolve in the near term. Then I will turn to the
implications for monetary policy. Finally, I will briefly discuss the
daunting fiscal challenges that we face as a nation.

The Economic Outlook
The economic recovery that began in the middle of 2009 appears to
have strengthened in recent months, although, to date, growth has not
been fast enough to bring about a significant improvement in the job
market. The early phase of the recovery, in the second half of 2009 and
in early 2010, was largely attributable to the stabilization of the
financial system, the effects of expansionary monetary and fiscal
policies, and a strong boost to production from businesses rebuilding
their depleted inventories. But economic growth slowed significantly
last spring as the impetus from inventory building and fiscal stimulus
diminished and as Europe's debt problems roiled global financial

More recently, however, we have seen increased evidence that a
self-sustaining recovery in consumer and business spending may be taking
hold. Notably, we learned last week that households increased their
spending in the fourth quarter, in real terms, at an annual rate of more
than 4 percent. Although a significant portion of this pickup reflected
strong sales of motor vehicles, the recent gains in consumer spending
look to have been reasonably broad based. Businesses' investments in new
equipment and software grew robustly over most of last year, as firms
replaced aging equipment and as the demand for their products and
services expanded. In contrast, in the housing sector, the overhang of
vacant and foreclosed homes continues to weigh heavily on both home
prices and residential construction. Overall, however, improving
household and business confidence, accommodative monetary policy, and
more-supportive financial conditions, including an apparent increase in
the willingness of banks to make loans, seems likely to lead to a more
rapid pace of economic recovery in 2011 than we saw last year.

While indicators of spending and production have, on balance,
been encouraging, the job market has improved only slowly. Following the
loss of about 8-1/2 million jobs in 2008 and 2009, private-sector
employment showed gains in 2010. However, these gains were barely
sufficient to accommodate the inflow of recent graduates and other new
entrants to the labor force and, therefore, not enough to significantly
reduce the overall unemployment rate. Recent data do provide some
grounds for optimism on the employment front; for example, initial
claims for unemployment insurance have generally been trending down, and
indicators of job openings and firms' hiring plans have improved. Even
so, with output growth likely to be moderate for awhile and with
employers reportedly still reluctant to add to their payrolls, it will
be several years before the unemployment rate has returned to a more
normal level. Until we see a sustained period of stronger job creation,
we cannot consider the recovery to be truly established.

On the inflation front, we have recently seen significant
increases in some highly visible prices, notably for gasoline. Indeed,
prices of many commodities have risen lately, largely as a result of the
very strong demand from fast-growing emerging market economies,
coupled, in some cases, with constraints on supply. Nevertheless,
overall inflation remains quite low: Over the 12 months ending in
December, prices for all the goods and services purchased by households
increased by only 1.2 percent, down from 2.4 percent over the prior 12
months.1 To
assess underlying trends in inflation, economists also follow several
alternative measures of inflation; one such measure is so-called core
inflation, which excludes the more volatile food and energy components
and therefore can be a better predictor of where overall inflation is
headed. Core inflation was only 0.7 percent in 2010, compared with
around 2-1/2 percent in 2007, the year before the recession began. Wage
growth has slowed as well, with average hourly earnings increasing only
1.8 percent last year. These downward trends in wage and price inflation
are not surprising, given the substantial slack in the economy.

Monetary Policy
In sum, although economic growth will probably increase this
year, we expect the unemployment rate to remain stubbornly above, and
inflation to remain persistently below, the levels that Federal Reserve
policymakers have judged to be consistent over the longer term with our
mandate from the Congress to foster maximum employment and price
stability. Under such conditions, the Federal Reserve would typically
ease monetary policy by reducing the target for its short-term policy
interest rate, the federal funds rate. However, the target range for the
funds rate has been near zero since December 2008, and the Federal
Reserve has indicated that economic conditions are likely to warrant an
exceptionally low target rate for an extended period. As a result, for
the past two years we have been using alternative tools to provide
additional monetary accommodation. 

In particular, over the past two years the Federal Reserve has
further eased monetary conditions by purchasing longer-term securities
on the open market. From December 2008 through March 2010, we purchased
about $1.7 trillion in longer-term Treasury, agency, and agency
mortgage-backed securities. In August 2010, we began reinvesting the
proceeds from all securities that matured or were redeemed in
longer-term Treasury securities, so as to keep the size of our
securities holdings roughly constant. Around the same time, we began to
signal to financial markets that we were considering providing
additional monetary policy accommodation by conducting further asset
purchases. And in early November, we announced a plan to purchase an
additional $600 billion in longer-term Treasury securities by the middle
of this year. All these purchases are settled through the banking
system, with the result that depository institutions now hold a very
high level of reserve balances with the Federal Reserve.

Although large-scale purchases of longer-term securities are a
different monetary policy tool than the more familiar approach of
targeting the federal funds rate, the two types of policies affect the
economy in similar ways. Conventional monetary policy easing works by
lowering market expectations for the future path of short-term interest
rates, which, in turn, reduces the current level of longer-term interest
rates and contributes to an easing in broader financial conditions.
These changes, by reducing borrowing costs and raising asset prices,
bolster household and business spending and thus increase economic
activity. By comparison, the Federal Reserve's purchases of longer-term
securities have not affected very short-term interest rates, which
remain close to zero, but instead put downward pressure directly on
longer-term interest rates. By easing conditions in credit and financial
markets, these actions encourage spending by households and businesses
through essentially the same channels as conventional monetary policy,
thereby supporting the economic recovery.

A wide range of market indicators supports the view that the
Federal Reserve's securities purchases have been effective at easing
financial conditions. For example, since August, when we announced our
policy of reinvesting maturing securities and signaled we were
considering more purchases, equity prices have risen significantly,
volatility in the equity market has fallen, corporate bond spreads have
narrowed, and inflation compensation as measured in the market for
inflation-indexed securities has risen from low to more normal levels.
Yields on 5- to 10-year Treasury securities initially declined markedly
as markets priced in prospective Fed purchases; these yields
subsequently rose, however, as investors became more optimistic about
economic growth and as traders scaled back their expectations of future
securities purchases. All of these developments are what one would
expect to see when monetary policy becomes more accommodative, whether
through conventional or less conventional means. Interestingly, these
developments are also remarkably similar to those that occurred during
the earlier episode of policy easing, notably in the months following
our March 2009 announcement of a significant expansion in securities
purchases. The fact that financial markets responded in very similar
ways to each of these policy actions lends credence to the view that
these actions had the expected effects on markets and are thereby
providing significant support to job creation and the economy.

My colleagues and I have said that we will review the asset
purchase program regularly in light of incoming information and will
adjust it as needed to promote maximum employment and stable prices. In
particular, it bears emphasizing that we have the necessary tools to
smoothly and effectively exit from the asset purchase program at the
appropriate time. In particular, our ability to pay interest on reserve
balances held at the Federal Reserve Banks will allow us to put upward
pressure on short-term market interest rates and thus to tighten
monetary policy when required, even if bank reserves remain high.
Moreover, we have developed additional tools that will allow us to drain
or immobilize bank reserves as required to facilitate the smooth
withdrawal of policy accommodation when conditions warrant. If needed,
we could also tighten policy by redeeming or selling securities.

Fiscal Policy
Fiscal policymakers also face significant challenges. The federal
budget deficit has expanded to an average of more than 9 percent of
gross domestic product (GDP) over the past two years, up from an average
of about 2 percent of GDP during the three years prior to the
recession. The extraordinarily wide deficit largely reflects the
weakness of the economy along with the actions that the Administration
and the Congress took to ease the recession and steady financial
markets. However, even after economic and financial conditions have
returned to normal, the federal budget will remain on an unsustainable
path, with the budget gap becoming increasingly large over time, unless
the Congress enacts significant changes in fiscal programs.

For example, under plausible assumptions about how fiscal
policies might evolve in the absence of major legislative changes, the
Congressional Budget Office (CBO) projects the deficit to fall from
around 9 percent of GDP currently to roughly 5 percent of GDP by 2015,
but then to rise to about 6-1/2 percent of GDP by the end of the decade.2 After
that, it projects the budget outlook to deteriorate even more rapidly,
with federal debt held by the public reaching almost 90 percent of GDP
by 2020 and 150 percent of GDP by 2030, up from about 60 percent at the
end of fiscal year 2010. 

The long-term fiscal challenges confronting the nation are
especially daunting because they are mostly the product of powerful
underlying trends, not short-term or temporary factors. The two most
important driving forces for the federal budget are the aging of the
U.S. population and rapidly rising health-care costs. Indeed, the CBO
projects that federal spending for health-care programs--which includes
Medicare, Medicaid, and subsidies to purchase health insurance through
new insurance exchanges--will roughly double as a percentage of GDP over
the next 25 years.3 The
ability to control health-care costs, while still providing
high-quality care to those who need it, will be critical for bringing
the federal budget onto a sustainable path.

The retirement of the baby-boom generation will also strain
Social Security, as the number of workers paying taxes into the system
rises more slowly than the number of people receiving benefits.
Currently, there are about five individuals between the ages of 20 and
64 for each person aged 65 and older. By 2030, when most of the baby
boomers will have retired, this ratio is projected to decline to around
3.4 Overall,
the projected fiscal pressures associated with Social Security are
considerably smaller than the pressures associated with federal health
programs, but they are still notable.

The CBO's long-term budget projections, by design, do not account
for the likely adverse economic effects of such high debt and deficits.
But if government debt and deficits were actually to grow at the pace
envisioned, the economic and financial effects would be severe.
Sustained high rates of government borrowing would both drain funds away
from private investment and increase our debt to foreigners, with
adverse long-run effects on U.S. output, incomes, and standards of
living. Moreover, diminishing investor confidence that deficits will be
brought under control would ultimately lead to sharply rising interest
rates on government debt and, potentially, to broader financial turmoil.
In a vicious circle, high and rising interest rates would cause
debt-service payments on the federal debt to grow even faster, causing
further increases in the debt-to-GDP ratio and making fiscal adjustment
all the more difficult. 

How much adjustment is needed to restore fiscal sustainability in
the United States? To help answer this question, it is useful to apply
the concept of the primary budget deficit, which is the government
budget deficit excluding interest payments on the national debt. To
stabilize the ratio of federal debt to the GDP--a convenient benchmark
for assessing fiscal sustainability--the primary budget deficit must be
reduced to zero.5 Under
the CBO projection that I noted earlier, the primary budget deficit is
expected to be 2 percent of GDP in 2015 and then rise to almost 3
percent of GDP in 2020 and 6 percent of GDP in 2030. These projections
provide a gauge of the adjustments that will be necessary to attain
fiscal sustainability. To put the budget on a sustainable trajectory,
policy actions--either reductions in spending or increases in revenues
or some combination of the two--will have to be taken to eventually
close these primary budget gaps.

By definition, the unsustainable trajectories of deficits and
debt that the CBO outlines cannot actually happen, because creditors
would never be willing to lend to a government with debt, relative to
national income, that is rising without limit. The economist Herbert
Stein succinctly described this type of situation: "If something cannot
go on forever, it will stop."6 One
way or the other, fiscal adjustments sufficient to stabilize the
federal budget must occur at some point. The question is whether these
adjustments will take place through a careful and deliberative process
that weighs priorities and gives people adequate time to adjust to
changes in government programs or tax policies, or whether the needed
fiscal adjustments will be a rapid and painful response to a looming or
actual fiscal crisis. Acting now to develop a credible program to reduce
future deficits would not only enhance economic growth and stability in
the long run, but could also yield substantial near-term benefits in
terms of lower long-term interest rates and increased consumer and
business confidence. Plans recently put forward by the President's
National Commission on Fiscal Responsibility and Reform and other
prominent groups provide useful starting points for a much-needed
national conversation. Although these proposals differ on many details,
they demonstrate that realistic solutions to our fiscal problems are

Of course, economic growth is affected not only by the levels of
taxes and spending, but also by their composition and structure. I hope
that, in addressing our long-term fiscal challenges, the Congress and
the Administration will seek reforms to the government's tax policies
and spending priorities that serve not only to reduce the deficit, but
also to enhance the long-term growth potential of our economy--for
example, by reducing disincentives to work and to save, by encouraging
investment in the skills of our workforce as well as in new machinery
and equipment, by promoting research and development, and by providing
necessary public infrastructure. Our nation cannot reasonably expect to
grow its way out of our fiscal imbalances, but a more productive economy
will ease the tradeoffs that we face.

Thank you. I would be pleased to take your questions.

1. Inflation data are derived using the price index for personal consumption expenditures. Return to text

2. The so-called alternative fiscal
policy scenario, which assumes, among other things, that most of the tax
cuts enacted in 2001 and 2003 are made permanent and that discretionary
federal outlays rise at the same rate as GDP, is presented in
Congressional Budget Office (2010), The Long-Term Budget Outlook (Washington: CBO, June (revised August)). Return to text

3. See the two long-term scenarios for mandatory federal spending on health care shown in figure 2-3, p. 39, in CBO, The Long-Term Budget Outlook, in note 2. Return to text

4. These figures are the inverse of
the ratio of the population age 65 or older as a percentage of the
population ages 20 to 64 shown in figure 3-2, p. 47, in CBO, The Long-Term Budget Outlook, in note 2. Return to text

5. This result requires that the
nominal rate of interest paid on government debt equal the rate of
growth of nominal GDP, a condition which usually serves as a reasonable
approximation. If the rate of interest on government debt is higher than
the growth rate of nominal GDP, as might happen if creditors become
wary of lending, then a primary budget surplus rather than primary
balance is needed to stabilize the ratio of debt to GDP. Return to text

6. Herbert Stein (1997), "Herb Stein's Unfamiliar Quotations," Slate, May 16, www.slate.com/id/2561. Return to text

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Gubbmint Cheese's picture

You are a world class douche bag Ben..

Ray1968's picture

I wonder when the rest of the world will realize that the revolutions around the globe (that are spreading) are a result of his monetary policies.

One day, we'll have zero friends left. Thanks a lot, Ben!

trav7777's picture

Provide an alternative to his policies.

The money system we use didn't provide any.  Allowing it to collapse or suddenly switching to a new one?  Revolutions ANYWAY.

pods's picture

Agree trav, but it is quite hypocritical when Ben gets up there and speaks of austerity, when it would be austerity that would implode the entire system and leave him dangling on the end of some boiled hemp.


equity_momo's picture

Far easier to transition when people arent starving or cold or homeless. Youre an erudite , if abrasive , contributor trav , but dont go all nihilistic.

Money printing is about one thing and thing only - protecting the elite.Inflation is an oligarchs best friend.

I dont buy into the fearmongering about armageddon when the banking system collapse. BS.  its as bad as the fear mongering about terrorism.

trav7777's picture

you should, you should.

The end of the banking system means the end of the world as we know it.  Sure, there's another world out there waiting in the Undiscovered Country for us.  But it will not be without massive changes in everything.

The Great Depression was what happened when they did not print.

Look; the monetary system chosen cast the die for us...there is no way out of major pain at this point.  Just the fact that we won't have 130mbpd in 2035 to let Chindia get to per capita consumption rates commensurate with the 2nd world is enough of a WTF shocker that it should provoke an uprising.

The American Dream is not happening globally and this lack of a better "future" is a major mellow harsher

equity_momo's picture

At the end of the day , i know what i can change and what i cant. And i dont waste time trying to piss into the wind. Massive change is coming regardless what actions our leaders take. But the way i see it  , the most productive change would have occurred had we let Wall St and the oligarchy goto hell in 2008. And i fully understand the energy predicament.   My money is on a war or proxy war with China - perhaps its already underway and North Africa are just the pawns falling. 

B9K9's picture

Right on all counts - all roads lead to collapse. It's just a matter of timing - now or later? The fatal flaw in Ben's thesis is that we don't have a Ghawar or two or three in reserve to power us out of this decline. Given the opportunity, Ben may have been able to pull off reflation in the 30s, but we don't have the ability to actually repeat the same trick of WWII and the post-war economic environment.

In many ways, your good friend Karl Denninger was absolutely correct in that we should have set up national food banks & shelters back in 2008. Instead of wasting $trillions (which don't actually exist), we could have prepared for the deflationary implosion. Now, when it arrives, we're gonna be standing around with our puds in our hands.

The PTB decided to double-down with our lives as collateral; when the margin call comes, look out!

trav7777's picture

there's a lot of things the government could have and should have done.  I have said many times that the Clitton Presidency was the worst ever because at a time of oil glut and strong dollar we could have printed our way to rooftop solar panels, nuclear power via PBMR, and a variety of other initiatives that would have at least given us the surplus electricity to have examined the whole electric transportation and H2 path.

Nevermind the utter failure to invest in technological advancement beyond fiber ethernet everywhere.  That yielded dividends, but in terms of fuel cells, propulsion systems, you know, all the shit we rely on oil for, we went in the opposite direction toward more consumption.

StarvingLion's picture

Which only proves that the international debt finance scum will fuck up your backyard even if its chock full of easily harvested minerals and hydrocarbons.  A casino is never interested in the general welfare of the community it resides in.  The stupid TV fuckwits who worship gaming and their so-called independence have ushered in their own demise...the house always wins.  Lack of oil had nothing to do with it just as all the shit bangs over banking over the milennia never had anything to do with oil.  Concentration of wealth and power due to systematic gaming in all aspects of our pathetic excuse of a society.

Assetman's picture

Very powerful thoughts there, B9K9.  You and trav, as always, are right on the mark.

I think trav has hit on some very salient points, but the fact of the matter is that there will still be a massive financial system collapse.  We are simply destined to a reset of the finanical system regardless.

The only difference being between what Genocide Ben is doing and what should have happened in 2008 is that $ trillions were wasted to delay an eventual lost cause.  The curtain has been left open for the select few to make their escape.

Not only did the PTB double-down with our lives as collateral, our fearless leaders will continue to double down-- until it isn't their problem anymore.  That day comes in January 2013, assuming we make it that far.

cranky-old-geezer's picture

"The Great Depression was what happened when they did not print."

No, it's what hapened when they collapsed money & credit, the dump phase in pump & dump, just like they pumped & dumped real estate this go-round.

It's why the Fed was created. Pump & dump the economy every so often.

tellsometruth's picture

strange how they just let lehman fail... oh wait more of a calculated collapse of credit with the banking laws they (TBTB) were surely aware of

tellsometruth's picture

strange how they just let lehman fail... oh wait more of a calculated collapse of credit with the banking laws they (TBTB) were surely aware of

jmc8888's picture


Banks can be run by people making 100k tops, it ain't hard.  McDonalds is harder to run correctly than a Bank.

LaRouche has been completely right.  While things wouldn't be perfect, and rough spots would happen, they would be temporary.

Ben's way is permanent new dark age.

Banks are not food producers, or manufacuturers, or anything real.  They're fake. They can use their fake 'money' to destroy all the above, and if we let that happen, and not understand Gov't issuing credit as a counterbalance to the dissappearance of our illegitimate Queen of England (I'm american, she ain't my queen even if she runs the place), then your scenario is much more plausible.  Considering how much of idiots the people in power are, probably even likely.  But all it takes is one idea, one person, to change it all.

Glass-Steagall for removal of trillions of bad debt

American credit system for private and public works/companies/projects whatever.

Meanwhile the closures haven't happened in any way that resembles back then.

You see FDR did good, LaRouche's plan is superior.  FDR dealt with it WITHIN the monetary system (due to WWII on the horizon and was to be trashed after it...but he died), but LaRouche wan'ts to deal with THIS one, OUTSIDE of the monetary system from the GET GO.  The American Credit (hamiltonian) System.

Using THAT plus Glass-Stegall, and to mimic his CCC/WPA with NAWAPA, would be vastly superior than what FDR did.  (not to belittle FDR)

Now, if we wait another year, or two or five, then try it, with so much destruction immediately, again your way would look much more plausible.  But not now, and definitely not if we did this in 2008, or better yet the HPBA of 2007 (yes the year is right, as the knowledge was widespread).

But we're not there yet, we haven't reached that point in which we must have a worldwide great depression, and even if we did, our plans now to get out are 100x better than FDR's, who of course only did it 100x better than anyone else ever had.

Now also how bad it gets is determined by many other things.  For instance, when the Queen of England is shown the true value of her monetary system, nothing, will she allow the U.K. and her commonwealth to go down? Well if the answer is yes, then it happens there at least, and needlessly.  Or the U.K. could implement it's own Glass-Steagall to save itself as well.

All we're really talking about is taking bad debt off books.  Entities without bad debts, because they are zeroed, don't go under. 

Those that choose not to zero them, will go under.  So the destruction in many ways is determined by how stupid, pig headed, and retarded the heads of these countries, corporations, etc are.  We know most are dumber than a doorknob, but would they really be this dumb?

Some will be.  Most will not.  Most of the printing done resides on computer hard drives, not wheelbarrows. 

There will be major pain to THOSE guys.  To the people?  The food, jobs, and opportunities would be in abundance almost immediately. Of course for food it would take a season or two, before it's grown, but it can be done.  In the meantime it's really the lack of the value of fiat currencies (thanks Uncle Ben) that is causing the rise in prices.  Yes speculation, but speculation on the back of the fed's printing.  That would be gone (except for the masochists that want to keep their monetary system alive).  Also the hoarding because they think the price would go up, would subside.  We can feed 12 billion people with todays tech, the only reason we don't is monetarism and greed.  It's the effects of the laws of the world, not the lack of the ability to produce foods, that creates our food riots today and in the future. 

Again, when do the poor bastards in Egypt realize that until the Queen of England's imperial monetarism is toast, via Glass-Steagall (which would immediately destroy British imperialism...or cause Uncle Ben to humoursly TRY to print a >quadrillion in a day), that their food prices are only going up, up, and up.  Mubarak, El-baradei, other...doesn't matter.  The Queen controls the fate of our food supply, and she's told Ben to print away like Mel Gibson in Signs told Joaquin Phoenix to 'swing away'. 

So while it may be an undiscovered country to you (which is ok btw), to others, it isn't.  There is a plan, it will work a whole lot better in reality than our dream is today....and it doesn't involve the Queen's stooges Barack Paul, the Keynesian Austrian.

But of course, if we fail to act, nowhere do I disagree with you.  But there are far better ways to approach the great depression (which come from the lessons we actually learned about the depression) than the way we conducted our attempted exit from the great depression.

There will be some pain, and those that hold onto the past could lose all.  But I think we can avoid massive pain, and all it takes is a few good people to do it.  All it took was FDR for us to not go down the Bush/Obama path.  To get us ready for WWII. (obviously more behind the scenes...but the direction came from one)

Today, after our country has lived through these experiences, we really have the tools to get it right, starting now.  We don't have just FDR, we have millions who understand what FDR did better than experts did then.  Hell we know better than FDR.  But even though the angelides report needed one line to go from outlining the cause being the scope of the report to be expanded to include the solutions of....would just to have added one line at the end.  Even though they give no solutions, everything in there they find at fault, is fact.  As LaRouche puts it, it vindicates him and all his work on the issue since around the time Barbara Walters was taking about something named TET.

Glass-Steagall would have prevented and can still fix this mess.  17 trillion wiped away instantly.  Everything changes.  Remember all a bank really needs to open the door are its customer's desposits.  Any monkey can run it.  Especially if you take away all the bs financial engineering that most that worked there didn't understand anyway.

End British Imperialism overnight, enact Glass-Stegall.

Now if I was less optimistic I was say trav is right.   He still may be.  But since we aren't there yet, lets do create something a little better while we can. 


trav7777's picture

Look; a gold backed currency will not resurrect Cantarell.

You can beat your gold into a calf and pray to it; won't make a shred of difference in the outcome.

Real things are driving this collapse, not human artifices like money.  We had a 400-year growth run, but all things end.

If we are serious about "change" there will be a lot of stuff needing to happen that will be wholly unpalatable.  I mean eugenics, massive population attrition, the end of a lot of silly egalitarian fetishes, government resembling voluntary marxism, etc.

We are facing a sinking luxury liner and lifeboats don't pilot well on group consensus.  We are facing an era of Contraction.  For those in the EW persuasion, the industrial revolution and the period since the renaissance are upward waves that must be retraced.

ALL depends upon whether we can come up with a new energy supply that can grow.  Nothing else matters.  If we assume that it is likely that we cannot, we have two choices.

This is straight out of Bartlett- either WE take some choices from the right hand side or we let nature pick.  Nature stands ready with the Four Horsemen; I propose a more humane outcome.

Either way, these are painful choices.  It will not be easy for people to hear that they cannot reproduce at will or consume as they see fit.  But, if we simply whistle past the graveyard, EVENTUALLY, nature will make these choices for us, as inexorably as they were made for Easter Islanders.

StarvingLion's picture

ALL depends upon whether we can come up with a new energy supply that can grow

I just solved fusion.  Essentially very cheap and inexhaustable energy.  Except I can't put it in a bulldozer, airplane, or car.  It can't be financed even by large governments (see ITER).  Even disregarding the fact that the USA is already a sardines can packed with houses and people,


Nothing can replace the flexibility of cheap oil and the immense # of jobs associated with it.

NOTW777's picture

right. just ask the dead people about the "fearmongering"

oh wait - you cant

Ray1968's picture

People riot because they are hungry. They've had an oppresive regime for 30 years. But they taxed lightly..(No taxation, therefore No Representation).

They are hungry because food has skyrocketed. Food skyrocketed because the dollar (mainly). Maybe I'm missing something big here, but it seems like a pretty simple formula to me.

When 80% of your income goes to food, there's not much wiggle room.

traderjoe's picture

Trav, I'm going to have to disagree with you here. In theory, I believe it would be possible to dissolve one monetary system and start another without revolution, IF the transition was planned for the benefit of the people (and not the bankers). Debt jubilee's, abolishment of fractional reserve banking, alternative monies/currencies available, etc. 

Of course, in reality, the inevitable transition/collapse is still inevitable, and will likely be done in as chaotic as fashion as possible - to benefit the bankers and the PTB. 

And as referenced above, I believe Ben's policies are losing us friends around the globe, and still haven't solved any of the monetary problems (which you are oft to point to). Cheers...


trav7777's picture

nonsense.  No change that major is accomplished painlessly.

There would be winners and losers.  Anyone not in debt would be a loser.  Anyone who lent money would be a loser.

Stop viewing reality through gold-colored lenses

Assetman's picture

You contradict yourself, trav.

If debtors and creditors are both losers... then who really wins?

Assetman's picture

Damn it... I need to get a new set of gold-colored glasses.

I see your point.

Little wonder that our own goverment is going into hock at an unprecedented rate.  Winner.

koaj's picture

iceland begs to differ

trav7777's picture

Iceland is full of civilized white people.

No, I do not care if I offend the diversity police by saying this.

Expect DIFFERENT outcomes from disasters depending upon the race of the population occasioned thereby.

equity_momo's picture

By that reasoning , are you suggesting uncivilized brown people are able to prevent a transition from one system to the next?

I think the reason it worked in Iceland wasnt due to race , more IQ.  The average American is so dumb , white included , that we could transition from one system to the next and they wouldnt have a clue.   Most are in debt up to their eyeballs , theyd have nothing to lose. And if it came to starvation ,well ,what are they going to do about it?  This is what it boils down to. Keeping people fed.  All those food stamps..... mmmmm what happens when they pull that plug?

trav7777's picture

race/ethnicity correlates to IQ.  white black hispanic asian jewish kurd arab slav, all have different IQ bell curves.

Interestingly enough from a diversity perspective, a lot of organizations (public) are now no longer counting asians as minorities, despite their being like 4% of our population.

They apparently aren't the right kind of minorities.  The US #1 public highschool counts 4% minority enrollment despite an incoming class that is 40+% asian.  Similar trends exist at major technical schools like MIT or Caltech.  Welcome to the brave new world my slanty eyed friends, you don't qualify as minorities.

But to address your point, they sure as hell would notice when the things they were accustomed to were suddenly gone.  This lifestyle we lead REQUIRES well over 10mbpd of imported oil.  If you took the FRN away from us, the power of the USD hegemony, do you really think we could afford that?  Remember, we eat oil these days.  We translate oil calories into food calories through industrial petrochem agriculture.

equity_momo's picture

As un-pc as you are , which i respect, i cant disagree. Im trying to play devils advocate.  I think diversity is a large problem and we are going to see some striking battle lines drawn up between several dynamics : ethnicity , wealth , age.   They will all overtake the old left-right paradigm.

Generation Ys will rail again Baby Boomers.   Blacks against whites. Rich against poor.

Lots to divide and conquer.


Curiously , i see the 20 to 30 somethings with wealth and/or intelligence currently having less children , if any. Like bees , these people know innately all is not well.  Govns have sponsored the feckless to overbreed , making the gene pool look like something out of a stagnant pond. 


whatsinaname's picture

So who is going to win the battle ? Mervwyn King (BOE) or BB (Fed) ? Austerity UK style hurting in the short run but will atleast help the solvency part of their equation. We on the other hand are just sliding into an abyss !!!

SparkyvonBellagio's picture

Ol' Reptile Ben at it again.


I believe he does the Geico ads when he's not wearing his 'beard' suit.



slewie the pi-rat's picture


batmanke has become a cartoon favorite of children, worldwide.

gotta tip my hat to him 4 this:

"The public must therefore rely on the diligent reporting, clear thinking, and lucid writing of reporters..."

George Burns, who also played God, as i recall, wouldn't have been able to get that fukin line off with a straight face!


TruthInSunshine's picture
02-03 12:37: Fed's Bernanke says QE 'effective at easing financial conditions'
02-03 12:35: Fed's Bernanke says unemployment, inflation likely to defy Fed mandate
02-03 12:34: Fed's Bernanke says 'overall inflation remains quite low' You simply can't make this shit up... ...Even if you were acid trippin'...
Ergo, Ben Bernank isn't acid trippin'...
..he's just a liar of epic proportions.
jus_lite_reading's picture

BUT.... BUT... Dancing with the Stars is on TV!

HarryWanger's picture

I believe he's stating that inflation needs to be higher in the Fed's eyes to address debt. So, if he see headline inflation as being benign, then it is defying the Fed mandate. So it's really not so odd.

Rogerwilco's picture

IOW, Bernanke provides an example where sociopathy and high IQ are correlated.

Bill Lumbergh's picture

Of course, just exclude energy and food then make hedonic adjustments here and there and voila no inflation at all.

NOTW777's picture

how much "higher"

$150 oil, $10 bread, $5 gas

Hedgetard55's picture

Ben's mandate is to make his bankster buddies whole so that he has a cushy 8 figure position waiting for him when he leaves the FED, just like Greenscam. Everything else pales in comparison.

sodbuster's picture

Greenscam! I hadn't heard that, before- that's good- I like that! You're right- most of the banks are insolvent, and it's his job to transfer the wealth from the responsible, hardworking, savers, to the the irresponsible criminals.

Cleanclog's picture

Thank you. I would be pleased to take your questions.

"But I won't be able to answer any of them honestly.  I just need you to report as part of my propaganda machine.  You are part of the great lie.  Thank you.  I said that, right?  Thank you.  Now go buy stocks.  And go further into debt.  That is the great American way.  To do any less is unpatriotic.  Thank you."  The Bernanke

jus_lite_reading's picture



I told you, with a name like Benjamin Shalom Israel Bernank he MUST be the messiah!

azusgm's picture

That speech coming from that person is reason enough to cause the spike in the precious inedible commodities.

Being lied to does get rather stale.

umop episdn's picture

You are absolutely correct. Fortunately, there are those who are trustworthy and blessed with stronger stomaches than I have and who are willing to read this and point out the lies for me.

redpill's picture

Inflation remains low? I mean, WTF.

Ray1968's picture

Sure... as long as you don't eat or use energy (things needed for life).

Keep selling LCD HD televisions!!! They keep going down in price.

pods's picture

And they actually taste quite good if marinated properly.


dick cheneys ghost's picture

mortgage rates were up again. i thought money printing was supposed to bring rates down? 

jus_lite_reading's picture

[in the voice of James Cagney] "Rates are up because of the strong recovery, see? The 10% increase in the price of rice in 4 days is also part of the "wealth effect" and strong recovery, see? Green shoots everywhere, see? Jobs everywhere, see? Record Whore Street bonuses while 44 million americans on food stamps is also a Green Shoot, see?"