Guest Post: The Bennie Who Stole Christmas

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Submitted by Jim Quinn of The Burning Platform

The Bennie Who Stole Christmas

Ben Bernanke is a highly educated PhD from Princeton who has never
worked a day in the real world since he graduated from college in 1975.
His entire life has been spent in the ivory tower of academia surrounded
by models and theories that work perfectly in the comfort of his
office. After building his reputation as an “expert” on the Great
Depression by studying it and reaching the wrong conclusions, he came
down from his ivory tower in 2002 to join an organization that has
systematically destroyed the value of the US currency, thereby
undermining the well being of the once vibrant middle class.

He became a member of the Federal Reserve
and has served his masters (Wall Street Banks, Mega-corporations,
Washington politicians) unswervingly since. When he makes his now
regular appearances on 60 Minutes, he tries to
give the appearance of being someone concerned about the average
American. The facts in the real world completely obliterate the lies
he nervously mouths while answering softball questions underhanded to
him by corporate media mouthpieces. His quivering lip and nervous ticks
reveal his true nature. How could Bernanke blatantly take measures that
destroy the lives of millions of Americans?  Maybe Dr. Seuss had the
answer: 

 

It could be his head wasn’t screwed on just right.
It could be, perhaps, that his shoes were too tight.
But I think that the most likely reason of all,
May have been that his heart was two sizes too small.
Whatever the reason, His heart or his shoes,
He stood there on Christmas Eve, hating the Whos,
Staring down from his cave with a sour, Grinchy frown -
Dr Seuss

If the Grinch had been pimping for a small
pack of Grinchsters who impoverished the honest people of Whoville, then
the Dr. Seuss poem would have perfectly described Ben Bernanke, the
Federal Reserve and the banksters that run the show here in the USA. The
actions taken by Ben Bernanke, Alan Greenspan and their brethren on the
Federal Reserve over the last quarter century have destroyed the middle
class and left senior citizens impoverished, while enriching its Wall
Street masters. Now he is stealing Christmas from the hard working
middle class of this country.

Bernanke’s latest theoretical venture into manipulating the puppet
strings of the economy began with his speech at Jackson Hole in August
and concluded with his Op-Ed on November 4. His master plan to buy an
additional $600 billion of Long-term Treasuries is being implemented on a
daily basis. This QE2 follows his previous QE1, which consisted of
buying $1.4 trillion of toxic mortgage securities from his masters, the
insolvent Wall Street banks. What follows are Ben Bernanke’s own
words:   

“I believe that additional purchases of longer-term securities,
should the FOMC choose to undertake them, would be effective in further
easing financial conditions.”
Ben Bernanke – August 27, 2010 -  Jackson Hole

“Given the Committee’s objectives, there would appear–all else
being equal–to be a case for further action. For example, a means of
providing additional monetary stimulus, if warranted, would be to expand
the Federal Reserve’s holdings of longer-term securities. Empirical
evidence suggests that our previous program of securities purchases was
successful in bringing down longer-term interest rates and thereby
supporting the economic recovery.”
Ben Bernake – October 15, 2010 – Boston Speech

“To promote a stronger pace of economic recovery and to help
ensure that inflation, over time, is at levels consistent with its
mandate, the Committee decided today to expand its holdings of
securities. The Committee will maintain its existing policy of
reinvesting principal payments from its securities holdings. In
addition, the Committee intends to purchase a further $600 billion of
longer-term Treasury securities by the end of the second quarter of
2011, a pace of about $75 billion per month.”
Ben Bernanke Fed Announcement – November 3, 2010

“This approach eased financial conditions in the past and, so
far, looks to be effective again. Stock prices rose and long-term
interest rates fell when investors began to anticipate the most recent
action. Easier financial conditions will promote economic growth. For
example, lower mortgage rates will make housing more affordable and
allow more homeowners to refinance. Lower corporate bond rates will
encourage investment. And higher stock prices will boost consumer wealth
and help increase confidence, which can also spur spending. Increased
spending will lead to higher incomes and profits that, in a virtuous
circle, will further support economic expansion.”
Ben Bernanke – November 4, 2010 – Washington Post Op-Ed

Ben and his friends on the Federal Reserve have a PR machine to help
sell their lies. Let’s assess whether Ben and his Federal Reserve have
helped or hurt the average American.

Throwing Senior Citizens Under the Bus

Then he slunk to the ice box. He took the Whos’ feast, he took
the who pudding, he took the roast beast. He cleaned out that ice box as
quick as a flash. Why, the Grinch even took their last can of Who hash.
-
Dr Seuss

 

There are approximately 40 million senior citizens living in 25
million households in the US. According to the Census Bureau, more than
12 million of these households survive on less than $30,000 of income
per year. The median household income in the US is $49,777. A full 70%
of all over 65 households make less than the median income.  A recent
study found that 58% of those between 60 and 84 will at some point fail
to have enough liquid assets to allow them to get through unanticipated
expenses or declining income.

The vast majority of their income is from Social Security payments.
Most senior citizens are rightly risk adverse and dependent upon income
from certificates of deposit. During the 1990′s and as recently as 2007,
a senior citizen could get a 5% return on a CD. Many of these people
depended on this interest income to pay their everyday expenses. Below
is a chart that plots the average interest rate for 6 month CDs since
1964. Today the average rate on a 6 month CD is .30%.

Ben Bernanke is to thank for this poverty enhancing rate. He reduced
the discount rate to 0% while paying interest on deposits at the Fed.
The affect of this policy has been to transfer hundreds of billions to
the Wall Street criminal banks from the pockets of senior citizens and
other Americans dependent upon interest income to sustain their meager
lives. A brainless CNBC anchor can look at this chart and realize that
the Federal Reserve caused the housing crisis by driving down rates from
2002 through 2005. Ben Bernanke, who never saw the housing collapse
coming and personally had an exploding adjustable rate mortgage, has
learned nothing from the prior disaster. He has driven rates down to 0%
in order to force people into speculative investments. The Federal
Reserve is a perennial bubble blower. This will likely be the final
bubble of Bennie’s career.

 Graph: 6-Month Certificate of Deposit: Secondary Market Rate

These recent actions by the Federal Reserve are just the tip of the
iceberg. Alan Greenspan, the Federal Reserve and the US Government have
systematically screwed senior citizens for decades by purposely
understating CPI. The result has been that the cost of living
adjustments to Social Security has seriously lagged real inflation. For
the 2nd consecutive year senior citizens will get no cost of living
increase on their Social Security. The average monthly Social Security
payment is $1,074. While seniors struggle to make ends meet, Wall Street
banks are handed billions in free money by Ben Bernanke. The chart
below details the COLA increases since 1975. Alan Greenspan and his
commission began manipulating the CPI in the early 1980s. 

Social Security Cost-Of-Living Adjustments
Year COLA
1975 8.0
1976 6.4
1977 5.9
1978 6.5
1979 9.9
1980 14.3
1981 11.2
1982 7.4
1983 3.5
1984 3.5
1985 3.1
1986 1.3
1987 4.2
1988 4.0
1989 4.7
Year COLA
1990 5.4
1991 3.7
1992 3.0
1993 2.6
1994 2.8
1995 2.6
1996 2.9
1997 2.1
1998 1.3
1999 2.5
2000 3.5
2001 2.6
2002 1.4
2003 2.1
2004 2.7
Year COLA
2005 4.1
2006 3.3
2007 2.3
2008 5.8
2009 0.0
2010 0.0
a The COLA for December
1999 was originally determined as 2.4 percent based on CPIs published by
the Bureau of Labor Statistics. Pursuant to Public Law 106-554,
however, this COLA is effectively now 2.5 percent.

 

Since 2000, seniors have seen their monthly payment increase by 27%,
or less than 2.5% per year. I challenge anyone to convince me that
inflation has been 0% for the last two years. I have calculated my real
inflation and it is four times the government reported figure. I suppose
government bureaucrats and Federal Reserve Chairmen don’t fill up their
gas tanks or go food shopping. John Williams at www.Shadowstats.com
calculates the CPI as it was calculated prior to the Greenspan fraud.
Based on this true assessment of inflation, prices have increased by
100% since 2000, or 8% per year.

Only an Ivy League academic could examine the following yearly price
data and conclude, as Bernanke has, that inflation is well contained:

  • Unleaded gas up 24%
  • Heating Oil up 28%
  • Corn up 50%
  • Wheat up 48%
  • Coffee up 56%
  • Sugar up 27%
  • Soybeans up 30%
  • Beef up 26%
  • Pork up 22%
  • Cotton up 101%
  • Copper up 33%
  • Silver up 72%

I wonder what a can of Who Hash will cost in 2011?

The truth is that senior citizens spend a much higher percentage of
their limited income on the basics of housing, transportation, food, and
insurance. So, these increases have a much greater impact on seniors
than rich bankers and Princeton scholars. The figures for key items over
the last decade prove the point that seniors have fallen further due to
the inflationary policies of the Federal Reserve.






Category Expense Cost in 2000 Cost in 2010 % Increase, 2000 – 2010
Housing Homeowner’s insurance (annual) $508.00 $1,059.00 108%
  Real estate tax (annual) $690.00 $1,223.88 77%
  Heating oil (gallon) $1.15 $2.88 150%
  Natural gas (per thousand cubic foot) $6.37 $10.39 63%
  Electricity (per kw hr) $0.08 $0.12 50%
Transportation Regular gas (gallon) $1.26 $2.75 118%
Medical Medicare Part B premiums (monthly) $45.50 $110.50 143%
Food 10 lbs. potatoes $2.98 $4.98 67%
  Eggs (dozen) $0.93 $1.79 93%
  Ground chuck (lb.) $1.90 $2.83 49%
  Bread, white loaf $0.91 $1.36 50%

 

Helping Housing?

And the one speck of food That he left in the house,
Was a crumb that was even too small for a mouse.
Then He did the same thing To the other Whos’ houses
Leaving crumbs Much too small For the other Whos’ mouses! -
Dr. Seuss

Not only was Ben Bernanke complicit in aiding Greenspan in creating
the housing bubble by keeping interest rates too low for too long,
completely missing a two standard deviation (PhDs love this stuff) price
bubble right in front of his eyes, telling Americans that we had a
strong housing market, telling Americans that housing price declines
would not affect the economy, not regulating or policing the rampant
mortgage fraud that was happening under his nose, and aiding and
abetting the very criminal banks that created the bubble, but now he has
blatantly lied by saying his QE2 $600 billion monetization of our debt
is to support the housing market. If you believe this, I have some prime
real estate with great views in the mountains of Afghanistan to sell
you. 

In his October 15 speech, Bernanke assured the world that QE2 would reduce long term interest rates. On November 4, he stated:

“Lower mortgage rates will make housing more affordable and allow more homeowners to refinance.” 

On October 7, one week before Bernanke gave the green light to QE2,
the 10 Year US Treasury rate was 2.38%. Today it stands at 3.3%, almost
100 basis points higher. I’m guessing this guy isn’t very good picking
his weekly football pool. Interest rates have done the exact opposite of
what he proclaimed they would do. These rates have surged in the face
of an already weakening economy, as unemployment continues to rise and
home prices continue to fall. A 100 basis point rise in Treasury
bonds piles approximately $120 billion more interest expense per year
onto the backs of future generations.

 Chart forCBOE Interest Rate 10-Year T-No (^TNX)

The rate on 30 year fixed mortgages has surged to 5.07% from 4.4% in
mid-October. That should do wonders for refinancing and home purchases.
Bernanke’s actions have priced millions of people out of the market. He
has inflicted more damage on an already teetering housing market and has
insured that home prices will plunge by another 20% in the next year.

Mortgage rates for Dec. 15, 2010

Despite the trillions of dollars thrown at the housing market by
Bernanke and Obama through home buyer tax credits, mortgage modification
programs, purchasing toxic mortgages from the criminal banks at 100
cents on the dollar, artificially reducing mortgage rates, and forcing
those government run disasters Fannie Mae, Freddie Mac and the FHA to
backstop more bad loans, home prices are resuming their downward
trajectory to fair value. That value is at least 20% lower. With 22.5%
of all properties (10.8 million properties) with a mortgage having
negative equity, the housing market was already in dire straits. With
the surge in mortgage rates caused by Ben Bernanke’s actions, a rapid
plunge in prices can be expected in 2011, resulting in more foreclosures
and negative equity swamping millions.  

The truth is that Ben Bernanke could care less about the average
American homeowner making $48,000 per year. The real purpose of QE2 was
to further enrich his masters on Wall Street and the ruling elite who
control the wealth in this country.

Wall Street Wealth Bailout

 

“When the Fed uses QEII to subsidize the largest players on Wall
Street, it is disadvantaging the smaller, better run banks, and it is
also playing with politics. Priyank Gandhi and Hanno Lustig, in a
National Bureau of Economic Research working paper issued in November
(No. 16553), suggest that the implicit collective guarantee extended to
large U.S. financial institutions reflects an annual subsidy to the
largest commercial banks of $4.71 billion per bank, measured in 2005
dollars. But, even more important, the paper notes that subsidies for
the “too big to fail” banks shows the Fed’s willingness to support the
equity markets, an extraordinary and ultimately political act that
requires further hearings by the Congress.”
Chris Whalen

Chris Whalen and a few other brilliant analysts realize the true
purpose of Ben Bernanke’s actions. Bernanke even revealed his true
intentions in his November 4 Op-Ed:

“Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.”

On August 26, the day before Bernanke’s Jackson Hole speech, the
S&P 500 was at 1,047. Today, it stands at 1,247, a 19% increase in
the face of  weakening economic conditions for the middle class worker.
The more speculative NASDAQ stood at 2,119 on August 26, and today sits
at 2,649, a phenomenal 25% increase as more middle class Americans have
lost their jobs. Over this same time frame, according to the BLS, there
are 500,000 less Americans employed.

The truth is that Ben Bernanke’s sole reason for implementing QE2 is
to enrich the few at the expense of the many. The chart below paints the
picture clearer than the lies and misinformation you will get from CNBC
and Fox. The top 1% wealthiest Americans own 60.6% of all the stocks in
America, with the next 9% wealthiest owning 37.9% of the stocks in
America. That leaves a full 1.5% of stocks in the hands of the remaining
90% of Americans. Who is benefitting from QE2?

Part 2 of the table clarifies who Bennie is working for. The 90% of
Americans have 42.3% of the liquid deposits, 61.5% of residential
investment and 73.4% of the debt in the country. Ben Bernanke’s actions
have resulted in liquid deposits paying 0% interest (19 largest banks
out of 7,700 banks control 50% of all deposits), residential real estate
prices declining, and the cost of carrying debt to rise. Meanwhile, the
top 1% convinced the public they needed a tax cut so they could
continue to buy  gifts like Clive Christian’s $247,000 Imperial Majesty
perfume, packaged in a diamond-encrusted Baccarat crystal bottle.

Table 2: Wealth distribution by type of asset, 2007
  Investment Assets
Top 1 percent Next 9 percent Bottom 90 percent
Business equity 62.4% 30.9% 6.7%
Financial securities 60.6% 37.9% 1.5%
Trusts 38.9% 40.5% 20.6%
Stocks and mutual funds 38.3% 42.9% 18.8%
Non-home real estate 28.3% 48.6% 23.1%
TOTAL investment assets 49.7% 38.1% 12.2%
 
  Housing, Liquid Assets, Pension Assets, and Debt
Top 1 percent Next 9 percent Bottom 90 percent
Deposits 20.2% 37.5% 42.3%
Pension accounts 14.4% 44.8% 40.8%
Life insurance 22.0% 32.9% 45.1%
Principal residence 9.4% 29.2% 61.5%
TOTAL other assets 12.0% 33.8% 54.2%
Debt 5.4% 21.3% 73.4%
 
From Wolff (2010).

 

Of course, we all know the rich create all the jobs. Too bad they
were created in India and China. No more conclusive evidence of the
Federal Reserve destroying the American middle class can be found on the
US Census Bureau site. The median household income in the US reached
its all-time peak in 1999 at $52,388, in today’s dollars (key data
point). Ten years later the median household income is $49,777. The
standard of living for the median household in the US has fallen by 5%
in the last decade, even using the government manipulated CPI.

The mainstream media will not report this fact. They will report the
non-inflation adjusted figures that show a 22% increase in the median
household income. They do this because they know that the average
American has no clue what the term “inflation adjusted” means. Ben
Bernanke, the Federal Reserve, and the ruling oligarchy can only retain
their power through the use of inflation, while slowly destroying the
currency, impoverishing the masses and enriching them. The website www.mybudget360.com has suggested the proper mission statement for Bennie and the Feds should be:

“To aggregate as much wealth into the banking system
while eliminating the American middle class by a slow systematic
dilution of their currency and financial well being and standard of
living.”







   
Table H-6.  Regions–All Races by Median and Mean Income: 1999 to 2009
(Households as of March of the following year.  Income in current and 2009 CPI-U-RS adjusted dollars (28))
Region and year Number (thousands) Median income Mean income
Current dollars 2009 dollars Current dollars 2009 dollars
 
2009 117,538 49,777 49,777 67,976 67,976
2008 117,181 50,303 50,112 68,424 68,164
2007 116,783 50,233 51,965 67,609 69,940
2006 116,011 48,201 51,278 66,570 70,819
2005 114,384 46,326 50,899 63,344 69,597
2004 113,343 44,334 50,343 60,466 68,662
2003 112,000 43,318 50,519 59,067 68,886
2002 111,278 42,409 50,563 57,852 68,976
2001 109,297 42,228 51,161 58,208 70,521
2000 108,209 41,990 52,301 57,135 71,165
1999 106,434 40,696 52,388 54,737 70,462

 

While real average weekly earnings for the average American are lower
today than they were in the early 1970s, you will be happy to know that
Wall Street bonuses have recovered nicely from the dip in
2008.  Compensation at Goldman Sachs, Morgan Stanley, JPMorgan Chase,
Bank of America, and Citicorp increased by 31% in 2009. Average
compensation rose by 27% to more than $340,000. Bonuses jumped above the
$20 billion mark in 2009, but sadly trail the record of $35.5 billion
in 2006 just before Wall Street destroyed the financial system of the
entire world. According to the NYT, 2010 will be a banner year:

“Wall Street’s five biggest firms have put aside nearly $90
billion for bonuses. Whether it’s for jewelry, high-end clothing or
apartments, bonus spending has long fed a post-holiday boom in January
and February, especially in Manhattan and expensive suburbs like
Greenwich.”

I’m sure this information warms the cockles of your heart.

At the end of Dr. Seuss’ poem, the Grinch repents and brings a happy ending to Whoville:

That the Grinch’s small heart Grew three sizes that day!
And the minute his heart didn’t feel quite so tight,
He whizzed with his load through the bright morning light,
And he brought back the toys! And the food for the feast!
And he, HE HIMSELF! The Grinch carved the roast beast! -
Dr. Seuss

Even if Ben Bernanke’s heart was to grow three sizes, he would be
discarded by the other Grinchsters (banksters) like piece of Whoville
tinsel. The truth of our current situation is better captured by Mick
Jagger in his song Sympathy for the Devil:

I’m a man of wealth and taste
I’ve been around for a long, long year
Stole many a man’s soul and faith

But what’s confusing you
Is just the nature of my game

The people running the show in this country
will not be bringing joy to Whoville. You need to understand the nature
of their game.