Guest Post: Bernanke Is 100% Sure

Tyler Durden's picture

Submitted by Jim Quinn of The Burning Platform

Bernanke Is 100% Sure

I don’t know about you, but I’m not 100% sure about anything. The
older I get, the less sure I am about everything. I question things that
I was sure were true when I was 25 years old. I’m not sure I’ll wake up
in the morning. I’m not sure I’ll survive my commute to work. That is
why I was flabbergasted last night as I watched Scott Pelley interview
Ben Bernanke on 60 Minutes. As a side note, boy this show has gone
downhill. In the old days of real journalism, Mike Wallace would have
scorched Ben Bernanke, pointing out his phenomenal ability to be wrong
or clueless on every financial issue the country has faced in the last
10 years. Today, Pelley underhands softball questions to Bernanke and
never challenges him. It was a pathetic display of journalism.

Below is the dialogue that made me almost fall off my chair:

Pelley: Is keeping inflation in check less of a priority for the Federal Reserve now?

Bernanke: No, absolutely not. What we’re trying to
do is achieve a balance. We’ve been very, very clear that we will not
allow inflation to rise above two percent or less.

Pelley: Can you act quickly enough to prevent inflation from getting out of control?

Bernanke: We could raise interest rates in 15
minutes if we have to. So, there really is no problem with raising
rates, tightening monetary policy, slowing the economy, reducing
inflation, at the appropriate time. Now, that time is not now.

Pelley: You have what degree of confidence in your ability to control this?

Bernanke: One hundred percent.

The hubris in this statement is breathtaking. The U.S. economy is a
complex interaction of thousands of variables and is intertwined with
the policies and actions of hundreds of other countries throughout the
world. No one has a handle on the worldwide economy and no model can
predict anything with any amount of accuracy. And still, this pompous
professor from Princeton who has never worked a day in his life in the
real world is 100% SURE that HE knows what will happen and when it will
happen. I’m sure his track record of predictions and analysis will give
you comfort in this statement:

“We’ve never had a decline in house prices on a nationwide basis.
So, what I think what is more likely is that house prices will slow,
maybe stabilize, might slow consumption spending a bit. I don’t think
it’s gonna drive the economy too far from its full employment path,
though.” – 7/1/2005

“Housing markets are cooling a bit. Our expectation is that the
decline in activity or the slowing in activity will be moderate, that
house prices will probably continue to rise.” – 2/15/2006

March 28th, 2007 – Ben Bernanke: “At this juncture . . . the
impact on the broader economy and financial markets of the problems in
the subprime markets seems likely to be contained,”

May 17th, 2007 – Bernanke: “While rising delinquencies and
foreclosures will continue to weigh heavily on the housing market this
year, it will not cripple the U.S.”

June 20th, 2007 – Bernanke: (the subprime fallout) “will not affect the economy overall.”

October 15th, 2007 – Bernanke: “It is not the responsibility of
the Federal Reserve – nor would it be appropriate – to protect lenders
and investors from the consequences of their financial decisions.”

February 29th, 2008 – Bernanke: “I expect there will be some
failures. I don’t anticipate any serious problems of that sort among the
large internationally active banks that make up a very substantial part
of our banking system.”

June 9th, 2008 – Bernanke: Despite a recent spike in the nation’s
unemployment rate, the danger that the economy has fallen into a
“substantial downturn” appears to have waned,

July 16th, 2008 – Bernanke: (Freddie and Fannie) “…will make it
through the storm”, “… in no danger of failing.”,”…adequately
capitalized”

September 19th, 2008 – Bernanke: “most severe financial crisis”
in the post-World War II era. Investment banks are seeing “tremendous
runs on their cash,” Bernanke said. “Without action, they will fail
soon.”

As you can see, he has been a regular Nostradamus with his predictions.

Whenever I see Bernanke or Obama seek to go on 60 Minutes I get the
impression they are getting desperate. Last night was nothing but a PR
effort by Bernanke because he is losing control of the situation. Our
entire financial system is nothing but a confidence game. During the
interview, Bernanke made two BIG LIES. He said that buying $600 billion
of US Treasuries would reduce long term interest rates.

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

When Bernanke made it clear he would institute QE2 in early October
the 10 Year Treasury was at 2.4%. Today, it is 3.0%. Mortgage rates are
tied to the 10 year Treasury. They are rising, not falling. Bernanke is
lying. His sole purpose for QE2 is to make the stock market go higher,
enriching his Wall Street masters.

His 2nd BIG LIE is that there is no inflation. In his little world of
models there is no inflation. In the real world, where we live there is
plenty of inflation. I guess his limo driver doesn’t tell him that gas
now costs $3.25 a gallon. Let’s assess his no inflation lie:

  • Oil is at $89 a barrel, up 21% in the last year.
  • Gold is trading at $1,413, up 23% in the last year.
  • Silver is trading at $30, up 66% in the last year.
  • Copper is trading at 4 per pound, up 26% in the last year.
  • Corn is trading at 573 a bushel, up 49% in the last year.
  • Soybeans are trading at 1,300 a bushel, up 23% in the last year.
  • Wheat is trading at 779 a bushel, up 41% in the last year.
  • Pork is trading at 104 a pound, up 23% in the last year.
  • Beef is trading at 106 a pound, up 28% in the last year.
  • Cotton is trading at 130 per pound, up 78% in the last year.
  • Sugar is trading at 29 per pound, up 32% in the last year.
  • Coffee is trading at 205 per pound, up 40% in the last year.

If you think these figures couldn’t possibly be correct, go to this link and verify for yourself.

http://money.cnn.com/data/commodities/

Evidently, Mr. Bernanke thinks that the sheeple will just believe him
because he is the Federal Reserve Chairman. The truth is that only two
things are deflating: middle class wages and home prices. Bernanke
certainly has chutzpah when blatantly lying to the American public about
inflation. I’m sure none of you drive cars, heat your homes, eat food,
or wear clothes.

I’m 100% sure that Ben Bernanke will be wrong again. He will
ultimately be known as the professor that never saw the collapse of the
USD coming.

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Cdad's picture

Exactly...I am definitively 100% offended by this arrogant remark.  Hell, I'm only 95% sure The Bernank should be fired.

 

michael.suede's picture

 

How Bernanke Is Using the Printing Press to Win Friends and Influence People | Robert P. Murphy

 

 

http://www.youtube.com/watch?v=BARmYUkdQUE

nope-1004's picture

When the head of the Federal Reserve and (arguably) the most influential financial person on earth shakes due to nervousness when not even facing tough questioning, then you know he's hiding a hell of alot.

After the implosion, he'll be fine because his memoirs about how much he knew and how close to the brink he straddled the economy will be an interesting read anyway.  I'm sure the book will sell well.

 

FEDbuster's picture

If he gets out alive, he will go into hiding like Hank "the Undertaker" Paulson.  I noticed his lips were quivering uncontrollably during the interview.  Hopefully someday soon someone will get to waterboard the Ben Bernak on PPV.  In the meantime, support Ron Paul's appointment to the chairmanship of the Monetary Oversight Commission.

MayIMommaDogFace2theBananaPatch's picture

>> Hopefully someday soon someone will get to waterboard the Ben Bernak on PPV. 

Aw hell.  Then I'll HAVE TO break down and get cable.

michael.suede's picture

 

Does Bernanke Have an Exit Strategy? | Robert P. Murphy

 

http://www.youtube.com/watch?v=dZf3Qye0BtQ

fajensen's picture

Bernanke reminds me of Robert Citron.

johngaltfla's picture

I am 100% sure Bernanke will end up making Arthur Burns look like a great Chairman of the Fed when all is said and done.

TradingJoe's picture

It was funny and worrisome to see Da Bernank's Face making strange moves while lying his but off! I used to be a big fan of 60 Min well not anymore!

ptoemmes's picture

A body language expert ought to have a field day.

Ya know - a "terrorist" security expert who ferrets out lying would have some fun, too.

 

Pete

 

Don Birnam's picture

Not quite up to the level of veracious discomfort evidenced in the face as Chief Inspector Dreyfus, but another "60 Minutes" performance could bear it out.

http://i2.ytimg.com/vi/LEcsgbwBFRs/0.jpg

karzai_luver's picture

Goes without saying that those who have been given absolute power will believe they are actually deserving and have all the answers.

The Bernank is a fanatic a true believer.

gmrpeabody's picture

Frankly, I'm 95% sure we should put the Ben Bernank on suicide watch. If he ever realizes that he is nothing more than a useful idiot, well, it might be more than he could take. He seems very shakey to me.

clymer's picture

 

Ha ha, exactly. Who actually believes that the BenBernank is actually in control of anything that his handlers don't want him to be.

I am surprised they didn't stick him with one of Barry Seotoro's teleprompters after this pathetic display:

 

http://www.youtube.com/watch?v=n0NYBTkE1yQ

 

Implicit simplicit's picture

I have Parent plus loans for 4 of my adult children. This is a short letter that I sent to the Fed, and my local senator today:

 

The Middle Class, Unemployment and Education

 

Education is a major factor in obtaining a job. The degree of education in a population has shown direct correlation with the unemployment rate. The government and Federal Reserve need policies to help employment and the middle class deteriorating income and employment numbers. Therefore, lowering debt burdens of the middle class should be a high priority of the government to promote spending, GDP, and employment. It would be very helpful for the government sponsored Parent Plus Loans to have a lower rate than the current 7.9%. The banks receive rates close to zero. The government implies that it would like to get money to the middle class. They have an avenue through these Parent Plus loans to help middle class parents, who are able to qualify for these loans easier than they are able to qualify for bank loans. Yet the government and their bank conduits continue to charge exuberant rates that are basically pillaging the middle class incomes, while the banks get a low interest rate free ride to invest in treasuries and other assets for a guaranteed profit. What is the logic in these actions?

 

 

Bernake is afraid of deflation. However his gratuitous relations with the banks allows the banks to drive up the price of assets that people need like energy (gas), food, education, and healthcare. The banks like Goldman are taking the low interest QE loans and investing in these assets and their derivatives, thus the dissonance between the economy, and the stock market and commodities. Bernake says he is not printing money, but it is a matter of semantics. It is just an accounting issue where he digitally adds more zeros to the banks balance sheets after he buys back the treasuries with added fees from the primary dealer banks. Ya, Bill Clinton didn't have sex with Monica either.

 

 

 

Rastadamus's picture

Don't worry, Bernank will burn in hell for this.

Rollerball's picture

Not if he believes Jesus died for his sins.

trav7777's picture

what needs to happen is the cost of higher education should come down.  The answer is not higher supplies of credit to cause more inflation there

The Alarmist's picture

The cost of higher education will never come down ... it was deliberately leveraged up over the past two decades as a payoff for the support in brainwashing the children to liberal elite causes by the liberal academic elite who would otherwise be unemployable in the real world. 

aztrader's picture

Check out the salaries of the esteem professors and teachers at some of these colleges.  There is a large percentage in the six figures with some at $300k plus.   They are just like union public employees that won't take a pay cut.

CH1's picture

Can't really disagree, though I'd call them the "statist" elite. "Liberal" is the currently dominant party, but "statist is the core. IMHO.

Clampit's picture

"It was a pathetic display of journalism."

No, it was a contractually scripted appearance by private entities looking to throw congress and the government under a bus to protect their interests. And yes, I'm 100% confident of this...;-)

Rogerwilco's picture

@clampit

Yeah, I was wondering myself why Bernanke even bothers with appearances like this. The FOMC must have some media and PR consultants that see these public displays as somehow supportive of their ultimate goals. For the unwashed, his interview will be edited and boiled down to a few ten-second sound bites, and that is all that matters these days.

Clampit's picture

Why? Because the fed fighting for it's life. Need to show the "people" that they're all about the good of the country. Without risk. No live interview with an unknown quantity, just a well rehearsed appearance at one of the long standing "respected" news organizations under corporate control. Probably could work something out with the PD community on CBS/Time/Warner's next leveraged acquisition...that's the real story here: did the fed have to "pay" for the "privilege" of being interviewed on 60 Minutes or visa versa?

Clockwork Orange's picture

If they wanted people to actually watch it, though, they should have had him appear on Dancing with the Stars.

Only people that can think watch 60 Minutes, even if its just once in awhile such as an occasion to watch, jaw-dropped, a Fed Chair spew out garbage from an upright fetal position.

centerline's picture

Cool post.

History might say he never saw this stuff coming.  Methinks it is quite the contrary.  The more this continues, the more it looks like either a larger game being played - or confluence of all that is social, moral, politically, economically, etc. broken into what amounts to a manifest destiny of fiat currency implosion.  Heck, it's probably both!  A sick combination of the two... just like marketing working off of people's fears and vanity.    

centerline's picture

Thanks.  Looks like some good reading.  Over the last few months I have really firmed up my own beliefs that we are heading for wreck of epic proportions.  Now, it really just comes down to what the pain will be and how to see it coming just a tad sooner than the average person.  Any reading I can get my hands on that speculates with intelligence in this regard is just what the doctor ordered.

trav7777's picture

hypertiger is and always has been correct, and is saying the same thing that I have.

But, the problem is the intermingling of monetarist definitions of inflation versus boots on the ground.  The latter sees a rise in prices, the former, a contraction in the quantity of money.

These are reconcilable only if you accept what I have been saying, that money, which equals debt, as an INSTITUTION is being discounted in the face of what hypertiger and the rest of all us all maintain - that exponential growth has stopped and the future holds contraction.  In the face of a contractionary future UNABLE to pay the yield, much less grow, the value, the "moneyness" of all the existing debt, which IS what we know as the money supply, MUST be discounted with respect to real things.

Because all that outstanding credit base, money supply, is a promise against - collateralized by - future growth which isn't coming.  Therefore, even in the face of clear monetarist deflation, we still see debts' value compared to real assets falling even faster.  This reflects a confidence problem in the ability of debt to maintain its own viability, for a bond to get "cash value" into a contractionary future, as well as to compete in a scarcity environment with other debt instruments for real production.

CrashisOptimistic's picture

I have rather some substantial problem embracing what seems to me to be a contorted, entirely re-imagined, definition of inflation -- in the context of every day life.  It is not clear to me that there's any point.

Inflation is an increase in cost of living.  Or it always has been.  I now see all sorts of lengthy presentation about what it *really* means, but I don't see any evidence that what it *really* means translates to cost of living.  Isn't cost of living the only significance to inflation?  

We all know the drill on this.  Housing and cars have smashed cost of living overall.  All the other things we see price increase on . . . those are entirely real, but they are ignoring the two 800 lb gorillas, housing and cars.  

It looks pretty clear that deflation is in the future because the engine of growth (increasing oil production) is gone forever.  If you are not growing, you do not demand anything not necessary.  If you do not demand it, a price increase won't entice you to suddenly start demanding it.  You can't raise the price of things no one wants.

So yes, food will go up.  Oil will kill us, literally, but enroute to that . . . gadgetry will become relentlessly less attractive.  Ditto sports/entertainment.  Ditto everything not food or oil.  If you don't want it, the price won't go up.

The only way I see what I'd call TRUE, ACTUAL, COST OF LIVING increase in all this is when housing hits rock bottom and people have nowhere to go and so don't demand cars.  Then you can get inflation, driven by the little effects of food and incidentals.  But while housing is flat or down and cars are flat or down, CPI is not going to spike.  It's just not.  

 

 

centerline's picture

And the rub is trying to figure out the behavior of the fiat currency, PM's, etc. relative to the REAL world you mentioned.  The point here is to chart a reasonable path (if possible) through the coming implosion of the system - and the warning signs of said system reaching critical mass.  Screw investment, materialism, high-profile career, success as measured by the broken metrics of our what has become a lost society... I just want to chart a course to the other side.  Would like not to become solient green if possible.

centerline's picture

Still reading hypertiger's stuff right now.  Seriously anger issues - love it of course.  Becoming the "perfect asshole" is sort of hobby of mine (at least according to my wife) - but in a tough-love sort of way of course.  The only thing I don't see so far is any consideration about what to do other than accept that if you are not a Rothschild that the best thing to do is get drunk and drive off the nearest pier.

Hey Assholes's picture

Hmmm... My wife insists that I am the perfect asshole. Can there be more than one?

swissinv's picture

Alpha persons don't know how a confidence interval is working ;)

Clapham Junction's picture

I'm 100% sure that America is made up of

1) Youth that suck the cock of Steve Jobs

2) Baby boomers too stoned on weed to look at their 401-K's until they lost 50%

3) Old farts that game the system to death.

Oh, and Ben's beard IS really cool!

TraderTimm's picture

Guess who I'm 100% sure will be against the wall and shot during a popular revolt? (Hint: It won't be the limo driver.)

trav7777's picture

BS...he'll be in Israel with Putin's oligarchs.

TraderTimm's picture

I reluctantly agree. If anyone can afford a nice gulfstream jet flight to anywhere on the globe, it certainly is him.

But I can dream, can't I?

Mr Lennon Hendrix's picture

I was expecting his mindless rhetoric concerning his methods relating to the markets, so it was the "100%" comment that made me irate.  I wrote this last nigh after reading the excerpt:

Liar's poker?  They can't raise rates!  How would Treasurie repay bonds with that?  Blackhawk may just be that stupid to think we would be so easily tricked.  You know it when he says he is 100%.  When he can't admit there might be a chance of being wrong, you know he is lying.  

 

He epitomizes the academic class.  Neo-Keynsian theory has "worked" (for them) for a good part of the last century.  How could it fail now?

Cult_of_Reason's picture

Bernanke is a liar -- watching 60-Minutes was like watching  old Goebbels' videos from the Nazi propaganda archive.

 

Ripped Chunk's picture

Cream puff interview. Piece of crap. Pelley was lobbing softballs. A terrible waste of time. Shit.

Internet Tough Guy's picture

Everyone who is waiting for a dip to buy PMs, you are getting it now. Someone didn't like gold at a new high. Hello Blythe.

haskelslocal's picture

You know why Bernake said 100%, he's selling. Could you see through his nervous twitches that he's not a salesman? Could you see the famous poker "tell" when he answered the 100% question that his pulse raced and he swallowed hard? He knew it was time to put it all on the line, yet he's not a public speaker so the flaws show.

Regarding tough questions, hard to do when the interview is scriped before hand. Interviewing should include both tough questions to ask, but more importantly, tough questions formed from the answers given. This takes tallent and knowledge of the subject material and being able to formulate an opinion on the fly. Mr. Pelley has little tallent in this regard. 

 

rogersails's picture

      I am also 100 % sure he can raise rates. It's a few keystrokes on a computer. So there. He speaks truth......But can he really ?

     With unemployment at 10% ? With a Trillion dollar hit to the market value of the Feds Holdings (not to mention the crony banks) ? With hundreds of billions in increased Government borrowing costs ?   Can you really push that button, Ben ?

Cleanclog's picture

And don't forget - he said he can raise rates in 15 minutes.  Hmmmmmm.  I don't think so. More a question of how fast and how often can he raise rates "when necessary"?

optimator's picture

Raise rates in 15 minutes?   Counting the time it takes to let the Boyz know?  Counting the time it would take for the Boyz to sell out?

packman's picture

      I am also 100 % sure he can raise rates. It's a few keystrokes on a computer. So there. He speaks truth......But can he really ?

     With unemployment at 10% ? With a Trillion dollar hit to the market value of the Feds Holdings (not to mention the crony banks) ? With hundreds of billions in increased Government borrowing costs ?   Can you really push that button, Ben ?

 

Nail on the head.  He'll try to weasel out of these statements like Krugman tried to weasel out of his "we need a housing bubble" statement, by mincing words.

The question isn't "can he push the button" - the questions are:

1.  Which of the following will we get first:

  • The beginning of a period where the economy really is strong enough to stand on its own footing, or
  • The beginning of a period of massive inflation (current commodities inflation aside, which is still limited in scope)

and

2.  If the former comes first (definitely not a 100% certainty), is Ben smart enough to know when that period has started but the second has not yet?