Guest Post: QE2 - The Bernanke Chronicles

Tyler Durden's picture

From Jim Quinn of The Burning Platform

QE2 - The Bernanke Chronicles

Our self proclaimed “expert” on the Great Depression, Ben Bernanke,
seems to be feeling the pressure. His theories worked so well when he
modeled them in his posh corner office at Princeton. He could saunter
down the hallway and get his buddy Krugman to confirm his belief that
the Federal Reserve was just too darn restrictive between 1929 and 1932,
resulting in the first Great Depression. I wonder if there will be a
future Federal Reserve Chairman, 80 years from now, studying how the
worst Federal Reserve Chairman in history (not an easy feat) created the
Greatest Depression that finally put an end to the Great American
Military Empire. Bernanke spent half of his speech earlier this
week trying to convince himself and the rest of the world that his
extremist monetary policy of keeping interest rates at 0% for the last
two years, printing money at an astounding rate, and purposely trying to
devalue the US currency, had absolutely nothing to do with the surge in
oil and food prices in the last year. Based on his scribbling since
November of last year, it seems that Ben is trying to win his own Nobel
Prize – for fiction.

His argument was that simple supply and demand has accounted for all
of the price increases that have spread revolution across the world. His
argument centered around growth in emerging markets that have driven
demand for oil and commodities higher, resulting in higher prices. As
usual, a dollop of truth is overwhelmed by the Big Lie. Here is
Bernanke’s outlook for inflation:

“Let me turn to the outlook for inflation. As you all know, over
the past year, prices for many commodities have risen sharply, resulting
in significantly higher consumer prices for gasoline and other energy
products and, to a somewhat lesser extent, for food. Overall inflation
measures reflect these price increases: For example, over the six months
through April, the price index for personal consumption expenditures
has risen at an annual rate of about 3.5%, compared with an average of
less than 1% over the preceding two years. Although the recent increase
in inflation is a concern, the appropriate diagnosis and policy response
depend on whether the rise in inflation is likely to persist. So far at
least, there is not much evidence that inflation is becoming
broad-based or ingrained in our economy; indeed, increases in the price
of a single product–gasoline–account for the bulk of the recent increase
in consumer price inflation. An important implication is that if the
prices of energy and other commodities stabilize in ranges near current
levels, as futures markets and many forecasters predict, the upward
impetus to overall price inflation will wane and the recent increase in
inflation will prove transitory.”

So our Federal Reserve Chairman, with a supposedly Mensa level IQ,
declares that prices have risen due to demand from emerging markets. He
also declares that US economic growth will pick up in the 2nd half of
this year. He then declares that inflation will only prove transitory as
energy and food prices will stop rising. I know I’m not a Princeton
economics professor, but if US demand increases due to a recovering
economy, along with continued high demand in emerging markets, wouldn’t
the demand curve for oil and commodities move to the right, resulting in
even higher prices?

 

Ben Bernanke wants it both ways. He is trapped in a web of his own
making and he will lie, obfuscate, hold press conferences, write
editorials, seek interviews on 60 Minutes, and sacrifice the US dollar
in order to prove that his economic theories are sound. They are not
sound. They are reckless, crazy, and will eventually destroy the US
economic system. You cannot solve a crisis caused by excessive debt by
creating twice as much debt. The man must be judged by his words,
actions and results.

November 4, 2010

With the U.S. economy faltering last summer, Ben Bernanke decided to
launch a desperate attempt to re-inflate the stock market bubble.
The S&P 500 had peaked at 1,217 in April 2010 and had fallen 16% by
July. This was unacceptable to Bernanke’s chief clientele – Wall Street
and the richest 1% in the country. At Jackson Hole in August he gave a
wink and nod to his peeps, letting them know he had their backs. It was
safe to gamble again. He’d ante up the $600 billion needed to revive
Wall Street. It worked wonders. By April 2011, the S&P 500 had risen
to 1,361, a 33% increase. Mission accomplished on a Bush-like scale.

Past Federal Reserve Chairmen have kept silent about their thoughts
and plans. Not Bernanke. He writes editorials, appears regularly on 60
Minutes, and now holds press conferences. Does it seem like he is trying
too hard trying to convince the public that he has not lost control of
the situation? QE2 was officially launched on November 4, 2010 with his
Op-Ed in the Washington Post. He described the situation, what he was
going to do, and what he was going to accomplish. Let’s assess his
success.

“The Federal Reserve’s objectives – its dual mandate, set by
Congress – are to promote a high level of employment and low, stable
inflation. Unfortunately, the job market remains quite weak; the
national unemployment rate is nearly 10 percent, a large number of
people can find only part-time work, and a substantial fraction of the
unemployed have been out of work six months or longer. The heavy costs
of unemployment include intense strains on family finances, more
foreclosures and the loss of job skills.” -
Ben Bernanke – Washington Post Editorial – November 4, 2010

Ben understands his dual mandate of high employment and low
inflation, but he seems to have a little trouble accomplishing it.
Things were so much easier at Princeton. Since August 2010 when Ben let
Wall Street know he was coming to the rescue, the working age population
has gone up by 991,000, while the number of employed Americans has
risen by 401,000, and another 1,422,000 people decided to kick back and
leave the workforce. That is only $1.5 million per job created. This
should get him a spot in the Keynesian Hall of Shame.

The official unemployment rate is rising after Ben has spent $600
billion and stands at 9.1% today. A true measurement of unemployment as
provided by John Williams reveals a true rate of 22%.

Any reasonable assessment of Ben’s success regarding part one of his
dual mandate, would conclude that he has failed miserably. He must have
focused his attention on mandate number two – low inflation. Bernanke
likes to call inflation transitory. Inflationistas like Bernanke will
always call inflation transitory. His latest proclamations reference
year over year inflation of 3.5%. This is disingenuous as the true
measurement should be since he implemented QE2. The official annualized
inflation since December 2010 is 5.3%. The real inflation rate as
calculated exactly as it was in 1980 now exceeds 10%.

  

Mr. Dual Mandate seems to have slipped up. As he stated in his editorial, he wanted to fend off that dreaded deflation:  

“Today, most measures of underlying inflation are running
somewhat below 2 percent, or a bit lower than the rate most Fed
policymakers see as being most consistent with healthy economic growth
in the long run. Although low inflation is generally good, inflation
that is too low can pose risks to the economy – especially when the
economy is struggling. In the most extreme case, very low inflation can
morph into deflation (falling prices and wages), which can contribute to
long periods of economic stagnation.”

He certainly has succeeded in fighting off deflation. Let’s list his anti-deflation accomplishments:

  • Oil prices have risen 35% since September 2010.
  • Unleaded gas has risen 50% since September 2010.
  • Gold has risen 24% since September 2010.
  • Silver has risen 85% since September 2010.
  • Copper has risen 20% since September 2010.
  • Corn has risen 67% since September 2010.
  • Soybeans have risen 40% since September 2010.
  • Coffee has risen by 44% since September 2010.
  • Cotton has risen 88% since September 2010.

Amazing how supply and demand got out of balance at the exact moment
that Bernanke unleashed a tsunami of speculation by giving the all clear
to Wall Street, handing them $20 billion per week for the last seven
months. Another coincidence seemed to strike across the Middle East
where the poor, who spend more than 50% of their meager income on
food, began to revolt as Bernanke’s master plan to enrich Wall Street
destroyed the lives of millions around the globe. Revolutions in
Tunisia, Egypt, Libya, Yemen, Bahrain, and Syria were spurred by
economic distress among the masses. Here in the U.S., Bernanke has only
thrown savers and senior citizens under the bus with his zero interest
rate policy and dollar destruction.

Bernanke’s Virtuous Circle

“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 – Washington Post Editorial – November 4, 2010

Ben Bernanke could not have been any clearer in his true purpose for
QE2. He wanted to create a stock market rally which would convince the
public the economy had recovered. As suckers poured back into the
market, the wealth effect would convince people to spend money they
didn’t have, again. This is considered a virtuous cycle to bankers. He
declared that buying $600 billion of Treasuries would drive down
long-term interest rates and revive the housing market. His unspoken
goal was to drive the value of the dollar lower, thereby enriching the
multinational conglomerates like GE, who had shipped good US jobs
overseas for the last two decades. Bernanke succeeded in driving the
dollar 15% lower since last July. Corporate profits soared and Wall
Street cheered. Here is a picture of Bernanke’s virtuous cycle:

Chart forTiffany & Co. (TIF)

Whenever a talking head in Washington DC spouts off about a new
policy or program, I always try to figure out who benefits in order to
judge their true motives. Since August 2010, the stock price of the high
end retailer Tiffany & Company has gone up 88% as its profits in
the last six months exceeded its annual income from the prior two years.
Over this same time frame, 2.2 million more Americans were forced into
the Food Stamp program, bringing the total to a record 44.6 million
people, or 14.4% of the population. But don’t fret, Wall Street paid out
$21 billion in bonuses to themselves for a job well done. This has done
wonders for real estate values in NYC and the Hamptons. See – a
virtuous cycle.

Do you think Bernanke mingles with Joe Sixpack on the weekends at the
cocktail parties in DC? Considering that 90% of the US population owns
virtually no stocks, Bernanke’s virtuous cycle only applied to his
friends and benefactors on Wall Street.

stock-markets

But surely his promise of lower interest rates and higher home
prices benefitted the masses. The largest asset for the vast majority of
Americans is their home. Let’s examine the success of this part of his
master plan. Ten year Treasury rates bottomed at 2.4% in October 2010,
just prior to the launching of QE2. Rates then rose steadily to 3.7% by
February 2011. I’m not a Princeton professor, but I think rising rates
are not normally good for the housing market. Today, rates sit at 2.9%,
higher than they were prior to the launch of QE2.

One-Year Chart for US Generic Govt 10 Year Yield (USGG10YR:IND)

I’m sure Ben would argue that interest rates rose because the economy
is recovering and the virtuous cycle is lifting all boats (or at least
the yachts on Long Island Sound). Surely, housing must be booming again.
Well, it appears that since Ben fired up his helicopters in November,
national home prices have fallen 5% and are accelerating downward at an
annual rate of 10%. There are 10.9 million home occupiers underwater on
their mortgage, or 22.7% of all homes with a mortgage. There are over 6
million homeowners either delinquent on their mortgage or already in the
foreclosure process. It certainly looks like another Bernanke success
story.

Bernanke’s conclusion at the end of his Op-Ed in November 2010 was
that his critics were wrong and his expertise regarding the Great
Depression trumped rational economic theory. By enriching Wall Street
and creating inflation, his virtuous cycle theory would lead to job
creation and a chicken in every pot.

“Although asset purchases are relatively unfamiliar as a tool of
monetary policy, some concerns about this approach are overstated.
Critics have, for example, worried that it will lead to excessive
increases in the money supply and ultimately to significant increases in
inflation.
But the Federal Reserve has a particular obligation
to help promote increased employment and sustain price stability. Steps
taken this week should help us fulfill that obligation.” Ben Bernanke – Washington Post Editorial – November 4, 2010

Anyone impartially assessing the success of QE2 would have to
conclude that it has been an unmitigated failure and has put the country
on the road to perdition. In three weeks, the Federal Reserve will stop
pumping heroin into the veins of Wall Street. The markets are already
reacting negatively, as the S&P 500 has fallen 6% and interest rates
have begun to fall. As soon as Bernanke takes his foot off the
accelerator, the US economy stalls out because we never cleaned the gunk
(debt) out of the fuel line. Jesse puts it as simply as possible.

“The Banks must be restrained, and the financial system reformed,
with balance restored to the economy, before there can be any sustained
recovery.” – http://jessescrossroadscafe.blogspot.com/

Bernanke and his Wall Street masters want to obscure the truth so
they don’t have to accept the consequences of their actions. The economy
and the markets will decline over the summer. Bernanke is a one trick
pony. His solution will be QE3, but it will be marketed as something
different. He will appear on 60 Minutes and write another Op-Ed. Ben
Bernanke will go down in history as the Federal Reserve Chairman that
brought about the Greatest Depression and hammered the final nails into
the coffin of the Great American Empire.

 

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GeneMarchbanks's picture

Tyler is it possible for the Fed to raise capital reqs to force banks to issue more shares and then use the money to buy treasuries? A sort of stealth QE by way of the banks or is this complete nonsense?

zaknick's picture

How about those Iranians, eh? They provide the fulcrum for other OPEC nations to rebel against the KKK/Banksters Empire (which seems to be coming apart at the seams ...tee hee hee) AND announce the tripling of HEU capacity at the same time! Yeehaaa! Bring it on bankster zombies!

Guess who's backing them up? Just half of humanity! There is hope after all!

http://consortiumnews.com/2011/06/07/asian-alliance-supplants-us-empire/

Oh say can you see, the mushroom cloud over thee!!!

TruthInSunshine's picture

The amazingly accurate predictions and forecasting of the genius that is the Bernank (/sarc):


  Bernanke Video Compilation: Bloopers
snowball777's picture

Not nonsense at all. Many have proposed that a defined portion of their cap requirements be in convertible debt which becomes the shares you describe if necessary. It would sell at a discount to traditional senior debt, but be available for looting if the ship is about to cap-size. Maybe this is why they wanted to be posting laughable dividends of late.

GeneMarchbanks's picture

Thanks snow. But this surely would be a last ditch attempt. Suppose that more shares are issued, who are the poor bastards who are going to buy these shares? Sheer the sheeple is surely coming to an end although I'm known for being wrong on these socio-economic predictions.

Quixotic_Not's picture

Suppose that more shares are issued, who are the poor bastards who are going to buy these shares?

What are they gonna buy, Bitcoin shares?  LOL

Oh BTW Conrad Murray, told ya so!

http://www.zerohedge.com/article/things-make-you-go-hmmm-it-safe#comment...

ST. LOUIS (Thomson Reuters Accelus) - Two senators are pressing federal authorities to crack down on an online black market and "untraceable" digital currency known as Bitcoins after reports that they are used to buy illegal drugs anonymously....

http://finance.yahoo.com/news/Senators-seek-crackdown-on-rb-4251307580.h...

GeneMarchbanks's picture

Dude... first let me say thanks for the reply. Second, I will not get into an extended discussion about bitcoin with you. Here is a quote from the second article you posted:

"U.S. law enforcers might have difficulty stopping Bitcoins without help from their peers in other countries."

It seems you are in the US of A. The fact that your congress is trying to stop this is telling. Here is all I have to say: You don't have to buy into bitcoin if you don't want to. BTW there are no shares, as I'm sure you are aware.

GeneMarchbanks's picture

thx I assumed as much, just exploring the possibility.

Quixotic_Not's picture

Trust me, I'd love nothing better than an alternative currency scheme to escape the fiat usury tyranny of the banksters and politeers, but that's not an option in the real world - You pay your protection money to the thugs or face the violent consequences thereof!

I am under no illusions as to my place in this world, thanks to the huddled mongrels that have destroyed the former Democractic Republic of the USA, and make my decisions for survival accordingly...

In a free society, not everyone is equal; Ergo, in a society where everyone is equal, no one will be free.

GeneMarchbanks's picture

I like Funkadelic-Parliament, do you? Free your mind and your ass will follow. All I'm saying is keep your options open, whether it's palladium coins, bitcoins or semi-precious stones. Makes no difference. As to illusions, I suggest you get some; I've heard life is impossiblie without'em.

Carl Spackler's picture

GeneMarch banks,

U.S. banks will not raise equity capital and use it solely to buy treasury securities, as that will create an additional negative carry and compress their net interest margins further.

Equity is more expensive that debt capital, and the returns on treasuries are slim and none, right now.

 

Hearst's picture

The below is a repost but I read it last night and thought how true it rings even today.

 


"It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes.  Distinctions in society will always exist under every just government.  Equality of talents, of education, or of wealth can not be produced by human institutions.  In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law, but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuties, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society - the farmer, mechanics, and laborers who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government.  There are no necessary evils in government.  Its evils exist only in its abuses.  If it would confine itself to equal protections, and, as Heaven does its rains, shower its favors alike on the high and low, the rich and the poor, it would be an unqualified blessing.  In the act before me there seems to be a wide and unnecessary departure from these just principles"

 

President Andrew Jackson defending his convictions in congress to kill the Second Bank Of The United States even though the congress and supreme court had ruled it constitutional. 

Withdrawn Sanction's picture

Tyler is it possible for the Fed to raise capital reqs to force banks to issue more shares and then use the money to buy treasuries?

That's a really interesting point.  Here's a slightly different twist on a related idea:

If I remember right, under Basel Stds, sovereign debt, like US Treasuries, carries no capital penalty; in essence, it's like carrying cash on the asset side of the balance sheet.  If banks were required to hold more capital-to-assets, one way to meet that standard would be for the banks recompose their balance sheets such that they hold more Treasuries.  In so doing, they raise their capital-to-assets level dollar for dollar for each dollar of Treasuries purchased (holding liabilities constant of course).

This process would also create additional demand for Treasuries during the readjustment period.  It also has the potential to (temporarily) stop the almost-immediate disposal of POMO purchases from the primary dealers (temporarily, that is, until the capital levels  rise to the higher prescribed levels, and then after that, the POMO game starts anew).

Wow, that'd be pretty sneaky even if it is only a short-lived bump to US Treasuries.

GeneMarchbanks's picture

Thanks WS,

I figure they have to get creative. I see no chance of any "Ooops! you caught us!" situation. It's really hard to take your eyes off of an upcoming catastrophe.

boiltherich's picture

Basel Stds

 

Is this what you get when your bank fucks you in the ass?

Quixotic_Not's picture

Actually, no that's what the banksters get when they have buttsex.

We get Change you can bleed in...

TimmyM's picture

GeneMarchbank-

"force banks to buy Treasuries?"

This has been done before to finance the civil war with the national bank act of 1864.

http://www.enotes.com/major-acts-congress/national-bank-act

GeneMarchbanks's picture

Sweet historical reference! Good to know... It seems they are in it to win it! ... ...

TopOnePercent's picture

Makes one wonder who is telling Bernanke what to say and when.

 

There is no way that this is all Bernanke.

 

There are names and faces that decide on currency valuations.

 

Would it not be interesting to know what names and what faces.

WonderDawg's picture

Look no further:

http://www.save-a-patriot.org/files/view/whofed.html

There's your answer, the org chart for the owners of the Fed. They own the Fed, they own Bernanke.

trav7777's picture

I dunno, but the action in Platinum and Palladium lately seems to smell something.  POG would appear to be confirming.

kumquatsunite's picture

Why why why? Did Bernanke give loans to those without jobs or income or any ability to pay? To every Jose who could cross the border via the map provided by a coyote? Did Bernanke juice the economy with unheralded, social glue destroying, ecologically devastating, importation of third world peoples who have no contribution to make to the United States except to make our country Look like a third world country?

Bernanke is just trying to replace some of the money that was juicing the economy from the housing industry and its associated ills; this is not his fault. This is the fault of the namby pamby, two bit, no account socialist/communists who think that giving away the United States as  a ponzi scheme of "economic growth" actually works. Some believe this country's heritage of English, white majority (10% traditionally non-white: our beloved Black Americans) has been deliberately destructed so that the world can descend, descend into chaos, red in tooth and claw, a vicious world reflective of the third world where each only thinks of themselves and all is done only for today. 

Good luck with that, and wish your kids good luck. They will desperately need it.

SheepDog-One's picture

It did work as planned....3rd worlding of US about complete. Welcome to the new world order.

Baron Robber's picture

people like kumquat will make his job easy (NWO)

karzai_luver's picture

Yep, One would think that the idiots would ....nah.

 

5 will get you 10 that old kummy is a church going kind. Pure christian!

 

Quixotic_Not's picture

I think it's the boogeyman in the closet that no one wants to think about.

http://www.freedomsite.net/93-549.htm

When I was part of a patriot group in the 90s, I spoke to thousands of "Americans" about Emergency Powers, and became aware of the cultural phobia then...

People just can NOT admit that the Constitution has been supplanted by UCC and UCMJ, even when presented with incontrovertible evidence - They'd rather live on pastures of ignorant bliss.

God bless 'MeriKa and a chicken in every pot!

Then you've got the socialist/fascist apparatchiks that are so dumbed-down to succumb that they dissemble when confronted and support traitors at their own expense!

Truth is treason in an empire of lies...

DoChenRollingBearing's picture

And so what do we DO about it?  Since we as a people likely are sheeple, and many of us don't want to take to the streets, there seems to be just one answer:

Buy physical gold.

SheepDog-One's picture

Buy physical gold, buy physical firearms and ammo too.

Silver Dreamer's picture

Although I agree that we are experiencing planned looting, there are millions of liberty lovers in this country who will resist the forced transition to a third world fascist nation.

augie's picture

"namby pamby."

absolutely god damn right. 

ugly_avatar_Muir's picture

"Did Bernanke give loans to those without jobs or income or any ability to pay? To every Jose who could cross the border via the map provided by a coyote?"

__

My friend.

I've traveled the US extensively.

Many, many "gringos" did very well because of the illegals that they were hiring.

It is absolutly amazing to me how many owners of construction companies would lament US policy on Mexicans while hiring so many that more than 70% of their labor force was Mexican.

You want to know who let this happen?

Here's a clue: look around your State and see who hired them.

I'm much more older and cynical than you are or may ever be.

At $10,000 fine per illegal the immigration problem is solved in a week (first came into law in late 80s if memory serves) it was the WASPs who made sure that this law never took hold.

Simple.

Quixotic_Not's picture

Yep, more cheap labor to grease the skids of the (D) & (R) Free Shit Empire™.

Amazing how totally self-deceived the avg. 'MeriKan is...

baby_BLYTHE's picture

He is a lying treasonous thieving bastard

Handing out free money 88% foreign banks!? While Americans are thrown into the street out of their homes.

Yet congress reconfirms him and gives the Federal Reserve even more power.

Sick

downwiththebanks's picture

Re: #1354321

Go back to Europe, White Man.  You're living on stolen land.

And you're doing so pretty ignorantly.

How in the world can you type while giving a hand job to Vikram Pandit?

DoChenRollingBearing's picture

Many parts of Europe will be majority Muslim by 2050.

So, no thanks!

The best way to get off of Vikram is to instead use those hands to turn fiat into physical gold.  Two problems solved.  You don't have to stroke filthy banksters and you get some financial security.  It's magic!

karzai_luver's picture

Peak OIL

Population bomb

 

Mushroom clouds

 

end of times

 

cats and dogs living together

 

 

I would be very suspect of who makes these predictions as they are

at times more than a little off.

 

 

carbonmutant's picture

 This is like shooting fish in a barrel...

None of these guys saw the problem coming and none of them know how to solve the problem. All Bernanke and the banks have done is circle the wagons to protect themselves from the inevitable...

Shocker's picture

There is no way Q3+ isn't coming. The only thing we know how to do is print money. We will keep throwing money at the problems until, the numbers are so big we all will need new calculators. There are several ways to help fix this economy, but nothing what we are doing now

http://www.dailyjobcuts.com

Things really need to change, thats all i can say

downwiththebanks's picture

All you need to do is call it something other than QE3, and White Capital's propaganda machine will get revved up.  

I just can see it now.  Imagine the fat bastard Mark Haines reading the TelePrompTer:

"The Bernank insists that the new program, called 'TWO WORDS,' has little in common or to do with the now obsolete QE2.  'It's not even named QE3,' the Bernank indignantly announced when questioned about the program's nature."

trav7777's picture

White capital, LOL....tell me again who the dominant ethnicity on the Fed board is

SheepDog-One's picture

This is BS, no one can try to tell me Bernank was selected and put there to FIX anything. He was put there to ensure the Greatest Depression would be so complete that there would be no way out of it. New world order is the agenda, people.

B9K9's picture

I disagree; I think Bernancke is a true believer, which is why he was selected for the position. The real players, who are descendants of those who first created the BoE, then the Fed, and many over CBs, know the true score.

After all, from their earliest ages, they are schooled in the simple mathematics of usury & compound interest. Their heritage is one of ultimate predation - to lie in wait until thriving societies (republics) reach the point of exhaustion so that their corrupting influences can have greatest effect.

But that observation is repetitive and well known by any who wish to understand. My interest lies in why people want to believe Bernancke can have any effect. I think the best way to explain this phenomena is to consider the witch doctor: why did/do primitive cultures revere witch doctors?

I think the simple explanation is that people are afraid. In days of yore, a crop failure was a death sentence for the entire country. Since people had nothing to lose, why not put their faith in the rantings of some hocus-pocus spewing mumbo-jumbo? After all, if he was wrong, they were dead anyway.

That's where we're at today - what do we have to lose by letting Ben dick around with monetary policy? After all, once the Fed was created nearly 100 years ago, the American Empire was put on death watch. I mean, it was fait accompli; the only variable was time.

Like a python, once a society relinquishes itself to the soft embrace of the chosen, it's a goner. The tribe never lets go until the victim is dead, then moves on to search for other living, thriving victims. It's been this way for 5-6 thousand years, and I dare say it will continue for at least that long into the future.

After all, how many people read/know of the Founders' warnings regarding foreign banking interests consipriing against the young Republic? 200+ years from now, no one will care to understand what happened when the American Empire finally expired. It will be lost in the annals of time, allowing the vipers to once again spin their webs.

DoChenRollingBearing's picture

*CRACK!*

The sound you just heard was B9K9 hitting another grand slam out of the park.

 

EDIT: You should write a blog.

SheepDog-One's picture

I dont buy B9K9's thesis, it sounds nice and all but hinges on the idea Bernank is just an innocent genius true believer, just having his strings pulled from above but unknowingly. I stand by my original simple statement that Helicopter Bernank has always known what he was doing, transfering the wealth of america to the central banks and planned 3rd worlding of the US.

Withdrawn Sanction's picture

 

I think this is essentially debating about how many angels can dance on the head of pin.  Does it really matter if BB is a brilliant dupe, or scheming douche?  The outcome will be the same regardless.  The debt pyramid (not to mention the derivatives pyramid resting on top of it) cannot grow the sky.  The bad debts (like cancer) must be removed from the system, or else the system dies.  Unfortunately, excising the bad debts crashes a big chunk of derivates bets in a non-linear (disproportionate) fashion.  Morever, the socialization of private losses, has transmitted the bad debt infection to the sovereign.  The disease in short is metastasizing.   

This dangerous relationship is also why QE/rev 3.0 is largely an irrelevancy (almost like it was meant to be a distraction or something, but I digress).  The QE advocates are talking billions, while the bad debt and related derivatives problem is measured in the trillions.   Good luck with that, BB.

 

Quixotic_Not's picture

I stand by my original simple statement that Helicopter Bernank has always known what he was doing, transfering the wealth of america to the central banks and planned 3rd worlding of the US.

Hasn't that been standard practice for the politeers in the District of Criminals since Woodrow Wilson?

To tell you the truth, the 'MeriKan sheeple have it coming, as they can hardly be qualified to be a 1st World Nation based on their utter and complete incompetence as an electorate...

augie's picture

This brings up a question i have been wrestling with for sometime: If what you suggest is true, (and believe me, i am sympathetic to your thoughts) then why even bother trying to make a difference? I think we as human beings instictively use that "human nature" excuse to abdicate the responsibility of actively evolving. Nature conserves energy when and where it can, and if i'm comfortable in my homiostasus, why in the wide world of sports would i go mucking about jepordizing what i have for what i dont even know is possible?