When Even John Taylor Says Bernanke's Interpretation Of The Taylor Rule Is Wrong

Tyler Durden's picture

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
emsolý's picture

It shall be referred to as the Modified Taylor Rule, then. Or the Unexpectedly unusually unconventional Bernankefied Taylor Rule. There, I fixed it.

Dr. Porkchop's picture



I like how that rolls off the tongue.

10kby2k's picture

Has Southpark done an episode on bernanke? 

redpill's picture

Bernankefied (adj.) <buhr-NANK-i-fie-d>: the state of being subjected to Bernankification.

SparkyvonBellagio's picture

Dear benny - PHUCK YOU!

Unless the USA is currently being held hostage by Aliens from the planet PrintEmIfYouveGotem you are by far the Dumbest MotherPhucker ever birthed.

Could it be aliens benny? Seriously that is the only possible reason you'd sell out this Country for a bag of TV time and for the financial demise of 99% of the citizens. Do you enjoy seeing yourself on the teevee? We don't, your FUGLY mug literally looks like a skanky overgrown 70's bush from bad porn.

I have to ask you.... got crabs?

Hope QI 574722  (Quantitative Infestation 574722 finally makes you shave that thing)



ps Have a nice day you Phucking Cawksucker! 

Scottj88's picture

Almost nothing Bernanke says is verifialbe in the real world:

Check out this perspective of the debt crisis we are facing.  Speak to this analysis bernanke, I dare you...



It includes calculations with Bernanke's numbers showing 5 million to 18 million jobs lost if we actually balance our budget (very conservative, but check it out!)

NotApplicable's picture

Well, if it was verifiable, it would be an extremely poor example of sophistry.

ghostfaceinvestah's picture

Congrats to Toomey for even knowing Bernanke was misinterpreting the rule.

But without that justification, von Havenstein will just find another reason to print.

JohnG's picture

I have a rule.  I call it the John rule.

Drown The Bernank in a toilet.

Judge Judy Scheinlok's picture

Rule #5. Imposed by Marla about 1.5 yrs ago.

A clear violation of free speech, YES. Does it matter, NO.

We all are thinking it but we have to be nice or the Southern Poverty Center will paint us into the jew corner.

JohnG's picture

No, I don't want to violate his right to free speech.

I want to hear him gasp and gurgle and beg for mercy as I dunk him again and again and again until he stops twitching.

(Yes, I'm in a very surly mood today, moreso than most.)

Judge Judy Scheinlok's picture

Many, many vicarious thanks for sharing. Yes indeed!

101 years and counting's picture

the Taylor rule needs to adjust for:

insolvency of banks

$100+ billion in banker bonuses, despite insolvency

camaro68ss's picture

Its the I hate america rule

karzai_luver's picture

I love it when the professors fight.



Fairy dust all over the place!



tmftdoyle's picture

"And when the bubble pops, which it will, it will be time to point fingers, and we are confident that the Fed will resort to blaming Taylor himself."

It's unfortunate, but I think things will play out differently. By the time the shit hits the fan, again, Ben, like his predecessor, will be taking down his $10-20mm annual retainer from all those he greased as a government official, and the next chairman will repeat the "no one saw it coming mantra", bail out his masters at the expense of the broad populace and wait for his two terms to expire so that he can pick which beneficiary he will choose to collect from.

Sadly, I thought that as a country we would have taken 2008 a bit more seriously. But, maybe next time the masses will finally demand no mas.

rlouis's picture

SEN. TOOMEY: Do you know if Mr. Taylor believes that?

MR. BERNANKE: Well, there are different versions of the Taylor Rule, and there’s no particular reason to pick the one that he picked in 1993. In fact, he preferred a different one in 1999 which, if you use that one, gives you a much different answer


Bernbank's expression just before he provided that answer was priceless...

but really, in the fog of war the only thing that matters is that the military machine have the money to maintain the empire.



Sizzurp's picture

Bernanke is a reptilian

Sancho Ponzi's picture

'Rules? We don't need no stinkin' rules.'

The Bernank

centerline's picture

It is just broken math inside a scheme whose overall mathematics ends in certain failure anyhow.  Seems like just another example of controls intended to keep the host alive a little longer... to play the ponzi out to it's maximum wealth extraction (maximum debt saturation for all of us of course).

Rainman's picture

These guys spout some smart sounding bullshit....but they know the dial back of decades of bubble printing, manipulation, fraud and bad debt is gonna sink many ships sooner or later. They both have the same desire to make it later...an argument unto itself. 

Mad Max's picture

Bernanke = Baghdad Bob

franzpick's picture

Listening to Ben 'n Tim's obfuscations is toxic and probably a lesson in how language is used to disguise thought;  if some day we hear one of them explain how a collapse of the U$D was the natural result of their long-term plan to establish the $ as the world's reverse currency, with all the resulting trade, debt and other benefits, I will remain underwhelmed, and of the opinion that those who attempt substantive debate on their propositions will become party to the crime.

glenlloyd's picture

If you take the forumla and substitute john williams measures for gdp/inflation you get a significantly higher rate.

The value of a forumla is nil if the imputs are worthless.

NotApplicable's picture

Not if your name is Bernanke. Then, the value is in its obfuscation.

LongSoupLine's picture

Taylor: "uh, that's not what I meant you assclown!"


BerBANKe: "You don't know what you meant, and I have a hot printing press...chump!"

Rider's picture


Perhaps the Chairman should learn to read english first.

nathandegraaf's picture

Again, I just cannot fathom how the nicest thing you can say about Bernanke is that he is a total idiot.  When "Maybe he's just stupid" is the most polite way your peers can define your relationship to your work, it is hard to imagine your work as being seen in a positive light, even through the peverted lense of percieved history. 

hamurobby's picture

MR. BERNANKE: There are, again, many ways of looking at that rule, and I think that ones that look at history, ones that are justified by modeling analysis, many of them suggest that we should be well below zero.


So the Bernanke sees himself as a conservative. I interpret that as he has many more moves left.

Catullus's picture

The Federal Funds rate doesn't mean anything any longer.  The Fed has written about this several times. Banks needn't concern themselves with lending to each other, when they're getting paid interest on "excess" reserves at the Fed.  The Fed is now managing monetary policy in this fashion.

spinone's picture

This undermines the transparentness and credibility of the FED, and of the dollar.  Who could blame countries for creating bilateral trade agreements and rejecting the dollar as WRC

NotApplicable's picture

Wow, color me shocked. Not only is Bernanke's interpretation labeled as intentional distortion, it's done so by WSJ's Hilsenrath?

Surely TPTB aren't getting ready to toss him under the bus when there's so much pillaging left to do?

Good thing it's almost beer-thirty. It's just too fucking weird these days, when reality actually appears realistic.

spinone's picture

I laughed out loud at the John rule.  If you missed it, read up.

This is a big deal. This means that an academic guy, who is supposed to be a big wig academic, totally mis-interpreted a collegue's rule. 

In the real academic world, you don't quote someone and also basterdize his/her findings. 

This really proves Bernanke is a bullshit artist.


Orly's picture

Oh, it's worse.  When the fellow academic says of the heretofore generally accepted economic principle that the guy who wrote it was mistaken!


snowball777's picture

It's even worse...he just plain lied about the modified rule's being Taylor's in the first place.

It's one class of mistake to apply a rule incorrectly, but this is either a problem in simple comprehension or an inability to suppress one's pathological instinct to lie under oath.


RockyRacoon's picture

Very apropos comments.   See my comment below about Nassim Taleb's interview on the topic of damage to society for academics and "economists" being wrong.

Sopra Tutt1's picture

"John Taylor, the creator of the rule, and Zero Hedge's nomination for Fed chairman"

The only person I know of, that can raise the bar to a higher level as a FED chairman, after Greenspan and Bernanke, is the one and only... Timothy Franz Geithner.

Pure Evil's picture

Oh, who really cares if he follows the rules.

Uncle Benster is a rebel.

Keep printing those Professor Fun Bucks, Uncle Benster.

When he's finally printed a trillion trillion googolplexian dollars by Dec 21, 2012...........

well, we all know what happens then, the Earth will implode from the weight of all that funny money.

KickIce's picture

Bernanke is a pirate.

They're not rules, more guidelines.

Waterfallsparkles's picture

Maybe everyone is angry that they did not get in on the Bottom and the FED gave all of the Banks the Money to buy up everything at the lowest prices.  Maybe people are angry about selling out at the bottom or they owned Bear Stearns, Washington Mutual, Lehman, Country Wide, Aig, Fre, Fnm, Nfi, New, Abk, Mbia, Pmi, etc. Plus, you have all of the people that ended up selling out at the totally bottom and when the market went up could not buy the stocks back.

In a normal market the stocks would have gone back to the bottom a second time to give you a chance to maybe buy the stocks back again after a small bounce.  That never happened.  This is not normal.  Bernanke stepped in and changed the normal function of the Market.

Yet, even if you happened to buy at the bottom now you have to sell your stock just to buy heating oil, gas for your car or food for your table. 

Such a shame.

Lapri's picture

Bernanke was just sloppy. Bullard, in his paper ("Seven Faces of the Peril") last year, doesn't deal with "Taylor Rule" but "Taylor-type Rule". It's more like "inspired by Taylor's work but not Taylor's work".

Bullard's "Taylor-type Rule" where the nominal interest rate goes below zero is is the first of "Seven Perils". Page 7 of the paper here:


dark pools of soros's picture

are those seven perils anywhere near Dante's Inferno?  Or Bernak's Benocide?

anonnn's picture

"... I think that ones that look at history, ones that are justified by modeling analysis..."

Modeling analysis yields powerful results, such as: society strongly benefits when the rich-and-powerful class are immune to common, ordinary, garden-variety, run-of-the-mill, every-day sense of fairness.

Modeling, especially when done with the latest mathematical fads and hi-speed computers running the most complicated of team-developed algorithms, simply blows away any ordinary human logic.

No wonder that past efforts, before contemporary modeling, defined the limits of Homo Sap.

Whaddyaknow! The new meme is Justice Sucks. We all are so much better served by having father figures. Who would of thought...

RockyRacoon's picture

If this were just two academics feuding over a formula, it wouldn’t be very interesting. But it’s more than that. Mr. Bernanke is the Fed chairman. Mr. Taylor is one of the most influential voices in monetary economics and he’s saying the Fed chairman is distorting his views to justify a controversial policy.


Nassim Taleb on Charlie Rose last night:  He says that economists can be wrong until people suffer for their errors.   I believe we are at that point.  The entire converstion is worth a listen (yeah, even if you skip Charlie's persistent interruptions and proving that he already knows what you are going to say).

"The risk that banks hold is like dynamite in the basement."

Taleb was outraged at Friedman's book, The Earth is Flat.

Pick up the conversation at 16:20 for the real core idea.

Judge Judy Scheinlok's picture

It's a shame that a man with this type of innate wisdom is not put into a position of leadership.

AldoHux_IV's picture

Insanity is doing the same thing twice and expecting a different outcome.  It can also lead to a total misunderstanding of reality.

Looks like fuck face Bernanke is insane and crazy, but I don't think we should let him off with any insanity defense... he should be so lucky.

hugolp's picture

Which goes to show the "value" of this rules...

A rule depending on expected inflation and potential GDP is worthless. Potential GDP has to be the most stupid idea keynesians had.