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Bernanke – “I’ve abandoned the dual mandate!”
I find myself this morning hoping for the failure of the Federal Reserve. This implies that I’m also hoping for a collapse in the equity markets and a severe recession. Coupled with that, I want to see that the massive increase in money supply and the endless interventions of the Fed bring us a round of much higher inflation. I want the Fed to fail so miserably that they are marginalized for the next twenty years. I want Bernanke fired. I want the Fed disgraced.
I’m not rooting for this to happen because I’m short assets. I’m not hoping for more pain for Americans. I don’t want to see a collapse in the economy. And I certainly do not want to see more inflation. But I’m convinced that the only hope for the country is to shut this Fed down. For that to happen there must first be a collapse.
This morning we once again we have the mouthpiece of Bernanke, Jon Hilsenrath at the WSJ, telling us what is coming next from the Fed. This is disgusting in so many ways.
Hilsenrath got a call from Benny yesterday. This time Ben Boy tipped his hand. A new LSAP plan is in the works. This time it will be directed at the Agency MBS market (a la QE #1).
What killed me is this quote from the WSJ:
Fed officials believe their past purchase programs helped to lift stock markets, by driving investors from low-risk investments toward riskier investments.
So we’re back to that old argument. Ben wants the S&P higher. He wants savers to do the heavy lifting by taking more and more equity risk. We have seen this plan again and again the past three years. It hasn’t worked. It won’t work this time either.
I’ll get what I want (chaos), but it will take some time. The new LSAP can’t happen till at least December. But sometime in the 1st Q it will be coming. In the past, articles like the one today in the WSJ lead to expectations of new Fed actions. This put a bid under equities. But as soon as the new monetary stimulus is announced the markets sell on the news. This time will be no different.
Core inflation is running at 2%. This is a level that Bernanke has repeatedly said he would respect when it come to more monetary gas. That he has initiated operation twist in the face of this inflation was the first evidence that he was abandoning his promise. In my book, Bernanke has flat out loud lied to the public on this. He should be fired for that.
CPI-U is a closer measure of actual inflation. That number is steaming along at 3.9%. We now have a situation where basic inflation is running at 8Xs the rate of short-term inflation. That ratio has never existed before in history.
Money supply is exploding over the past half year. Up over 30% (See Zero Hedge story). Inflation is the only possible outcome.
I’m not insensitive to the plight of the unemployed in America. There are some 20mm people who are either out of work or underemployed. I wish that something could be pulled out a hat and make that problem go away. But there is no magic solution. It’s time that Bernanke start to look at the other 280 million citizens that are paying the price for his actions. Ben is robbing savers. He is killing seniors who need predictable income (and should not be investing in risky equities). He is stealing from all of us with his push for more and more inflation as a cure to our problems.
I’m not happy with my position. I wish that I did not feel so strongly about this. But I’m convinced that the only thing that can actually help us out economically is that the Fed is completely marginalized. To have that happen there must be some big pain. Pain is exactly what we are going to get with Bernanke’s insane policies.
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http://www.youtube.com/watch?v=TXyvCJlPgME
I embed bad
You can't embed without contributor permissions.
Would you do the honors?
Brilliant as always WB7! As posted on ZH in the last few weeks, when the congress critters and the loybbiests holding the leashes started trying to get the Fed to take over more components of fiscal policy (so congress and the lobbyists could get back to the coke and whores tax credit for 2012) Bernanke played out exact as you depict "It was awesome! But now I am lost. Can we start again with less complexity?" -- Greenspan "No". (translation: this is a path you dont want to go down. Go back home)
Just need Burt Renoylds in the next frame serving the "Enforcerment" Arm for the existing hot potatoe set of reponsibilities, for, you know, the global economy.
EDIT: Thanks haddox. I type too slow.
EDIT2: Haddock, you might not have image posting privledges. very,very few posters here do. The link is good enough for the folks who want to see the pic. (another frame from the same movie, maybe or maybe not safe for work, R rated violence)
[img]http://natsukashi.files.wordpress.com/2010/02/deliverance_l.jpg[/img]
who read this flunky's thesis is what i want to know - this student of the great depression sounds more like a disillusioned psychopathic agnostic from the 15th century
150 pages cover to cover... just got it....
http://mit.dspace.org/bitstream/handle/1721.1/29839/05915220.pdf?sequence=1
can't tell you how appreciative i am,... 'Cui Bono' :-))
thankyou for the great dig
ps. i'm a speed reader, and i must say it was impressive [i'll read again to verify the math] - i can't figure out for the life of me why he doesn't dig it out of the dust-bin, and put it to practical use?
Some under grad should just change the name and date and submit it as his own.. See if anyone notices..
love to be a gargoyle on the wall, when God casts the bernank and cohorts to the fiery pits of hell!
There are no fiery pits in hell. Hell = Hades/Sheol = the place where the dead people are = the grave. See your Hebrew, Greek, and Latin.
Then death and Hades were thrown into the lake of fire. The lake of fire is the second death. (NIV) Revelation 20:14
What makes you think that? Perhaps you fear that? How about this:
that everything and anything you can imagine exists for real.
Now I can imagine rather disturbing Hells, and many others have
also contributed far greater imaginings of Hells than I, Dante for one,
but perhaps some of the best (?) have come from those you least
suspected and would adamantly deny unless better informed:
The Tibetans. Yes, the Tibetans actually codified and wrote
down all the Hells that actually exist to inform you much
as they wrote about all the Bardo states too.
Wrongfully, it is attributed to Bhuddism, but this is because
Bhuddism coopted all the former knowledge of the Tibetans
as religions oft do.
http://en.wikipedia.org/wiki/Naraka
What makes you think that?
I care not what Dante or the Tibetens said. I was addressing the meaning of the word, as known in the Western World.
Hell > hel > helan - Old English/Germanic/Saxon words meaning to cover; denotes the covered or secret place. Used to translate sheol from the Hebrew and hades from the Greek - Hebrew and Greek names for the place where the dead are, the grave - the covered or secret place. Helan. Hel. Hell.
http://eastonsbibledictionary.com/h/hell.htm
The Christian New Testament supports that definition by saying that death and the grave (hades) will be thrown into the lake of fire, as quoted in my first post here.
Other visions of hell that do not contain pits of fire were not the object of my comment.
.
Bernank shall get his assured place in history (hell)... as a crook and thief of all society
his sugary words to help Main Street or business masks one bailout of criminal frauds after another. "Saving the financial system" (Wank Paulsons dirty deeds) was just throwing Fed counterfeit wealth at his bankrupt crooked bum-chums on Wall Street and the equally crooked and grotty windbags of Washington
Brucie says Bernank has 'abandoned' his promise to peg a QE3 rollout to inflation. If you believe anything Bernank says then yes isn't it a 'surprising' U-turn. Personally i time every Bernank move on how bankrupt his gangster elite-educated anarchists are and buying more toxic shit (MBS's) off their books with the lame, already patently failed excuse, it'll help Joe Public down on Main Street is just another pile of stinking bollocks from a scumbag who wouldn't know economic policy from robbing and defrauding society with his counterfeit wealth printing
Bernanke is most definitely going to get buried in hell... it'll be an historic wipe-out
Bruce, as always thanks for your valued input.
The devil we know vs the devil we do not know is problematic. The complex financial situation is such that most everyman can not get any sort of grasp of most parts of it. Inflation, unemployment, devalued housing, and loss of faith, hope and confidence is obvious. The rest is such a Halloween witches brew of lies and shadow/covert operations that the results is as intended--- it is opaque to a black out.
Indeed, this time it may be different; the Black Plague of Derivates may have no cure.
Sounds like commodities and the stocks are the place to be if Ben starts printing more ...again.
Isn't bernanke dead? I thought it's an evil which took over his body.
Yes I agree with most of your points, Bernake has put the population of this country (and eventually the world) in a place where they don't know what to hope and pray for. Usually it is not hard for human beings to know what to pray for, however, if they understand the current circumstances, actions being taken, and their intended and unintended consequences, they would not know what they should be hoping and praying for. Yes, the system will not correct itself until it fails its question of how quickly that can happen.
This Zombie Economy seems to be resistant to rot.
A more active approach is needed.
You may see the change, Bruce, but I think I am too old.
Inertia.
bernanke's mother was a whore from a long line of whores, his father was a goat. his whole hairy family belongs in a pig sty.
You forgot to insult the horse he rode in on;)
Quit holding back and let us know how you realy feel Buzz.
Dead markets will be BB's legacy.
Just dropping back down to the 200 year sma. It was/is the biggest bubble in history. The dutch would be proud, 400 years later and they still have been unable to reinflate the tulip bubble.
Bernanke is a Democrat, next year is the election. He's got to go all in to save Obama or he will be fired ( and maybe more if Perry is the nominee).
uh no.....
14th Chairman of the Federal Reserve Incumbent Assumed officeFebruary 1, 2006 President George W. Bush
Barack Obama Deputy Janet Yellen Preceded by Alan Greenspan 23rd Chairman of the Council of Economic Advisers In office
June 2005 – January 2006 President George W. Bush Preceded by Harvey Rosen Succeeded by Edward Lazear Member of the Board of Governors of the Federal Reserve System In office
September 2002 – June 2005 Nominated by George W. Bush Personal details Born December 13, 1953 (age 57)
North Augusta, South Carolina, U.S. Political party Republican Spouse(s) Anna Friedmann Alma mater Harvard University
the previous post can't tell the difference between a Democrat and a Republican, and neither can I. but ignorance is no excuse, a man has to know his limitations
When following the Fed, it is important to watch from whom the message is being delivered. The most recent is from a guy who normally gives speeches about bank regulation and systemic risk. Here are the titles of some of his recent speeches (One of these things is not like the others, One of these things just doesn't belong, Can you tell which thing is not like the others.)
So this is probably a smokescreen. The Fed needs to juice asset prices ahead of the 'all important holiday shopping season' as it's own research has demonstrated that individual consumption habits are linked to asset prices... to wit, people are more prone to cut consumption in response to falling asset prices than they are to raise consumption in response to rising asset prices. Ben has repeatedly hinted that the Fed is out of the game (and from now on it is up to fiscal policy to guide the economy).. which is why they leaned on the bank regulation / systemic risk guy to deliver the B.S. QE3 threat.
You make some really good points. He has talked his effectiveness down lately, and this policy does seem extremely foolish. Oil is already up a couple of percent. He now knows that inflation is just waiting to rage so perhaps this is just a "transitory" idea to bump the market up and out of this trading range. The timing was perfect coincidently enough. My concern is that if the Chinese see this as a blatant attempt to further devalue the dollar, they may react forcibly with a big T-Bill dump. The problem here is that either way this is madness. If Bruce is right we have huge inflation and trade war problems, if you are right we have someone who thinks they can tweek a very complicated machine while it is running at full throttle.
Bruce, I'll see you down in Arizona Bay.
We all need to learn to swim.
Bruce,
I find myself thinking the same things. It would be cathartic. It would be real. And we could move forward.
However, the geopolitical game is overwhelming any other considerations. It is dangerous. At this level, wars can break out, or on the flip side, markets can be used as the new proxy wars. At issue, it is still and only one of adapting western standards of living to cheap global labor. If neither congress nor the public can stem the outflow of $ to the point of bankruptcy, then the Bernank will simply create more $ and devalue all of those $ lying outside our shores.
The US is not going to let a dysfunctional Europe create more difficulties but will simply absorb Europe into the plan. As a quote from French Finance Minister Baroin said the other day, the US does it, the UK does, we need to do it ... leverage it up baby. The Germans don't have the wherewithal to stand in the way.
Here come the warm jets.
Bruce,
While I wholeheartedly agree, that headline is irresponsible. "I've abandoned the dual mandate." That is a loose paraphrase laiden with inference, which you present as a quote.
I love you, Bruce, but that is MSM smut... although I don't think you intended it as such.
Give me a break. I can say what I like in a title. The fact is BB has abandoned the duel mandate. So I stand by it.
The Fed guys read this. They read the comments too. That title was intended to piss them off. I hope it did.
bk
Printing money is a deal with the devil, the Father of Lies.
The road to hell is paved with good intentions.
the deflation which would go with this crash would actually help middle class and below. once asset prices drop, housing, etc, then money will come off the sidelines. once oil prices come down around $50, business will start up again. but at $50 a lot of new exploration will stop. whose side is POTUS on? the side of the economy, or the side of Big Oil?
Bernanke is just the puppet, and he is destroying the economy to save Wall Street
should we not get a deflationary washout then Bernankes policy will result in stagflationary policies, assets always remaining artificially priced above what buyers are willing to pay for them. (and short term interest rates)
and while the POTUS loves the Occupy moment, they love the money Wall Street gives them even more, money to do Wall Streets bidding. right now they have it both ways, a movement with no demands no direction, just aimless rambling street theatre, none of which impedes their flow of cash into the campaign coffers of Barrack Gadafi Obama
in the meantime as a short you are going to get every kind of abuse. good luck bruce but I am not adding to my shorts until I see a bit more. the thing about being a bear is you have to be patient, and every rally when you are not on margin, is a godsend. up 200 today, love it, but i think 12K-13K DJIA before we are there.
Yep a test of the 200 sma, followed by the main event.
The mistake was believing the Fed ever had a mandate outside enriching .1% of the population in the first place.
If ever killing one man in the history of the world was justified....
Remember how people always say, if you had a time machine and could go back and kill Hitler.
Really is should be, if you had a time machine and could go back and kill the first Rothschild.
Rockerfeller?
vacuums are always eventually filled...there would have been another.
Just one guy? Maybe a little more killing would fix it, heh?
Bruce, finally you got the religion. Amen
Perfect response to the bulls out there who believe sites like this are just for doom and gloomers. Well said.
It took you until late 2011 to make this assessment? They have been the enemy for nearly 100 years. Better late than never I guess.
I think you'll get your wish, Bruce. Take a look at the weekly charts of 2007/08 and overlay them over 2011. Bon appetite'.