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The Fed Chairman "Gets To Work", Releases His First Speech Since QEternity

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Prepared remarks at the Economic Club of Indiana, Indianapolis, Indiana, by Chairsatan Ben Bernanke, who recently "got to work" at the orders of Charles Schumer and the Schumer banker lobby.

First, in word cloud format:

And the full thing:

Five Questions about the Federal Reserve and Monetary Policy

Good afternoon. I am pleased to be able to join the Economic Club of Indiana for lunch today. I note that the mission of the club is "to promote an interest in, and enlighten its membership on, important governmental, economic and social issues." I hope my remarks today will meet that standard. Before diving in, I'd like to thank my former colleague at the White House, Al Hubbard, for helping to make this event possible. As the head of the National Economic Council under President Bush, Al had the difficult task of making sure that diverse perspectives on economic policy issues were given a fair hearing before recommendations went to the President. Al had to be a combination of economist, political guru, diplomat, and traffic cop, and he handled it with great skill.

My topic today is "Five Questions about the Federal Reserve and Monetary Policy." I have used a question-and-answer format in talks before, and I know from much experience that people are eager to know more about the Federal Reserve, what we do, and why we do it. And that interest is even broader than one might think. I'm a baseball fan, and I was excited to be invited to a recent batting practice of the playoff-bound Washington Nationals. I was introduced to one of the team's star players, but before I could press my questions on some fine points of baseball strategy, he asked, "So, what's the scoop on quantitative easing?" So, for that player, for club members and guests here today, and for anyone else curious about the Federal Reserve and monetary policy, I will ask and answer these five questions:

  1. What are the Fed's objectives, and how is it trying to meet them?
  2. What's the relationship between the Fed's monetary policy and the fiscal decisions of the Administration and the Congress?
  3. What is the risk that the Fed's accommodative monetary policy will lead to inflation?
  4. How does the Fed's monetary policy affect savers and investors?
  5. How is the Federal Reserve held accountable in our democratic society?

What Are the Fed's Objectives, and How Is It Trying to Meet Them?
The first question on my list concerns the Federal Reserve's objectives and the tools it has to try to meet them.

As the nation's central bank, the Federal Reserve is charged with promoting a healthy economy--broadly speaking, an economy with low unemployment, low and stable inflation, and a financial system that meets the economy's needs for credit and other services and that is not itself a source of instability. We pursue these goals through a variety of means. Together with other federal supervisory agencies, we oversee banks and other financial institutions. We monitor the financial system as a whole for possible risks to its stability. We encourage financial and economic literacy, promote equal access to credit, and advance local economic development by working with communities, nonprofit organizations, and others around the country. We also provide some basic services to the financial sector--for example, by processing payments and distributing currency and coin to banks.

But today I want to focus on a role that is particularly identified with the Federal Reserve--the making of monetary policy. The goals of monetary policy--maximum employment and price stability--are given to us by the Congress. These goals mean, basically, that we would like to see as many Americans as possible who want jobs to have jobs, and that we aim to keep the rate of increase in consumer prices low and stable.

In normal circumstances, the Federal Reserve implements monetary policy through its influence on short-term interest rates, which in turn affect other interest rates and asset prices.1 Generally, if economic weakness is the primary concern, the Fed acts to reduce interest rates, which supports the economy by inducing businesses to invest more in new capital goods and by leading households to spend more on houses, autos, and other goods and services. Likewise, if the economy is overheating, the Fed can raise interest rates to help cool total demand and constrain inflationary pressures.

Following this standard approach, the Fed cut short-term interest rates rapidly during the financial crisis, reducing them to nearly zero by the end of 2008--a time when the economy was contracting sharply. At that point, however, we faced a real challenge: Once at zero, the short-term interest rate could not be cut further, so our traditional policy tool for dealing with economic weakness was no longer available. Yet, with unemployment soaring, the economy and job market clearly needed more support. Central banks around the world found themselves in a similar predicament. We asked ourselves, "What do we do now?"

To answer this question, we could draw on the experience of Japan, where short-term interest rates have been near zero for many years, as well as a good deal of academic work. Unable to reduce short-term interest rates further, we looked instead for ways to influence longer-term interest rates, which remained well above zero. We reasoned that, as with traditional monetary policy, bringing down longer-term rates should support economic growth and employment by lowering the cost of borrowing to buy homes and cars or to finance capital investments. Since 2008, we've used two types of less-traditional monetary policy tools to bring down longer-term rates.

The first of these less-traditional tools involves the Fed purchasing longer-term securities on the open market--principally Treasury securities and mortgage-backed securities guaranteed by government-sponsored enterprises such as Fannie Mae and Freddie Mac. The Fed's purchases reduce the amount of longer-term securities held by investors and put downward pressure on the interest rates on those securities. That downward pressure transmits to a wide range of interest rates that individuals and businesses pay. For example, when the Fed first announced purchases of mortgage-backed securities in late 2008, 30-year mortgage interest rates averaged a little above 6percent; today they average about 3-1/2 percent. Lower mortgage rates are one reason for the improvement we have been seeing in the housing market, which in turn is benefiting the economy more broadly. Other important interest rates, such as corporate bond rates and rates on auto loans, have also come down. Lower interest rates also put upward pressure on the prices of assets, such as stocks and homes, providing further impetus to household and business spending.

The second monetary policy tool we have been using involves communicating our expectations for how long the short-term interest rate will remain exceptionally low. Because the yield on, say, a five-year security embeds market expectations for the course of short-term rates over the next five years, convincing investors that we will keep the short-term rate low for a longer time can help to pull down market-determined longer-term rates. In sum, the Fed's basic strategy for strengthening the economy--reducing interest rates and easing financial conditions more generally--is the same as it has always been. The difference is that, with the short-term interest rate nearly at zero, we have shifted to tools aimed at reducing longer-term interest rates more directly.

Last month, my colleagues and I used both tools--securities purchases and communications about our future actions--in a coordinated way to further support the recovery and the job market. Why did we act? Though the economy has been growing since mid-2009 and we expect it to continue to expand, it simply has not been growing fast enough recently to make significant progress in bringing down unemployment. At 8.1 percent, the unemployment rate is nearly unchanged since the beginning of the year and is well above normal levels. While unemployment has been stubbornly high, our economy has enjoyed broad price stability for some time, and we expect inflation to remain low for the foreseeable future. So the case seemed clear to most of my colleagues that we could do more to assist economic growth and the job market without compromising our goal of price stability.

Specifically, what did we do? On securities purchases, we announced that we would buy mortgage-backed securities guaranteed by the government-sponsored enterprises at a rate of $40 billion per month. Those purchases, along with the continuation of a previous program involving Treasury securities, mean we are buying $85 billion of longer-term securities per month through the end of the year. We expect these purchases to put further downward pressure on longer-term interest rates, including mortgage rates. To underline the Federal Reserve's commitment to fostering a sustainable economic recovery, we said that we would continue securities purchases and employ other policy tools until the outlook for the job market improves substantially in a context of price stability.

In the category of communications policy, we also extended our estimate of how long we expect to keep the short-term interest rate at exceptionally low levels to at least mid-2015. That doesn't mean that we expect the economy to be weak through 2015. Rather, our message was that, so long as price stability is preserved, we will take care not to raise rates prematurely. Specifically, we expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens. We hope that, by clarifying our expectations about future policy, we can provide individuals, families, businesses, and financial markets greater confidence about the Federal Reserve's commitment to promoting a sustainable recovery and that, as a result, they will become more willing to invest, hire and spend.

Now, as I have said many times, monetary policy is no panacea. It can be used to support stronger economic growth in situations in which, as today, the economy is not making full use of its resources, and it can foster a healthier economy in the longer term by maintaining low and stable inflation. However, many other steps could be taken to strengthen our economy over time, such as putting the federal budget on a sustainable path, reforming the tax code, improving our educational system, supporting technological innovation, and expanding international trade. Although monetary policy cannot cure the economy's ills, particularly in today's challenging circumstances, we do think it can provide meaningful help. So we at the Federal Reserve are going to do what we can do and trust that others, in both the public and private sectors, will do what they can as well.

What's the Relationship between Monetary Policy and Fiscal Policy?
That brings me to the second question: What's the relationship between monetary policy and fiscal policy? To answer this question, it may help to begin with the more basic question of how monetary and fiscal policy differ.

In short, monetary policy and fiscal policy involve quite different sets of actors, decisions, and tools. Fiscal policy involves decisions about how much the government should spend, how much it should tax, and how much it should borrow. At the federal level, those decisions are made by the Administration and the Congress. Fiscal policy determines the size of the federal budget deficit, which is the difference between federal spending and revenues in a year. Borrowing to finance budget deficits increases the government's total outstanding debt.

As I have discussed, monetary policy is the responsibility of the Federal Reserve--or, more specifically, the Federal Open Market Committee, which includes members of the Federal Reserve's Board of Governors and presidents of Federal Reserve Banks. Unlike fiscal policy, monetary policy does not involve any taxation, transfer payments, or purchases of goods and services. Instead, as I mentioned, monetary policy mainly involves the purchase and sale of securities. The securities that the Fed purchases in the conduct of monetary policy are held in our portfolio and earn interest. The great bulk of these interest earnings is sent to the Treasury, thereby helping reduce the government deficit. In the past three years, the Fed remitted $200 billion to the federal government. Ultimately, the securities held by the Fed will mature or will be sold back into the market. So the odds are high that the purchase programs that the Fed has undertaken in support of the recovery will end up reducing, not increasing, the federal debt, both through the interest earnings we send the Treasury and because a stronger economy tends to lead to higher tax revenues and reduced government spending (on unemployment benefits, for example).

Even though our activities are likely to result in a lower national debt over the long term, I sometimes hear the complaint that the Federal Reserve is enabling bad fiscal policy by keeping interest rates very low and thereby making it cheaper for the federal government to borrow. I find this argument unpersuasive. The responsibility for fiscal policy lies squarely with the Administration and the Congress. At the Federal Reserve, we implement policy to promote maximum employment and price stability, as the law under which we operate requires. Using monetary policy to try to influence the political debate on the budget would be highly inappropriate. For what it's worth, I think the strategy would also likely be ineffective: Suppose, notwithstanding our legal mandate, the Federal Reserve were to raise interest rates for the purpose of making it more expensive for the government to borrow. Such an action would substantially increase the deficit, not only because of higher interest rates, but also because the weaker recovery that would result from premature monetary tightening would further widen the gap between spending and revenues. Would such a step lead to better fiscal outcomes? It seems likely that a significant widening of the deficit--which would make the needed fiscal actions even more difficult and painful--would worsen rather than improve the prospects for a comprehensive fiscal solution.

I certainly don't underestimate the challenges that fiscal policymakers face. They must find ways to put the federal budget on a sustainable path, but not so abruptly as to endanger the economic recovery in the near term. In particular, the Congress and the Administration will soon have to address the so-called fiscal cliff, a combination of sharply higher taxes and reduced spending that is set to happen at the beginning of the year. According to the Congressional Budget Office and virtually all other experts, if that were allowed to occur, it would likely throw the economy back into recession. The Congress and the Administration will also have to raise the debt ceiling to prevent the Treasury from defaulting on its obligations, an outcome that would have extremely negative consequences for the country for years to come. Achieving these fiscal goals would be even more difficult if monetary policy were not helping support the economic recovery.

What Is the Risk that the Federal Reserve's Monetary Policy Will Lead to Inflation?
A third question, and an important one, is whether the Federal Reserve's monetary policy will lead to higher inflation down the road. In response, I will start by pointing out that the Federal Reserve's price stability record is excellent, and we are fully committed to maintaining it. Inflation has averaged close to 2 percent per year for several decades, and that's about where it is today. In particular, the low interest rate policies the Fed has been following for about five years now have not led to increased inflation. Moreover, according to a variety of measures, the public's expectations of inflation over the long run remain quite stable within the range that they have been for many years.

With monetary policy being so accommodative now, though, it is not unreasonable to ask whether we are sowing the seeds of future inflation. A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature, as needed, to return its balance sheet to a more normal size. Moreover, the way the Fed finances its securities purchases is by creating reserves in the banking system. Increased bank reserves held at the Fed don't necessarily translate into more money or cash in circulation, and, indeed, broad measures of the supply of money have not grown especially quickly, on balance, over the past few years.

For controlling inflation, the key question is whether the Federal Reserve has the policy tools to tighten monetary conditions at the appropriate time so as to prevent the emergence of inflationary pressures down the road. I'm confident that we have the necessary tools to withdraw policy accommodation when needed, and that we can do so in a way that allows us to shrink our balance sheet in a deliberate and orderly way. For example, the Fed can tighten policy, even if our balance sheet remains large, by increasing the interest rate we pay banks on reserve balances they deposit at the Fed. Because banks will not lend at rates lower than what they can earn at the Fed, such an action should serve to raise rates and tighten credit conditions more generally, preventing any tendency toward overheating in the economy.

Of course, having effective tools is one thing; using them in a timely way, neither too early nor too late, is another. Determining precisely the right time to "take away the punch bowl" is always a challenge for central bankers, but that is true whether they are using traditional or nontraditional policy tools. I can assure you that my colleagues and I will carefully consider how best to foster both of our mandated objectives, maximum employment and price stability, when the time comes to make these decisions.

How Does the Fed's Monetary Policy Affect Savers and Investors?
The concern about possible inflation is a concern about the future. One concern in the here and now is about the effect of low interest rates on savers and investors. My colleagues and I know that people who rely on investments that pay a fixed interest rate, such as certificates of deposit, are receiving very low returns, a situation that has involved significant hardship for some.

However, I would encourage you to remember that the current low levels of interest rates, while in the first instance a reflection of the Federal Reserve's monetary policy, are in a larger sense the result of the recent financial crisis, the worst shock to this nation's financial system since the 1930s. Interest rates are low throughout the developed world, except in countries experiencing fiscal crises, as central banks and other policymakers try to cope with continuing financial strains and weak economic conditions.

A second observation is that savers often wear many economic hats. Many savers are also homeowners; indeed, a family's home may be its most important financial asset. Many savers are working, or would like to be. Some savers own businesses, and--through pension funds and 401(k) accounts--they often own stocks and other assets. The crisis and recession have led to very low interest rates, it is true, but these events have also destroyed jobs, hamstrung economic growth, and led to sharp declines in the values of many homes and businesses. What can be done to address all of these concerns simultaneously? The best and most comprehensive solution is to find ways to a stronger economy. Only a strong economy can create higher asset values and sustainably good returns for savers. And only a strong economy will allow people who need jobs to find them. Without a job, it is difficult to save for retirement or to buy a home or to pay for an education, irrespective of the current level of interest rates.

The way for the Fed to support a return to a strong economy is by maintaining monetary accommodation, which requires low interest rates for a time. If, in contrast, the Fed were to raise rates now, before the economic recovery is fully entrenched, house prices might resume declines, the values of businesses large and small would drop, and, critically, unemployment would likely start to rise again. Such outcomes would ultimately not be good for savers or anyone else.

How Is the Federal Reserve Held Accountable in a Democratic Society?

I will turn, finally, to the question of how the Federal Reserve is held accountable in a democratic society.

The Federal Reserve was created by the Congress, now almost a century ago. In the Federal Reserve Act and subsequent legislation, the Congress laid out the central bank's goals and powers, and the Fed is responsible to the Congress for meeting its mandated objectives, including fostering maximum employment and price stability. At the same time, the Congress wisely designed the Federal Reserve to be insulated from short-term political pressures. For example, members of the Federal Reserve Board are appointed to staggered, 14-year terms, with the result that some members may serve through several Administrations. Research and practical experience have established that freeing the central bank from short-term political pressures leads to better monetary policy because it allows policymakers to focus on what is best for the economy in the longer run, independently of near-term electoral or partisan concerns. All of the members of the Federal Open Market Committee take this principle very seriously and strive always to make monetary policy decisions based solely on factual evidence and careful analysis.

It is important to keep politics out of monetary policy decisions, but it is equally important, in a democracy, for those decisions--and, indeed, all of the Federal Reserve's decisions and actions--to be undertaken in a strong framework of accountability and transparency. The American people have a right to know how the Federal Reserve is carrying out its responsibilities and how we are using taxpayer resources.

One of my principal objectives as Chairman has been to make monetary policy at the Federal Reserve as transparent as possible. We promote policy transparency in many ways. For example, the Federal Open Market Committee explains the reasons for its policy decisions in a statement released after each regularly scheduled meeting, and three weeks later we publish minutes with a detailed summary of the meeting discussion. The Committee also publishes quarterly economic projections with information about where we anticipate both policy and the economy will be headed over the next several years. I hold news conferences four times a year and testify often before congressional committees, including twice-yearly appearances that are specifically designated for the purpose of my presenting a comprehensive monetary policy report to the Congress. My colleagues and I frequently deliver speeches, such as this one, in towns and cities across the country.

The Federal Reserve is also very open about its finances and operations. The Federal Reserve Act requires the Federal Reserve to report annually on its operations and to publish its balance sheet weekly. Similarly, under the financial reform law enacted after the financial crisis, we publicly report in detail on our lending programs and securities purchases, including the identities of borrowers and counterparties, amounts lent or purchased, and other information, such as collateral accepted. In late 2010, we posted detailed information on our public website about more than 21,000 individual credit and other transactions conducted to stabilize markets during the financial crisis. And, just last Friday, we posted the first in an ongoing series of quarterly reports providing a great deal of information on individual discount window loans and securities transactions. The Federal Reserve's financial statement is audited by an independent, outside accounting firm, and an independent Inspector General has wide powers to review actions taken by the Board. Importantly, the Government Accountability Office (GAO) has the ability to--and does--oversee the efficiency and integrity of all of our operations, including our financial controls and governance.

While the GAO has access to all aspects of the Fed's operations and is free to criticize or make recommendations, there is one important exception: monetary policymaking. In the 1970s, the Congress deliberately excluded monetary policy deliberations, decisions, and actions from the scope of GAO reviews. In doing so, the Congress carefully balanced the need for democratic accountability with the benefits that flow from keeping monetary policy free from short-term political pressures.

However, there have been recent proposals to expand the authority of the GAO over the Federal Reserve to include reviews of monetary policy decisions. Because the GAO is the investigative arm of the Congress and GAO reviews may be initiated at the request of members of the Congress, these reviews (or the prospect of reviews) of individual policy decisions could be seen, with good reason, as efforts to bring political pressure to bear on monetary policymakers. A perceived politicization of monetary policy would reduce public confidence in the ability of the Federal Reserve to make its policy decisions based strictly on what is good for the economy in the longer term. Balancing the need for accountability against the goal of insulating monetary policy from short-term political pressure is very important, and I believe that the Congress had it right in the 1970s when it explicitly chose to protect monetary policy decisionmaking from the possibility of politically motivated reviews.

Conclusion
In conclusion, I will simply note that these past few years have been a difficult time for the nation and the economy. For its part, the Federal Reserve has also been tested by unprecedented challenges. As we approach next year's 100th anniversary of the signing of the Federal Reserve Act, however, I have great confidence in the institution. In particular, I would like to recognize the skill, professionalism, and dedication of the employees of the Federal Reserve System. They work tirelessly to serve the public interest and to promote prosperity for people and businesses across America. The Fed's policy choices can always be debated, but the quality and commitment of the Federal Reserve as a public institution is second to none, and I am proud to lead it.

Now that I've answered questions that I've posed to myself, I'd be happy to respond to yours.

 

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Mon, 10/01/2012 - 12:35 | 2845416 WALLST8MY8BALL
WALLST8MY8BALL's picture

MANBERNKRUG!

Mon, 10/01/2012 - 12:42 | 2845446 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Awhile ago I did not respect my opponents.  I thought they would fail instantly.  But I will admit Bernanke and Co. have done a brilliant job managing finance and economics.  Their Central Planning will go down in history.

Who is really to blame 5 years into the greatest collapse of markets and the psuedo-science of economics?

You and I and all the people of the globe are.  We are being held captive by invisable chains.  We need to understand how easy it is to break the bonds.  All we have to do is take over the real supply of money so that the Planners can not fix the economy how they do.  We have been making progress and evidence has shown up when gold bars turn out to have tungsten filling (it means people are making sure they have gold instead of believing they do) but we need to go full tilt.

We need to buy as much gold and silver as we can so they can not rehypothicate and leveage the economy infinately.

And if youare sitting on your hands waiting for a dip, just so you know, you will never see $22/oz silver again, you will likely not see $27, you may not see $30, and if you wait for $33 you may not even get that.

Do yourself a fovor and realize the dollar sign next to the number is imaginary.  It is an alchemists dream.  The oz has nothing to do with the price.  The oz just is.

So, I beg of you, use your fiat, whatever you have to part with, and buy silver.  Take back your money and take back your right to it.

Mon, 10/01/2012 - 12:44 | 2845461 Mark Carney
Mark Carney's picture

Let me be honest.....I did not read the article, just scrolled down to read the posts for I knew I would get more out of them then what Bernak spews out.

Mon, 10/01/2012 - 12:46 | 2845470 GaryNeville
GaryNeville's picture

Ditto..

Bernanke can kiss my ass!

Mon, 10/01/2012 - 12:47 | 2845475 Manthong
Manthong's picture

“the employees of the Federal Reserve System. They work tirelessly to serve the public interest and to promote prosperity for people and businesses across America. “

..and in less than 100 years they have devalued the Federal Reserve Note by 95% and have absolutely destroyed the value of saving.

They will soon own all of the US government’s debt and will have destroyed the ability of pension funds to meet their obligations.

That is a remarkable accomplishment.

They are to be recognized for what they have done.

Mon, 10/01/2012 - 12:53 | 2845510 fuu
fuu's picture

Fuck you Bernanke!

Mon, 10/01/2012 - 13:03 | 2845551 Conax
Conax's picture

I can scan through a wall of text, and always read things posted here since they are deemed important, but there is no way, no way I'm going to slog through the incredible mountain of verbose BS this fuzzy faced marmot just spewed.  What a windbag. 

It's all just an excuse to naked short the hell out of gold and silver anyway.

So yeah, what you said. 

Mon, 10/01/2012 - 13:28 | 2845674 IndicaTive
IndicaTive's picture

 fuzzy faced marmot. Thanks for the laugh.

Thu, 10/04/2012 - 02:42 | 2854982 James
James's picture

In particular, I would like to recognize the deceit,Fraud,self-dealing,total lack of professionalism, and dedication to continuing at all costs this fraud perpetrated on humanity by the employees of the Federal Reserve System past and present.

They work tirelessly to assrape the public  and to promote wars,famine,genocide ,death and  destruction  for people and businesses across America and continuing,Satan willing, Worldwide.

 

 There you go Ben.

Fixed it for 'ya!

Mon, 10/01/2012 - 13:06 | 2845560 Jason T
Jason T's picture

ah, that puritain value of thrift and hardwork, setting aside those "savings" for hard times if they come.

But the devil came and made America a deal, it could print money to solve economic ills, turn thoes ills into a good.

But only to realize later, when it was too late, that thoes savings were but a lie, akin to the devil himself, the Father of Lies.  

Mon, 10/01/2012 - 14:50 | 2846088 ATM
ATM's picture

Faust.

Mon, 10/01/2012 - 13:25 | 2845659 lunaticfringe
lunaticfringe's picture

The bullshit is strong with this one.

Mon, 10/01/2012 - 14:58 | 2846116 akak
akak's picture

These aren't the hard-moneyists you're looking for.

Mon, 10/01/2012 - 12:49 | 2845472 Stackers
Stackers's picture

Cliff notes:


1.We have a great record of consistently destroying the dollar through inflation

2.Nothing we have done has caused recent inflation

3.Being in debt is actually saving

4.Everything possible must be done to prop up the imaginary value of financialized "assets"

Mon, 10/01/2012 - 12:57 | 2845517 vast-dom
vast-dom's picture

please submit all remarks directly to the fed:

 

Federal Reserve Consumer Help: ConsumerHelp@federalreserve.gov 

 

please paste here what you emailed.

 

 

Mon, 10/01/2012 - 12:57 | 2845529 LMAOLORI
LMAOLORI's picture

 

 

I got to the part of no inflation and almost choked we have plenty of inflation in the things people need to actually live like FOOD!

This you?

Carney: 'Economic patriotism': Corporatism dressed as populism

Mon, 10/01/2012 - 13:24 | 2845653 akak
akak's picture

Bernanke said:

Inflation has averaged close to 2 percent per year for several decades, and that's about where it is today.

God damn you, you fucking liar.

God damn you, you fucking liar.

God damn you, you fucking liar.

God damn you, you fucking liar.

God damn you, you fucking liar.

God damn you, you fucking liar.

God damn you, you fucking liar.

God damn you, you fucking liar.

Mon, 10/01/2012 - 18:55 | 2846752 Slewburger
Slewburger's picture

The words bubble, or phrase student loan were not mentioned in the speech once.......  In the land of the blind the Bernak prints in Braille!!!

The Federal Reserve was created by the Congress, now almost a century ago.

God damn you, you fucking liar.

It is important to keep politics out of monetary policy decisions

God damn you, you fucking liar.

Mon, 10/01/2012 - 13:10 | 2845577 Dead Canary
Dead Canary's picture

"Let me be honest.....I did not read the article, just scrolled down to read the posts..."

Oh my God! I thought I was the only one who did that!

Mon, 10/01/2012 - 13:28 | 2845672 stuckonarock
stuckonarock's picture

i did it too!   whats the point of wastin planet time reading lies and BS ?

Mon, 10/01/2012 - 13:42 | 2845724 stuckonarock
stuckonarock's picture

wouldnt it have been much easier for BS ben to simply draw a large cartoon $ bomb with a happy face being dropped on the happy face of USA, it would also serve to graphically illustrate to the masses how happy it has made them!  why complicate matters with BULLSHIT ?

Mon, 10/01/2012 - 13:43 | 2845738 Just Observing
Just Observing's picture

You didn't miss anything. 

He could have simply walked out, said "You folks are screwed", and sat down to eat the rubber chicken while it was still warm.

 


Mon, 10/01/2012 - 12:48 | 2845482 MillionDollarBoner_
MillionDollarBoner_'s picture

Right on MLH.

Last week I had some electrical work done on my property.

GBP50 in cash plus two .999 Ag rounds.

Way to go ;O)

Mon, 10/01/2012 - 13:03 | 2845555 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I bought a portible ceramic water filter last month.  I am ready.

Mon, 10/01/2012 - 13:06 | 2845563 fuu
fuu's picture

Which one?

Mon, 10/01/2012 - 13:10 | 2845584 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

MSR's Microworks EX Microfilter

Mon, 10/01/2012 - 12:43 | 2845451 Stackers
Stackers's picture

Frist came Beer Goggles

Now we have Bernanke Goggles

Cant wait to see what we wake up next to. God help us

Mon, 10/01/2012 - 12:50 | 2845493 MillionDollarBoner_
MillionDollarBoner_'s picture

I'm gettin ahead of the game and started chewin my right arm off already...

Mon, 10/01/2012 - 12:54 | 2845506 CPL
CPL's picture

...Ben squinted and focused on finding his glasses while fighting down the morning wood, the last night had been a hell of a fiat bender.  Countless numbers of shots of liquidity injection had taken their toll.  He rubbed his eyes and brushed against someone else in his bed.

She shifted her porcine form around, her hook hand gleaming in morning sunlight.  A small trail of drool formed from the corner of her mouth.  Ben slid over to get a better half sober look at the catch of the night.

"Morning lover" a gentle breeze passing through the window playing with the whisps of her arm hair.  Her glass eye wasn't quite aligned yet but it held the promise of more unholy fiscal unions.

"Morning England".  Ben stated in a business like manner. "I would like you to prep the room for the morning round of financial messy business."

"Rubber sheets and gerbils it is".

 

The End. 

Mon, 10/01/2012 - 13:07 | 2845533 ZeroAvatar
ZeroAvatar's picture

Dovenanke,Bitchezz!

 

CPL: LOL!

 

Mr. Lennon H:  I respectfully disagree, sir.  I DO think we will see silver again at $22.  Do you  agree that the system was not purged in 2008-09?

 

Do you agree that we will again see DOW 5000? (Just asking).  Because, if you do, silver, gold, lead, RV's, bond prices, real estate....you name it........

 

That shit's goin' down!

 

It's coming.  If there's to be a reset, a collapse of the financial system, what does that entail?   Granted, gold and silver may fall 'less' than everything else, and recover quicker, but, still.....it's gotta go down ONE LAST TIME.

Mon, 10/01/2012 - 13:32 | 2845696 CPL
CPL's picture

In 2008-2009 you could naked short silver with a x3 multipler on 200% margin.

Today silver margin is no higher than 5-10%.  Regulation changes on the PM was to make sure JPM didn't get cuaght with their pants down in their silver short.  It's why you or I can look at the physical futures board and see only the tiniest deviation in the futures contracts.

 

Combine that with silver and gold being cored, there will be a consolidation soon if it's not happening already of back door channels being used to find T-gold/silver bars, failure to deliver on anything right now, especially a PM like silver, gold, oil calls into question of other commodities and their likelyhood of being delivered.  last thing right now the Fed wants...yet doesn't need either, is an appreciating silver position.  I honestly think it's still cheap to where it will end up in price, the loons running the show have seen to that.

Mon, 10/01/2012 - 13:43 | 2845725 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

King Dollar!

lol....

Did you just listen to Bernanke's Q&A?  He just told you there are two dollars:  One you use to buy groceries, and one the big boys play with.

Good luck with your fiat.  You'll need it.

PS I find it funny that people think it will happen "One More Time" like this is some fucking concert and there has to be an encore.  The crash already happened.  You are witnessing the dust settle after the controlled demolition.

Thu, 10/04/2012 - 00:46 | 2845988 James
James's picture

.

Mon, 10/01/2012 - 12:36 | 2845422 Dr. Engali
Dr. Engali's picture

Blah blah blah...deflation...blah blah blah no inflation..blah blah blah gold is not money.

Mon, 10/01/2012 - 12:46 | 2845473 Skateboarder
Skateboarder's picture

I would rather read Twilight than listen to/read that fool's speech.

"In the Federal Reserve Act and subsequent legislation, the Congress laid out the central bank's goals and powers, and the Fed is responsible to the Congress for meeting its mandated objectives, including fostering maximum employment and price stability."

MY ASS! And Santa Claus is responsible for subatomic particle research...

Mon, 10/01/2012 - 13:34 | 2845702 The Shootist
The Shootist's picture

Purchasing power of the dollar??

 

-Mr. Bernanke, "what exactly is, a dollar?" In your own words...

Mon, 10/01/2012 - 19:30 | 2846834 L G Butz PhD
L G Butz PhD's picture

Twilight?

 

Low Blow!

Mon, 10/01/2012 - 12:38 | 2845426 Muppet of the U...
Muppet of the Universe's picture

QE3 is like the Fed's B-day party!  YAY! Happy 100 years of slavery!  ~& to many many more ;D

Mon, 10/01/2012 - 12:53 | 2845503 TheSilverJournal
TheSilverJournal's picture

BernanQE has to know now that his policies are leading to the destruction of millions. This ship won't stay afloat for many many more years and will crash very soon.

BernanQE doesn't have the balls to admit he was wrong and stand in there and help the people jump to safety after the ship crashes. And he doesn't have the balls say "No mas" to his masters and to jump ship like a rat. He'll just stand in there like a good little puppet frozen with the fear of stepping out of line and do what he's told, and he'll get the ultimate reward of being used as a scapegoat and get thrown under the bus by his masters when things get ugly.

Mon, 10/01/2012 - 12:56 | 2845525 Muppet of the U...
Muppet of the Universe's picture

+1 for busses

Mon, 10/01/2012 - 13:58 | 2845799 XitSam
XitSam's picture

This is the third time since I've been counting that he's used the line, "monetary policy is no panacea."  Now and the two previous press conferences. Bernanke knows there is serious odds that big problems are ahead. He wants a Get Out of Jail Free card when things collapse.

Edit: Jail isn't what he should worry about.

Mon, 10/01/2012 - 12:39 | 2845427 MillionDollarBoner_
MillionDollarBoner_'s picture

"I know from much experience that people are eager to know more about the Federal Reserve, what (the fuck) we  are playing at, and who the fuck benefits."

There, fixed it for ya !:O)

Mon, 10/01/2012 - 12:38 | 2845429 holdbuysell
holdbuysell's picture

Bernanke from Bloomberg: "Inflation won't get out of control."

Mmmk, just like 'subprime was contained' and all the other catastrophes that were not seen until the people were left holding the bag.

Mon, 10/01/2012 - 12:43 | 2845454 pods
pods's picture

"The Federal Reserve will not monetize the debt.”

-The Bernanke

Mon, 10/01/2012 - 12:51 | 2845494 holdbuysell
holdbuysell's picture

But...but...Bernanke says he's not monetizing the debt.  / sarc

From the above speech:

"A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates."

Mon, 10/01/2012 - 13:27 | 2845670 Chump
Chump's picture

Yep, say he's not monetizing the debt, define debt monetization as exactly what he is doing, and then provide the mechanism by which he is doing it.

"And the crowd loves it!"

And kudos to you for even managing to read that much of this tripe.

Mon, 10/01/2012 - 13:34 | 2845701 JPM Hater001
JPM Hater001's picture

Well now that all depends on what your definition of "monetize" is?  He may have meant comply.

Mon, 10/01/2012 - 13:12 | 2845583 FL_Conservative
FL_Conservative's picture

How about this gem:

"Increased bank reserves held at the Fed don't necessarily translate into more money or cash in circulation, and, indeed, broad measures of the supply of money have not grown especially quickly, on balance, over the past few years."

Hey Fuckhead (er, I mean the honorable Chairman of the Fed), why don't you look at these charts and tell us that cash "in circulation" hasn't grown over the past few years:

http://research.stlouisfed.org/fred2/series/BASE

http://research.stlouisfed.org/fred2/series/M1SL

http://research.stlouisfed.org/fred2/series/M2SL

Douchebag........

Mon, 10/01/2012 - 15:06 | 2846139 ATM
ATM's picture

I thought this was even better.

A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature, as needed, to return its balance sheet to a more normal size.

What a flat out blatant fucking parsing of words lie! Yes Bernenk, this time is different. This time it's only temporary!! We'll pay it all back later, we promise!!

and this bullshit about buying the securities on the open market.... How the hell does that make a difference? The TBTF banks simply front run the Fed and then they sell "on the open market" and book guaranteed profits - buying from your friend Timmay and selling to you. That one little extra step doesn't sterilize your money printing it creates unearned profits on the books of the connected!! It's worse than simly buy directly fromt he treasury you weaselly little fucker. 

I cannot wait for Steve Liesman to come all over himself gushing about how great this speech was and how Bernencke shut down the dissenters. Really wish I had gotten a ticket for this one but Mondays are hard to do. The bearded marmot was rigth down the street.

Mon, 10/01/2012 - 15:42 | 2846257 holdbuysell
holdbuysell's picture

The speech reminded me of this:

http://www.youtube.com/watch?v=5NNOrp_83RU

 

 

Mon, 10/01/2012 - 16:24 | 2846396 mktsrmanipulated
mktsrmanipulated's picture

The following are 30 Ben Bernanke quotes that are so stupid that you won't know whether to laugh or cry....

#1 (October 20, 2005) "House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals."

#2 (On 60 Minutes in response to a question about what would have happened if the Federal Reserve had not "bailed out" the U.S. economy) "Unemployment would be much, much higher. It might be something like it was in the Depression. Twenty-five percent."

#3 (February 15, 2006) "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."

#4 (January 10, 2008) "The Federal Reserve is not currently forecasting a recession."

#5 (When asked directly during a congressional hearing if the Federal Reserve would monetize U.S. government debt) "The Federal Reserve will not monetize the debt."

#6 "One myth that’s out there is that what we’re doing is printing money. We’re not printing money."

#7 "The money supply is not changing in any significant way. What we’re doing is lowering interest rates by buying Treasury securities."

#8 (November 21, 2002) "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost."

#9 (March 28, 2007) "At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency."

#10 (July, 2005) "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."

#11 "Although low inflation is generally good, inflation that is too low can pose risks to the economy - especially when the economy is struggling."

#12 (February 15, 2007) "Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low."

#13 (October 31, 2007) "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."

#14 (On the possibility that the Fed might launch QE3) "Oh, it's certainly possible. And again, it depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks."

#15 (November 15, 2005) "With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly."

#16 (January 18, 2008) "[The U.S. economy] has a strong labor force, excellent productivity and technology, and a deep and liquid financial market that is in the process of repairing itself."

#17 "I wish I'd been omniscient and seen the crisis coming."

#18 (May 17, 2007) "All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.  The vast majority of mortgages, including even subprime mortgages, continue to perform well.  Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable."

#19 "The GSEs are adequately capitalized. They are in no danger of failing."

#20 (Two months before Fannie Mae and Freddie Mac collapsed and were nationalized) "They will make it through the storm."

#21 (September 23rd, 2008) "My interest is solely for the strength and recovery of the U.S. economy."

#22 "Economics has many substantive areas of knowledge where there is agreement but also contains areas of controversy. That's inescapable."

#23 "I don't think that Chinese ownership of U.S. assets is so large as to put our country at risk economically."

#24 "We’ve been very, very clear that we will not allow inflation to rise above 2 percent."

#25 "...inflation is running at rates that are too low relative to the levels that the Committee judges to be most consistent with the Federal Reserve's dual mandate in the longer run."

#26 (June 10, 2008) "The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so."

#27 "Not all information is beneficial."

#28 "The financial crisis appears to be mostly behind us, and the economy seems to have stabilized and is expanding again."

#29 "Similarly, the mandate-consistent inflation rate--the inflation rate that best promotes our dual objectives in the long run--is not necessarily zero; indeed, Committee participants have generally judged that a modestly positive inflation rate over the longer run is most consistent with the dual mandate."

#30 (October 4, 2006) "If current trends continue, the typical U.S. worker will be considerably more productive several decades from now. Thus, one might argue that letting future generations bear the burden of population aging is appropriate, as they will likely be richer than we are even taking that burden into account."

Mon, 10/01/2012 - 12:38 | 2845430 LongSoupLine
LongSoupLine's picture

 

 

Q.  How do you answer to Goldman Sachs being the overwhelming beneficiary to POMO operations?

Mon, 10/01/2012 - 12:40 | 2845439 MillionDollarBoner_
MillionDollarBoner_'s picture

A. Its a Jewish thing...you yocks wouldn't understand.

Next question ?:O)

Mon, 10/01/2012 - 12:43 | 2845457 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

JPM begs to differ.

Mon, 10/01/2012 - 12:42 | 2845447 CPL
CPL's picture

Does evapouration work into this? 

Mon, 10/01/2012 - 12:38 | 2845434 fonzannoon
fonzannoon's picture

he should have the obama phone chick there to answer any question he is uncomfortable with

Mon, 10/01/2012 - 12:38 | 2845435 JustObserving
JustObserving's picture

Gold getting hammered when Bernanke speaks.  This is getting very routine.

 

Mon, 10/01/2012 - 12:44 | 2845459 CPL
CPL's picture

Not really, everyone is taking the chance to back up the truck.

 

Look at the numbers.

Mon, 10/01/2012 - 12:46 | 2845467 Winston Churchill
Winston Churchill's picture

Set your calendar by it.Don't even try to hide the manipulation anymore.

They don't care ,and it shows how close we must be to the Endgame.

Mon, 10/01/2012 - 12:41 | 2845441 SumSUN
SumSUN's picture

This man is totally insane.

Mon, 10/01/2012 - 12:41 | 2845443 PUD
PUD's picture

Bernanke gunna pa ma mogage!!

Mon, 10/01/2012 - 12:43 | 2845456 MillionDollarBoner_
MillionDollarBoner_'s picture

...caus ah shure as hell aint gunna...

Mon, 10/01/2012 - 12:42 | 2845450 LawsofPhysics
LawsofPhysics's picture

Adding electronic zeros is "work"?!?!?  WTF?!?!?

Mon, 10/01/2012 - 12:43 | 2845452 becky quick and...
becky quick and her beautiful mouth's picture

creamette pasta has gone from $0.95 a box to $1.45 in the last 2 years. and the box is now 14 ounces instead of 16. bernanke!

Mon, 10/01/2012 - 12:50 | 2845489 azzhatter
azzhatter's picture

transitory. just don't eat for a few months and it'll be fine

Mon, 10/01/2012 - 12:53 | 2845508 TrustWho
TrustWho's picture

You did not hear....Bernanke has wrapped his monetary policy into his anti-obesity program.

Mon, 10/01/2012 - 13:09 | 2845581 nofluer
nofluer's picture

My real world inflation tracking (food) over the last three years used:

Generic label canned tuna "on sale" (5 oz), specific brand frozen beef & bean burritos "full retail" (10 pack), and Hershey's "fun bars", (10 pack).

Through the various gyrations of the manufacturers attempts to avoid price shock*, I clocked real world inflation of around 20 - 30%.

*There are several pretty standard gambits. The commonest is to reduce the package content while keeping the package price constant. Then there is the "change the package content upwards to an odd number and raising the price a disproportionate amount "- which makes it hard for the customer to easily figure the price/unit changes.

The Burrito company is currently trying a new and (iin my opinion) suicidal gambit - they reduced the content of each burrito while keepng the price static - a change not discernable from the outside of the package, you have to buy them and take them home to see that one. But it's also the most certain to kill the product because once you see that they've essentially turned a "burrito" into a burrito shell with a thin coating of "stuff" on it instead of "stuffing", you have pretty much guaranteed that the customer will never buy your product again UNTIL you engage in further manipulation of package counts and contents and price, and an extensive ad campaign. (If you're interested in this step, ask and I'll explain.)

 

Mon, 10/01/2012 - 13:23 | 2845650 CrimsonAvenger
CrimsonAvenger's picture

In addition to static prices/quantity reductions, there's a second kind of hidden inflation: reducing the quality of ingredients. I used to buy Breyers ice cream all the time, until I noticed that they changed the description on most flavors from "ice cream" to "frozen dairy dessert".

Mon, 10/01/2012 - 13:30 | 2845682 nope-1004
nope-1004's picture

Geithner will soon change the definition of CPI - Again!

It will be ex food, ex apparel, ex office supplies, along with the already ex autos and ex energy.  Feeding yourself, heating your home, and wearing clothes is so 1982.

 

 

Mon, 10/01/2012 - 12:43 | 2845455 ekm
ekm's picture

I have no intent to waste any nerves in the brain to read this crap.

Please produce a summary for us.

 

Mon, 10/01/2012 - 12:46 | 2845465 MillionDollarBoner_
MillionDollarBoner_'s picture

Ahem...allow me :O)

Shit...bollocks...unemployment...arse...claptrap...inflation...fart...waffle...aaand its gone ;o)

Mon, 10/01/2012 - 13:01 | 2845534 Bastiat
Bastiat's picture

Brilliant distillation - poetry!

Or is that Bernanke with Turette's ?

Mon, 10/01/2012 - 14:04 | 2845829 XitSam
XitSam's picture

Bernanke with Tourette syndrome would be using the cuss word "deflation."

Mon, 10/01/2012 - 12:52 | 2845497 Cyrano de Bivouac
Cyrano de Bivouac's picture

QE3= Defib3.

 

Mon, 10/01/2012 - 12:43 | 2845458 DavidC
DavidC's picture

I'm sorry, but why doesn't he just shut the fuck up? He's pathetic.

DavidC

Mon, 10/01/2012 - 12:47 | 2845466 bnbdnb
bnbdnb's picture

Wait, what? You will RAISE interest rates on reserves, if inflation gets out of hand???

So let me get this straight...you buy everything fucking thing you can at premium, pay banks to keep their money chilling, then when inflation hits, you pay them more for taking your money???

Is that about right?

Mon, 10/01/2012 - 13:03 | 2845553 LMAOLORI
LMAOLORI's picture

 

 

That would be amusing to watch if it wouldn't affect us LIKE IT WILL

Economist Who Early On Warned about Eurozone Now Warns of Inflationary Consqeuences of Fed Policies

snip

But Feldstein's most important point is similar to a point made by Fed President Charles Plosser, that the Fed will be slow too raise rates in the face of climbing price inflation. They will raise rates some but not enough.

Plosser put it this way:

 I have been a student of monetary theory and policy for over 30 years. One constant is that central banks tend to find it easier to lower interest rates than to raise them. Moreover, identifying turning points is difficult even in the best of times, so timing the change in the direction of policy is always a challenge. But this time, exit will be even more complicated and risky.

Plosser's looking at it strictly from a technical perspective that the Fed is slow to raise rates enough to slow price inflation. Feldstein  is looking at the political pressure that will exist to not raise rates. They are both correct. All elements are in place for the Fed to be very slow to raise rates, which means accelerating price inflation and soaring asset prices are very likely down the road.

Mon, 10/01/2012 - 12:49 | 2845483 azzhatter
azzhatter's picture

What a mealy mouth piece of shit this Bernanke is. Fuck him

Mon, 10/01/2012 - 12:49 | 2845486 Billy Shears
Billy Shears's picture

Hang 'em!

 

Mon, 10/01/2012 - 12:49 | 2845487 q99x2
q99x2's picture

Fuck that nest of smoke and mirror vampires.

Ross Perot is still alive and squacked out some words of the upcoming leveraged buyout of the US. He did not mention that Romney was the man for the job.

Mon, 10/01/2012 - 12:59 | 2845539 ParkAveFlasher
ParkAveFlasher's picture

Ron Paul must still be a factor for MSM to trot out Perot.

Mon, 10/01/2012 - 12:50 | 2845490 icanhasbailout
icanhasbailout's picture

Check out the word "market" in tiny print on the upper right... isn't that cute?

Mon, 10/01/2012 - 12:54 | 2845509 MillionDollarBoner_
MillionDollarBoner_'s picture

...yeah...and the word "tools" in bigger writing just below...;o)

Mon, 10/01/2012 - 12:51 | 2845491 Meesohaawnee
Meesohaawnee's picture

but but Bob Brinker of money talk said  "hes doing an excellent job" guess bob is getting his revenue stream from you know who.

Mon, 10/01/2012 - 12:52 | 2845496 foytik
foytik's picture

Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis...

Oh, how reassuring! Its only temporary, kinda like Nixon's temporary closing of the gold window.

If the Fed is serious about not supporting treasury debt, then when he decides not to buy all that is otherwise unsold we will have a huge rise in rates, followed shortly by failed auctions and a US default. Then their frn's wont be worth anything, which is not in the Fed's interest. So I think that they will indeed continue to monetize to keep the game going as long as possible. And as Bob Chapman pointed out we can't really know how much treasuries the Fed is buying. The fed has foreign accounts set up to make it look like they are not the ones buying the notes. 

Mon, 10/01/2012 - 12:51 | 2845500 wstrub
wstrub's picture

“There are two ways to conquer and enslave a nation. One is by the sword.. The other is by debt.” ~ John Adams 1826

 

“You cannot strengthen the weak, by weakening the strong.” ~ A. Lincoln

 

“When injustice becomes law, then resistance becomes duty.” ~ T. Jefferson

 

 

Mon, 10/01/2012 - 12:52 | 2845501 Peter Pan
Peter Pan's picture

And ll this fom a man who (along ith Al) could not see a bubble forming in real estate when every investor and his blind dog not only saw it forming but also rushed to join.

Could Ben tell me why the bounce in stock prices is not matched by a bounce in real estate prices? Would it have something to do with any limitations the plunge protection team has?

If Ben thinks he is doing the right thing by the economy does that mean that government is to blame?

Does Ben honestly think that the economy, minus fake stock market perormance, can return to where it was?

Mon, 10/01/2012 - 13:37 | 2845711 walküre
walküre's picture

Would it have something to do with any limitations the plunge protection team has?

Pumping and dumping equities and other paper assets is much easier than getting buyers excited to pile into an asset class again which has pretty much developed terminal cancer, leprocy and epileptic seizures at the same time. They tried to pump the housing market but it failed despite low low credits and low low payments. Keep in mind that the banks rather took the Fed money for the stock casino as opposed to loaning it out for a depreciating asset class that can possibly not be sold again. The banks made their huge profits when housing was hot and they passed their losses to the tax payer when housing tanked. Now they don't want to touch it again.

What do you expect? That bankers actually worked for their money?

Mon, 10/01/2012 - 12:52 | 2845504 nofluer
nofluer's picture

Spot reading causes me to pose a question to someone who actually saw him spewing - did he look even a LITTLE bit embarrassed at the number and poor quality of the lies he was telling? Or did he deliver them with a straight face?

Mon, 10/01/2012 - 12:55 | 2845514 Atlantis Consigliore
Atlantis Consigliore's picture

You Lie: http://youtu.be/TyTelRaoBAI     the Federal Reserve Will not Monetize Debt. Ben Bernanke;  Subprime is Contained....You Lie

                                                          Federal reserve employees are dedicated.....You Lie  Weimar Lies.

Mon, 10/01/2012 - 12:56 | 2845522 TheDarkKnight
TheDarkKnight's picture

"It is important to keep politics out of monetary policy decisions, but it is equally important, in a democracy, for those decisions--and, indeed, all of the Federal Reserve's decisions and actions--to be undertaken in a strong framework of accountability and transparency. The American people have a right to know how the Federal Reserve is carrying out its responsibilities and how we are using taxpayer resources."

What a scam.

Mon, 10/01/2012 - 12:56 | 2845523 Inthemix96
Inthemix96's picture

This disgusting excuse of a human being is criminally insane.

His day of reckoning is drawing near.  It is a feeling I am getting more and more.  More people I speak to are aware of him and his ilk, both here in GB and over your end my American friends.

I relish the day this goes pete tong, history will prove man can and fucking will prevail against insurmoutable odds, not all of us good guys just bullshit and waffle.

Some of us know the score, and here you pathetic waste of a badly worn suit ben, you had better fucking prepare accordingly, cos' your fucking island in the bahamas will be of little protection you cock sucking fucking dwarf.

Mon, 10/01/2012 - 13:01 | 2845547 ParkAveFlasher
ParkAveFlasher's picture

Wow, I never read that before. 

Mon, 10/01/2012 - 13:18 | 2845624 walküre
walküre's picture

Would you bank with Apple Inc.?

Mon, 10/01/2012 - 13:00 | 2845538 Piranhanoia
Piranhanoia's picture

He forgot to mention jobs.   

He won't mention jobs.

Mon, 10/01/2012 - 13:01 | 2845546 TheDarkKnight
TheDarkKnight's picture

Only way he would mention jobs is if it were possible to monetize jobs.

Mon, 10/01/2012 - 13:00 | 2845541 roonbox
roonbox's picture

This is pretty scary stuff.. I knew he wasnt the smartest tool in the box but this really is troubling.

Mon, 10/01/2012 - 13:01 | 2845542 pndr4495
pndr4495's picture

I hope ZH sends Bernanke these questions : Who owns the stock of The Fed ; and how is that stock divvied up between the owners ?  Do these owners also own significant numbers of gold / silver bars in NY's Fed or elsewhere?  How much more might they need ?

Mon, 10/01/2012 - 13:04 | 2845556 Everybodys All ...
Everybodys All American's picture

Someone needs to arrest him and soon.

Mon, 10/01/2012 - 13:05 | 2845559 walküre
walküre's picture

Markets are actually tanking because investors aren't buying the hype. Just look at the setup. They push the indexes higher pre-open. This is not buying from investors, it's manipulation. Then they hope for investors to pile in and at least buy the crap they're trying to sell. It's not working. The market is lower than pre-open which means they can't sell to anybody.

I don't know who "they" are or who "investors" are but one thing is for sure. This is a setup, a scam, a fraudulent market. There's not even much short covering going on because the bears and short players learned their lessons the hard way from 2009 to 2011.

Think FB IPO. Think the manipulation and the sheer fraud that went into that. They couldn't pull off the heist because the market wasn't going along with it. They became greedy and rode FB like a cheap penny stock pump & dump.

Essentially their entire ammo is pumping and dumping. Read the collective narrative and the headlines in every business paper on every business "news" website. They're all coordinated to support their market actions. It has probably always been this way but it is alot more obvious when investors are refusing to play along and the internet makes data tracking and analysis so much easier.

Keep adding to your physical holdings. At least you know what you have in your boat.

Mon, 10/01/2012 - 13:37 | 2845710 MillionDollarBoner_
MillionDollarBoner_'s picture

Way to go Walkure... but a note of caution.

I knew what I had in my boat...but then a storm blew up...sadly it was the PMs or the missus...all at the bottom of the lake now...tragic...

Tue, 10/02/2012 - 08:19 | 2847816 overmedicatedun...
overmedicatedundersexed's picture

why are" investors not buying it"..well 1. if you are UE you got no money to throw at WS.

2. if you are older baby boomer you are selling your investments for income

3. if you are working but the job is low paying  you are like #1.

4. if you are political many see the lies and corruption and refuse to invest in this system

5. if you are awake you see the false picture and have no confidence in any of it

6. traders invest but are short term holders and cannot support any market move

7. we are left with the big funds, insurance co and banks who as always make the market- they will buy and hold until conditions change and the 1 -6 above start buying. they will be holding a long time as the real economy continues to fall into the abyss created by the elite..ask paul kanjorski ex congressman who let the cat out of the bag after 2008 that massive equity was withdrawn from our markets ..leading to the question by whom?? never asked or answered even here on ZH...

Mon, 10/01/2012 - 13:06 | 2845561 Darth Mul
Darth Mul's picture

 

Central Bankers Inflate Fiat While Plans for One World Currency Are Finalized

http://occupycorporatism.com/central-bankers-inflate-fiat-while-plans-for-one-world-currency-are-finalized/

Mon, 10/01/2012 - 13:19 | 2845629 Overfed
Overfed's picture

One world currecy? Sheeit, they couldn't even make a pan-European currency work.

Mon, 10/01/2012 - 13:27 | 2845660 walküre
walküre's picture

You fail to see that it is working for THEM.

They don't care that Greece or Spain are broke. They just want to get paid on the debt which is why they created the debt first and then the bondage. Nobody is walking away from the debt and that should give you pause.

Why isn't Greece defaulting? think think think

Mon, 10/01/2012 - 13:08 | 2845567 Racer
Racer's picture

"start by pointing out that the Federal Reserve's price stability record is excellent,"

I was eating a sandwich and nearly choked to death!

How obscenely UNTRUE!

Mon, 10/01/2012 - 13:08 | 2845571 Quinvarius
Quinvarius's picture

Scary.  He is printing for the banks only.  He knows it.  And he is not going to stop.  He is jawboning a truck tire at this point.  The stuff he is saying...the contradictions...the nonsense.  Mindboggle.

Mon, 10/01/2012 - 13:08 | 2845575 TrustWho
TrustWho's picture

Daddy Bernanke is independent of the US gov't. and works for the Banksters; however Bernanke can expand the currency by expanding their balance sheet. And now Bernanke says this:

I'm confident that we have the necessary tools to withdraw policy accommodation when needed, and that we can do so in a way that allows us to shrink our balance sheet in a deliberate and orderly way. For example, the Fed can tighten policy, even if our balance sheet remains large, by increasing the interest rate we pay banks on reserve balances they deposit at the Fed.

Talk about stealing from the poor and giving to the rich, this is worse than any mafia organization. Remember the keymaker in the Matrix movie, we have found him and he is Daddy Bernanke. Neo, please rescue us and kidnap this keymaker for us.

Mon, 10/01/2012 - 13:15 | 2845613 walküre
walküre's picture

This isn't the Eighties. He can sure think that way and even try to raise rates but too many out there understand how any raise in interest rates would just mean that people are working harder for the banks than they do now.

The whole game is so obvious by now and all they can hope for is to delay the revolution until the majority of them has died from a natural cause. It will be a tough balancing act but rest assured, they do care to live as long as they can and as comfortable as possible. They DO NOT care what happens after they're DEAD.

Mon, 10/01/2012 - 13:22 | 2845642 TrustWho
TrustWho's picture

God is Dead! Selfish behavior unleashed. How do you create the middle ages with over 7 billion people?

Mon, 10/01/2012 - 13:25 | 2845658 walküre
walküre's picture

On the contrary. How do you avoid anarchy and slipping back into the middle ages when you're going from 7 to 9 billion?

Mon, 10/01/2012 - 13:34 | 2845704 TrustWho
TrustWho's picture

You do not get to 9 billion.

Mon, 10/01/2012 - 13:44 | 2845743 walküre
walküre's picture

I get that. So you're suggesting raising interest rates is a way to reduce population? Shylock calling in the loan and the King better pay up or lose the palace? King beats on his people to pay more taxes until the people go to Shylock and take a loan to build their revolutionary army? Shylock is in a win-win position.

Mon, 10/01/2012 - 14:04 | 2845824 TrustWho
TrustWho's picture

...Until you get a Hitler who says fuck Shylock.

Mon, 10/01/2012 - 14:39 | 2846024 walküre
walküre's picture

Encouraging to read that even the best packaged bullshit has an expiry date on it. No matter how carefully crafted the propaganda or how much effort has been put into 're-education' over time.

In the end and generations later the questions remain unanswered and conclusions are the same as ever.

Many more things could be said... if it walks like a duck, quacks like a duck it is a duck.

Tue, 10/02/2012 - 14:14 | 2849096 TrustWho
TrustWho's picture

Truth, justice and the American way is the packaged bullshit that has expired and replaced by a kleptocracy of corruption. Daddy Bernanke is only the keymaker.

Mon, 10/01/2012 - 13:24 | 2845652 Racer
Racer's picture

"I'm confident that we have the necessary tools"

From the man who said sub-prime is well contained!

Ridiculous untruths

Mon, 10/01/2012 - 13:09 | 2845580 buzzsaw99
buzzsaw99's picture

I am baffled by so much of that bullshit so it must be all okay. [/sarc]

Mon, 10/01/2012 - 13:12 | 2845597 Quinvarius
Quinvarius's picture

This is like when The Fonz jumped that shark on a motorcycle.

Prediction:  Gold has its first +100 day this week.

Mon, 10/01/2012 - 13:13 | 2845602 El
El's picture

We are not a democracy, Mr. Bernanke. We are a republic. (At least we are supposed to be ::sighs:: )

Mon, 10/01/2012 - 13:20 | 2845631 Quinvarius
Quinvarius's picture

I can't tell where the government stops and the banking system begins anymore.  I can't define this thing with the proper "ism".  This may be something new.  It is more like some kind of mafia family alliance than anything else.

Mon, 10/01/2012 - 13:32 | 2845691 pndr4495
pndr4495's picture

Priapism

Mon, 10/01/2012 - 13:38 | 2845716 Quinvarius
Quinvarius's picture

I had to look that up.  LOL.

Mon, 10/01/2012 - 13:17 | 2845621 adr
adr's picture

I vote the Obamaphone welfare mama for the next Fed Chair. Although an ant has more brainpower, at least she would give people something with all the printed cash.

Free Obamas money fo evyone!!!!

Fuck, she can't do worse.

Mon, 10/01/2012 - 13:20 | 2845636 zorba THE GREEK
zorba THE GREEK's picture

The really scary thing about his speech is that he probably believes

what he is saying.

Mon, 10/01/2012 - 13:30 | 2845687 TrustWho
TrustWho's picture

Where was the discussion on the stock market? I think the PPT hit the key at 1:14pm today. The Fed has sent the message...stop the fall, do not test the Bernanke Put!

Mon, 10/01/2012 - 13:32 | 2845693 DavosSherman
DavosSherman's picture

I've taken better looking shits than Bernanke and they smell better than his speaches.  We have a pschopathic moron dragging us over the coals.

Mon, 10/01/2012 - 13:59 | 2845806 khakuda
khakuda's picture

"Even though our activities are likely to result in a lower national debt over the long term, I sometimes hear the complaint that the Federal Reserve is enabling bad fiscal policy by keeping interest rates very low and thereby making it cheaper for the federal government to borrow. I find this argument unpersuasive."

HAHAHAHAHAHA!!!!

Mon, 10/01/2012 - 14:37 | 2846015 JR
JR's picture

Translation: Bernanke is getting lots of criticism so now he’s blaming Congress.

“Hey, Congress, it takes one to know one.” -- Ben

Mon, 10/01/2012 - 14:08 | 2845838 calgal
calgal's picture

Public Will Be Slaughtered as Fed is Setting Up the Biggest Pump & Dump the World Has Ever Seen

http://www.silverdoctors.com/public-will-be-slaughtered-as-fed-is-setting-up-the-biggest-pump-dump-the-world-has-ever-seen/#more-14713

Mon, 10/01/2012 - 16:55 | 2846491 JR
JR's picture

A winner! Thanks! I particularly found this succinct:

"Mannarino states the 1,000 million dollars a day in QE3 being used t0 attempt to re-inflate the housing bubble is attempting to remove risk from the banks, who can now package all mortgages and dump the MBS to the Fed.  However Mannarino states that the plan will not work to re-inflate the housing bubble DUE TO INFLATION.   The Fed believes money will come out of equities and will go into housing due to their plan."

Mon, 10/01/2012 - 14:19 | 2845897 dolph9
dolph9's picture

Bernanke is certainly doing all he knows how to do, and all that he is capable of doing.  I'm not sure if I can blame him for that.

You have to learn to read between the lines.  There is no "exit."  The exit plan is retirement or death.

Are you starting to get it?  Everybody is just trying to keep things patched up and run away with as much fiat before the thing collapses.  Everyone, including you and me.

That is why the most important decisions any of us can make is how far up are we willing to climb, and how much responsibility are we willing to take.  I personally have decided that mostly dropping out is the best solution.  In the coming years, the circle jerk between the banks, corporations, and government is going to turn into an all out war, leaving nothing but jaded "climbers" who will begin to realize that the party's over and they're left to clean up the mess.

Tue, 10/02/2012 - 03:55 | 2847589 Anasteus
Anasteus's picture

Definitely.

Mon, 10/01/2012 - 14:30 | 2845991 JR
JR's picture

A tissue of lies!!!

The recession did not drive interest rates down. The Fed drove interest rates down; the recession is not holding interest rates at exceptionally low levels. The Fed is holding interest rates at exceptionally low levels.

The extended low levels of interest rates are destroying sound money and increasing the wealth and power of the big banks at the expense of not only savers and retirees and others but at the expense of the American economy.

It is bad enough that Bernanke represents a banking cartel that is purposely driving the economy down for its own benefit; but, now, he has the gall to lie about not only current conditions but about the truth of Fed policy.

The way to fix the economy was to let the interest rates seek their market level and blow out the insolvent banks who created the crisis and are prolonging it and to depend on market forces, not central planning, to return the economy to prosperity.

Please can someone tell this man to shut up?

Mon, 10/01/2012 - 14:31 | 2845994 ebworthen
ebworthen's picture

"We reasoned that, as with traditional monetary policy, bringing down longer-term rates should support economic growth and employment by lowering the cost of borrowing to buy homes and cars or to finance capital investments."

What a dope.

Tue, 10/02/2012 - 04:45 | 2847614 Fort
Fort's picture

First I wanted to just skip the article and read the comments. I then decided to at least offer him the opportunity to justify CP actions taken since the start of the great recession. After all he was going to answer 5 questions. So I read the full article. I must admit I was baffled; I frequently had a wtf moment and at the end was not convinced by the conclusion. I mean does it even deserve to be called a conclusion. We all work very hard and do our utmost. A lot is said in all posts and indeed my biggest wtf was when he explained he was going to increase interest paid on bank reserves to counter inflationary pressure if and when that was deemed necessary. That is the biggest middle finger he could have stuck in the air when answering five questions to his audience.

His audience by his own words are:

"I was introduced to one of the team's star players, but before I could press my questions on some fine points of baseball strategy, he asked, "So, what's the scoop on quantitative easing?" So, for that player, for club members and guests here today, and for anyone else curious about the Federal Reserve and monetary policy, I will ask and answer these five questions:"

I think Mr Chairman you should have concluded like this at least you would have been honest:

"I'm making banks richer by providing them a return on their reserves and take away any risk banks might have as a result of their own actions, you sheep are financing that return and the risk premiums, once I can no longer provide them with free additional income I will increase the interest paid to them. So audience you may spit, fume, shout, resist and say whatever you like and say whatever you want about our CP policies we will continue to do it because that is basically our mandate. Now give me your questions and after that piss off."

Mr Chairman Thanks for the explanation why didn’t you just say you only serve one master.

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