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Woods & Murphy Refute 11 Myths About The Fed

Tyler Durden's picture





 

Authored by Tom Woods and Bob Murphy, originally posted on Liberty Classroom,

The other day the Huffington Post ran an article by a Bonnie Kavoussi called “11 Lies About the Federal Reserve.” And you’ll never guess: these aren’t lies or myths spread in the financial press by Fed apologists. These are “lies” being told by you and me, opponents of the Fed. Bonnie Kavoussi calls us “Fed-haters.” So she, a Fed-lover, is at pains to correct these alleged misconceptions. She must stop us stupid ingrates from poisoning our countrymen’s minds against this benevolent array of experts innocently pursuing economic stability.

Here are the 11 so-called lies (she calls them “myths” in the actual rendering), and my responses.

 

HuffPo’s Myth #1: “The Fed actually prints money.”

She leads off with this? As if this is some big discovery that will refute the end-the-Fed people? When we talk about Fed money-printing, we are speaking in shorthand. We’re pretty certain someone like Ron Paul knows the Fed doesn’t actually print money. But he, along with pretty much the whole financial world, speaks of the Fed as printing money. You know why? Because it’s a teensy bit more convenient than saying, “We need the Fed to credit some banks’ accounts with increased balances, which it does by means of a computer, though if these balances are lent out and the borrowers prefer to use some of this lent money as cash, the Treasury will go ahead and print the cash.”

 

HuffPo’s Myth #2: “The Federal Reserve is spending money wastefully.”

You may think the Federal Reserve is throwing around money like crazy, just like the federal government. But you’re wrong! As Kavoussi explains, the Fed doesn’t spend money like the federal government does; it creates money! That’s just totally different! And so we read, “Both CNN anchor Erin Burnett and Republican vice presidential nominee Paul Ryan have compared the Federal Reserve’s quantitative easing to government spending. But the Federal Reserve actually has created new money by expanding its balance sheet.”

She then points out that hey, the Fed earned a profit of $77.4 billion last year. We are supposed to be impressed. But if you can create money out of thin air and buy bonds with it, and then earn interest on those bonds, wouldn’t it be pretty hard to lose money? (But they just might, if interest rates should spike.)

 

HuffPo’s Myth #3: “The Fed is causing hyperinflation.”

Is it just us, or does Bonnie Kavoussi word things awkwardly? Do you know of anyone who says the Fed is causing – as in present progressive tense — hyperinflation?

Kavoussi then goes on to tell us that the CPI is showing low price inflation — again, as if she’s reporting some extraordinary revelation that will put all Fed critics to shame. There is no hyperinflation because the banks are holding the newly created money as excess reserves with the Fed. If the banks begin lending and the money multiplier is enacted, an inflationary spiral could easily occur — trillions of dollars of high-powered money would expand via the fractional-reserve banking system into tens of trillions of dollars. The only way for the government to stay ahead of the curve would be for the Fed to keep creating boatloads of new money — which is how hyperinflation happens, after all.  If that were to happen, we rather doubt Kavoussi would want to come tell us how the CPI is doing.

 

HuffPo’s Myth #4: “The amount of cash available has grown tremendously.”

“Some Federal Reserve critics claim that the Fed has devalued the U.S. dollar through a massive expansion of the amount of currency in circulation,” says Kavoussi. “But not only is inflation low; currency growth also has not really changed since the Fed started its stimulus measures, as noted by Business Insider’s Joe Weisenthal.”

This looks like another silly gotcha with definitions, like the “printing money” canard. The graph below shows that the currency component of M1 hasn’t shot up like a rocket, it’s true; but M1 itself (which consists of not just physical paper but also checking account deposits) has indeed risen sharply, notwithstanding the insights of Business Insider’s Joe Weisenthal.

 

HuffPo’s Myth #5: “The gold standard would make prices more stable.”

Kavoussi writes, “Rep. Ron Paul (R-Tex.) has claimed that bringing back the gold standard would make prices more stable. But prices actually were much less stable under the gold standard than they are today, as The Atlantic’s Matthew O’Brien and Business Insider’s Joe Weisenthal have noted.”

Does our critic even read the things she links to? Her two authors’ blog posts depict a very brief period in the twentieth century, after the classical gold standard had already given way to the gold exchange standard. What is that supposed to prove?

So against Bonnie Kavoussi’s two blog posts that examine the gold exchange standard and only for a period of about 15 years at that, all we have in reply is only the most meticulous study of gold and its purchasing power ever written, Roy Jastram’s The Golden Constant: The English and American Experience 1560-2007, which finds gold to be extraordinarily stable over four and a half centuries.

Even John Kenneth Galbraith, not exactly gold’s biggest fan, conceded that once someone had gold, there was little uncertainty about what he would be able to get with it. “In the last [19th] century in the industrial countries there was much uncertainty as to whether a man could get money but very little as to what it would do for him once he had it. In this [20th] century the problem of getting money, though it remains considerable, has diminished. In its place has come a new uncertainty as to what money, however acquired and accumulated, will be worth. Once, to have an income reliably denominated in money was thought…to be very comfortable. Of late, to have a fixed income is to be thought liable to impoverishment that may not be slow. What has happened to money?”

Of course, gold standard advocates, at least in the Austrian tradition, are not fixated on price stability in the first place.

 

HuffPo’s Myth #6: “The Fed is causing food and gas prices to rise.”

This can’t be, Kavoussi says, since some sources deny it. Bob Murphy testified before Congress on this very issue. He thinks the Fed does play a role. Where is the flaw in his reasoning?

 

HuffPo’s Myth #7: “Quantitative easing has not helped job growth.”

How could we think such a thing? Why, we should be satisfied to know, as Bonnie Kavoussi assures us, that “the Fed’s quantitative easing measures actually have saved or created more than 2 million jobs, according to the Fed’s economists.” Gee, the Fed’s economists think the Fed contributes to job growth? How about that! On the same grounds, we might say there was no housing bubble in 2005 and that the fundamentals of real estate were sound — after all, we could find a whole bunch of “Fed economists” who were saying just that.

In fact, these models build in the very assumptions about purchases helping the economy that they then spit out, just like with the ex post “analysis” of the Obama stimulus package. No matter what numbers one fed into such models, it would be impossible for them to say that QE (or the Obama stimulus) hindered economic growth; the worst they would show is a build-up of price inflation once “full employment” had been achieved.

 

HuffPo’s Myth #8: “Tying the U.S. dollar to commodities would solve everything.”

Whenever you hear a mocking writer like Bonnie Kavoussi say something like, “My opponents think X would solve everything,” you can be sure her opponents have said no such thing. Why, as a matter of simple courtesy, could she not simply have described this alleged myth as, “Tying the U.S. dollar to commodities would improve the American monetary system”? Because that might sound reasonable, and it’s Bonnie Kavoussi’s job to make her opponents sound like troglodytes.

That’s all we have to say about this myth, though, since we are not interested in tying the dollar to a basket of commodities. Here is our preferred monetary reform.

 

HuffPo’s Myth #9: “Ending the Fed would make the financial system more stable.”

Here’s Bonnie Kavoussi: “Rep. Ron Paul (R-Tex.) claims that ending the Federal Reserve and returning to the gold standard would make the U.S. financial system more stable. But the U.S. economy actually experienced longer and more frequent financial crises and recessions during the 19th century, when the U.S. was using the gold standard and did not have the Fed.”

Categorically false. As wrong as wrong can be.

First, an excerpt from the 2011 Tom Woods book Rollback, whose chapter on the Fed spends some time on this claim. (We omit the notes here, but thanks go to George Selgin and Peter Klein for help with sources.)

When people raise questions about the utility of the Fed, they are usually lectured about how volatile the economy used to be and how much better it is now, thanks to the wise oversight of our central bank. Recent research has thrown cold water on this claim. Christina Romer finds that the numbers and dating used by the National Bureau of Economic Research (NBER, the largest economics research organization in the United States, founded in 1920) exaggerate both the number and the length of economic downturns prior to the creation of the Fed. In so doing, the NBER likewise overestimates the Fed’s contribution to economic stability. Recessions were in fact not more frequent in the pre-Fed than the post-Fed period.

 

But let’s be real sports about it, and compare only the post-World War II period to the pre-Fed period, thereby excluding the Great Depression from the Fed’s record. In that case, we do find  economic contractions to be somewhat more frequent in the period before the Fed, but as economist George Selgin explains, “They were also almost three months shorter on average, and no more severe.” Recoveries were also faster in the pre-Fed period, with the average time peak to bottom taking only 7.7 months as opposed to the 10.6 months of the post-World War II period. Extending our pre-Fed period to include 1796 to 1915, economist Joseph Davis finds no appreciable difference between the length and duration of recessions as compared to the period of the Fed.

 

But perhaps the Fed has helped to stabilize real output (the total amount of goods and services an economy produces in a given period of time, adjusted to remove the effects of inflation), thereby decreasing economic volatility. Not so. Some recent research finds the two periods (pre- and post-Fed) to be approximately equal in volatility, and some finds the post-Fed period in fact to be more volatile, once faulty data are corrected for. The ups and downs in output that did exist before the creation of the Fed were not attributable to the lack of a central bank. Output volatility before the Fed was caused almost entirely by supply shocks that tend to affect an agricultural society (harvest failures and such), while output volatility after the Fed is to a much greater extend the fault of the monetary system.

 

When we look back at the nineteenth century, we discover that the monetary and banking instability that existed then were not caused by the absence of a government-established agency issuing unbacked paper money. According to Richard Timberlake, a well-known economist and historian of American monetary and banking history, “As monetary histories confirm…most of the monetary turbulence — bank panics and suspensions in the nineteenth century — resulted from excessive issues of legal-tender paper money, and they were abated by the working gold standards of the times.” In a nutshell, we are faced once again with the faults of interventionism being blamed on the free market.

From here, we recommend Tom’s article Life with the Fed: Sunshine and Lollipops? and his resource page Economic Cycles Before the Fed.

 

HuffPo’s Myth #10: “The Fed can’t do anything else to help job growth.”

Bonnie Kavoussi: “Many commentators have claimed that there simply aren’t any tools left in the Fed’s toolkit to be able to help job growth. But some economists have noted that the Fed could target a higher inflation rate to stimulate job growth.”

So we’re back to the old Phillips Curve analysis, which posited an inverse relationship between inflation and unemployment. You can get low unemployment, the argument went, but the price will be high inflation.

Time has not been kind to the Phillips Curve.  As economist Jeff Herbener told an interviewer:

The theory was that there was a trade-off between unemployment and inflation. But if you go back to the original article by Phillips, he never demonstrates that such a thing exists in the real world. He manipulated and maneuvered the data around to make it look as if there was one. Once his errors are swept away, and the data broken down, the Phillips Curve vanishes as any kind of long-run pattern. It didn’t take stagflation to teach us that. It was always untrue.

 

This raises a much more interesting question. How did the idea ever come to dominate the macroeconomic literature in the first place? Here’s my theory. Recall that Keynesian theory suggests there are no downsides to manipulating aggregate demand through fiscal and monetary policy. If you created full employment, it would stay there and we’d all live happily ever after. It seems paradoxical, then, that Keynesians would embrace a theory that suggests that creating full employment risks generating inflation. Keynes never said that, but people like Paul Samuelson did...

 

It became fairly well recognized, even in the 1950s, that there could be such things as inflationary recessions. That put orthodox Keynesians in big trouble. In order to cover themselves, Samuelson and Solow adopted the Phillips Curve as a model. It served as the means to save themselves from the realization that Keynesianism was fundamentally flawed.

 

When inflation and unemployment increase, they don’t have to throw in the towel on Keynesian theory; they merely claim that the Phillips Curve has shifted outwards. They are saved–until of course the outward and inward shifts of the whole curve dominate movement along the curve. That means the supposed trade-off itself has disappeared. That’s exactly what happened. Many people see that the curve is now discredited. But in fact, it never did stand up. It was an escape hatch built by Keynesians that no longer allows them an escape.

For the systematic takedown of the Phillips Curve — if only Bonnie Kavoussi could recognize a real myth when she saw one, instead of just repeating what she learned in Ec 10 at Harvard — see chapter 3 of Dissent on Keynes.

 

HuffPo’s Myth #11:  ”The Fed can’t easily unwind all of this stimulus.”

Kavoussi: “Some commentators have claimed that the Fed can’t safely unwind its quantitative easing measures. But the Fed’s program involves buying some of the most heavily traded and owned securities in the world, Treasury and government-backed mortgage bonds. The Fed will likely have little problem finding buyers for these securities, all of which will eventually expire even if the Fed does nothing. But economists have noted that once the Fed decides it’s time to unwind the stimulus, the economy will have improved to such an extent that this won’t be an issue.”

Nobody is denying that the Fed could find a buyer for its assets. The issues are: (1) at what price will the Fed be able to unload those assets, and (2) what happens to the financial sector when the reserves are destroyed in the act of selling off these assets? The Fed could dump its entire holdings of Treasury securities tomorrow, but the critics are worried that this would send interest rates soaring and would cripple the banks which would no longer have excess reserves.

Look closely at what Kavoussi is saying: If the economy begins to recover before price inflation becomes a problem, then the Fed will be able to sit back and let its “stimulus” unwind naturally. Yes, great, but what if the economy is still in the toilet when price inflation heats up? Then, as Bob Murphy argues, all of the Fed’s ballyhooed “exit strategies” will seem pretty useless.

 

In short, it’s safe to say that there are indeed plenty of myths about the Fed, and that Bonnie Kavoussi believes pretty much all of them.

 


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Tue, 10/09/2012 - 17:18 | Link to Comment MillionDollarBogus_
MillionDollarBogus_'s picture

Created by and for the biggest bank(er)s...

Tue, 10/09/2012 - 17:24 | Link to Comment no taste
no taste's picture

Myth #12 -- The Federal Reserve gives a shit about anybody who does not already have a private jet.

http://howstupidare.blogspot.com/

 

Debt Slavery - Feudalism for our time.

Tue, 10/09/2012 - 17:37 | Link to Comment redpill
redpill's picture

The original HuffPo article is the most mind-numbingly ignorant and naive piece of shit I've ever forced myself to scan several paragraphs of.  Amazing the dumbslavebitches that get vomited out of Harvard these days.

Tue, 10/09/2012 - 17:37 | Link to Comment Stackers
Stackers's picture

PWND

Tue, 10/09/2012 - 18:04 | Link to Comment MillionDollarBogus_
MillionDollarBogus_'s picture

What I find most interesting about the Federal Reserve is this; The Senate, on December 23, 1913, agreed to it by a vote of 43 yeas to 25 nays with 27 not voting.

Two days before Christmas and the vote comes up before the Senate.

You have to wonder if the backers of the Fed waited until enough potential No votes left town before it came up for a vote..?? 

Tue, 10/09/2012 - 18:19 | Link to Comment Manthong
Manthong's picture

Um.. you've got the wrong orifice with that Harvard emission reference up there. 

Tue, 10/09/2012 - 18:30 | Link to Comment macholatte
macholatte's picture

The original HuffPo article is the most mind-numbingly ignorant and naive piece of shit I've ever forced myself to scan several paragraphs of.  Amazing the dumbslavebitches that get vomited out of Harvard these

 

The folks who inspired, wrote and published the articel are NOT dumb. The article was crafted by intelligent people who desire to destroy America by any means possible. Propaganda being a most useful tool.

 

It is the absolute right of the State to supervise the formation of public opinion.
Joseph Goebbels

The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society.
Edward Bernays

Tue, 10/09/2012 - 18:32 | Link to Comment notbot
notbot's picture

i MUST own one of those rainbow "I heart the Fed" t-shirts!  great satire.  ZH should start selling those, would make a fortune.  Just add a little unicorn on there

Tue, 10/09/2012 - 18:52 | Link to Comment insanelysane
insanelysane's picture

I heart the Fed with a giant mushroom cloud instead of the rainbow.

Tue, 10/09/2012 - 19:14 | Link to Comment knukles
knukles's picture

Oh come on, everybody, it is the HuffPo for Christ's sake.
But then again they are know to be a fairly financially conservative, small gubamint, fiscally responsible organ for that only one somebody I know who is one of my uber-liberal golf buds who likewise thinks that Paul Krugman is a fucking genius.

Unicorns and dildos for everybody.

Tue, 10/09/2012 - 19:59 | Link to Comment nmewn
nmewn's picture

Who is Bonnie Kavoussi and why is she riding a pink unicorn with a dildo in the center of the saddle?

Tue, 10/09/2012 - 21:27 | Link to Comment FEDbuster
FEDbuster's picture

The real sad thing about Bonnie's article is that millions of people will believe her.  They are mostly predisposed to this propaganda, but this kind of shit re-enforces their beliefs.  Then there are the other 70 percent of the population who don't know what the FED is or what it does.

Tue, 10/09/2012 - 22:10 | Link to Comment RockyRacoon
RockyRacoon's picture

Wow.  If you think HuffPo is getting away with this tripe, one just needs to read the comments.  Kavoussi is skewered -- I mean totally.   Nearly no comment is going with the nonsense in the article.  It went over like the proverbial lead balloon.  Click on the "Favorites" tab of the comments for the most blistering.

http://www.huffingtonpost.com/2012/10/08/lies-about-the-federal-reserve_...

Wed, 10/10/2012 - 07:17 | Link to Comment homme
homme's picture

Because the side saddle dildo craze ended with Disco, I believe, sir.

Tue, 10/09/2012 - 20:51 | Link to Comment mick_richfield
mick_richfield's picture

 

Unicorns and dildos for everybody.

If you have a unicorn, do you really need a dildo ?

Tue, 10/09/2012 - 21:25 | Link to Comment Row Well Number 41
Row Well Number 41's picture

How about a T-Shirt with "I love the Fed" and Bernake riding a unicorn shitting skittles.  O Banzai where art thou.

#41

Tue, 10/09/2012 - 18:53 | Link to Comment The Alarmist
The Alarmist's picture

That is so gay (not that there is anything wrong with that)!  What they really need is a pink unicorn.

Tue, 10/09/2012 - 18:59 | Link to Comment formadesika3
formadesika3's picture

Joe's stomach with rancid gas bubbling out of the top.

Tue, 10/09/2012 - 18:49 | Link to Comment smlbizman
smlbizman's picture

if anybody cares... on 10-4 the other day netdania charts showed from a time frame of 17 21 to 18 01 silver flashed crashed .60 cents than traded between 34.60 34.605 and 34.61 for 40 minutes......tonight on netdania ; at 17 21 again silver dropped from 33.86 to 33.07 but only for 2 minutes...same exact time...

Tue, 10/09/2012 - 20:54 | Link to Comment mick_richfield
mick_richfield's picture

I don't care what those animals do with their lies and frauds that they call markets, and very soon no one else will care either.

Tue, 10/09/2012 - 21:03 | Link to Comment FEDbuster
FEDbuster's picture

Bought two rolls of "Liberty" and pre-64 Roosevelt dimes this past weekend.  No rehypothication here, locked in the gun safe till needed for trade.

Tue, 10/09/2012 - 19:14 | Link to Comment EscapingProgress
EscapingProgress's picture

Here is that last quote in its entirety.

"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. ...We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. ...In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons...who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind." - Edward Bernays (excerpt from Propaganda)

Tue, 10/09/2012 - 20:33 | Link to Comment TWSceptic
TWSceptic's picture

The folks who inspired, wrote and published the articel are NOT dumb. The article was crafted by intelligent people who desire to destroy America by any means possible. Propaganda being a most useful tool.


I think you're giving this woman too much credit. I think she actually believes the nonsense that she learned and writes about.

Tue, 10/09/2012 - 23:07 | Link to Comment Radical Marijuana
Radical Marijuana's picture

The first rule of ideology is that people tend to rationalize and believe in whatever it takes to make their living. People who support the biggest bullies' bullshit tend to make way more money than those who do not! The Fed is at the core of a system of lies, backed by violence, running the globally dominant organized fraud and robbery system. If you want to do well in the short-term, then you support it. If you get sufficiently disturbed that the path that whole system is on is towards mad self-destruction, due to the prolonged triumph of controlling society with lies, then it becomes harder to agree to support that system. Up until 2007, it was almost always much easier to support the idea of making more money out of nothing, and to work towards being in place to take a bigger slice of that pie ... After 2007, we have turned the corner, where even the banksters are just slightly starting to snipe at each other.

Remember that the best liars believe in their own lies. Therefore, I agree that this person probably does believe in her own lies. If anything was able to crack her wall of deliberate ignorance and wilful blindness, then most of the arcitecture of her mind would collapse, and she would have to rebuild her entire world view. It is not realistic to expect that people will volunarily tear down their own basic mental contructions, simply because any amount of evidence or logical arguments indicate that they should. Instead, the whole established system must continue to drive itself through more spirals of insanity, staving off recognition of realities through masterful cognitive dissonance. Of course, that is a lot easier to do as long as one is still getting paid well, within a still standing system, to agree with the runaway frauds, and continue defending them!

It is an interesting question to ask at what point does the cognitive dissonace finally snap, like a rubber band being stretched to the breaking point. In general, the plasticity of the human mind to embrace absuridities is AWESOME! So far, we have no good ideas about how far the established systems of making money out of nothing, in flagrant contradiction of all the known laws of nature, could continue to do that! When one's way of life depends on believing and supporting HUGE LIES, the breaking point has to be quite overwhelming!

Wed, 10/10/2012 - 02:11 | Link to Comment verum quod lies
verum quod lies's picture

Thank you for that great summary on the mindset; and I agree that around 2007 we had a general turning point in cognitive dissonance for many. My guess to your overall point/question on when the rubber band of cognitive dissonance finally breaks for people in general  is that it is happening, but as you point out, the average person has an amazing capacity for rationalizing the unrationizable (e.g., the Fed). The whole Orlov point about collapse being more of a “process” than an event seems very applicable to the notion of population wide cognitive dissonance with respect to the system and its growing system of lies as it heads down the drain.

For example, few people can come to the conclusion by themselves and those that do tend to be shunted aside as you suggest, yet the larger group that has and is largely controlled by the constant false propaganda and their own cognitive dissonance will break out when they are cut off from the system (not all mind you, but a larger number; and depending on the group, history, etc.). Many, if not most, rationalize their position, again as you point out, because it is simply in their perceived economic interest to do so. In the extreme, a police officer or other armed representative of the state beating, torturing or even killing someone because they “had to feed their family, etc.” Therefore, waking up for people like that takes them being fired and/or cut off economically and/or even being socially cast aside (or at least perceiving that the people outside the tank will soon be their boss, or even kill them and/or their families, for example) so that their perceived benefits stop and they are faced with the stark reality of the system they supported, and often ridiculed others for rejecting, before they can realize any epiphany. For example, even on this website there are extreme signs of cognitive dissonance that is astonishing at this point. Many will reflexively reject points, arguments, or insights because they have that childlike need to cling to their beliefs and lash out with ad homonyms and expletives rather than try to make a cogent argument. In short, and unfortunately tautologically true, system collapse will most likely result in a bare majority finally coming to grips with their economic cognitive dissonance; yet, economic system collapse tends to be a long drawn out process interspersed with a few memorable events. Political and cultural Marxist related cognitive dissonance is another kettle of fish, and may still be difficult to eliminate or even much dent under the current propaganda system (i.e., e.g., it would need to be cut off from its funding sources in an economic collapse).

 

Tue, 10/09/2012 - 18:21 | Link to Comment moroots
moroots's picture

Read "The Creature from Jekyll Island" by G. Edward Griffin.  Great book.  To your point, that was exactly the strategy.  Wait until the very last minute before the Christmas recess to put the bill to a vote.  They knew what they were doing.

Tue, 10/09/2012 - 18:31 | Link to Comment Stoploss
Stoploss's picture

http://www.scribd.com/doc/17234309/Congressional-Record-Dec-23-1913

Here ya go.

======================FUCK THE FED=======================

Tue, 10/09/2012 - 22:36 | Link to Comment taxpayer102
taxpayer102's picture

 

@Stoploss

Thanks for posting, interesting to read Sen. Bristow direct a conflict of interest passage from Jefferson's Manual to Sen. Owen of Kansas.  Bristow then read a news clipping : Senator Robert L. Owen, chairman of the Senate Committee on Banking and Currency, last night confirmed a report that he is to be a large stockholder in a national bank now being organized in St. Louis.

 

Wed, 10/10/2012 - 06:24 | Link to Comment Stoploss
Stoploss's picture

Your welcome.

Feel free to pass it on, and please do.

Tue, 10/09/2012 - 22:22 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Why aren't CONgressional non-votes defaulted to Nay?

Tue, 10/09/2012 - 20:53 | Link to Comment azzhatter
azzhatter's picture

Bonnie- I fart in your general direction

Tue, 10/09/2012 - 17:56 | Link to Comment ACP
ACP's picture

The scary thing is the amount of dumbfucks that actually read HuffPo. The traffic is unbelievably high.

Sad situation.

But I do want one of those t-shirts. Not the one with the rainbow heart (specifically for the SF Fed I assume?), but just a regular red heart.

Tue, 10/09/2012 - 18:05 | Link to Comment Esso
Esso's picture

Gee, I thought the multi-colored heart was some new, high-tech terror warning system designed to keep me safe from all those eeevil Eye-Ray-Neons that hate us for our freeedums.

Tue, 10/09/2012 - 18:50 | Link to Comment insanelysane
insanelysane's picture

A mushroom cloud instead of a rainbow.

Tue, 10/09/2012 - 18:57 | Link to Comment Hugh G Rection
Hugh G Rection's picture

Great Article Bonnie at HuffPo!

 

You only deserve a one word reponse..CUNT

Tue, 10/09/2012 - 19:19 | Link to Comment knukles
knukles's picture

Dat's razzzist.

(WTF, I keep getting called it for shit like not wanting to eat my peas...)

Tue, 10/09/2012 - 19:46 | Link to Comment GOSPLAN HERO
GOSPLAN HERO's picture

Dat be rayciss.

Fixed it for ya.

Tue, 10/09/2012 - 20:18 | Link to Comment ACP
ACP's picture

Hmm...maybe if public funding does get cut and Big Bird gets sold off, I would be willing to go in to help buy Big Bird in order to teach kids about the Fed.

Sound like a plan?

Edit: Kind of a "counterinsurgency" against the war that has been waged on children who have been raised to think as individuals.

Tue, 10/09/2012 - 18:01 | Link to Comment Dr. Engali
Dr. Engali's picture

Redpill I'm not sure I quite get how you feel about this piece. Would you care to elaborate a bit?

Tue, 10/09/2012 - 18:11 | Link to Comment redpill
redpill's picture

War is peace.  Central banks care about you.

 

Tue, 10/09/2012 - 18:23 | Link to Comment Aziz
Aziz's picture

Smashing windows creates growth.

Tue, 10/09/2012 - 18:24 | Link to Comment redpill
redpill's picture

Alien invasion will save our economy.

Tue, 10/09/2012 - 18:55 | Link to Comment The Alarmist
The Alarmist's picture

We have an alien invasion from the south, and it does not appear to be working ... or did you mean a space-alien invasion, 'cos I'm all for that 'cos I want to do a Cap'n Kirk and get it on with a green chick.

Tue, 10/09/2012 - 18:21 | Link to Comment JohnnyBriefcase
JohnnyBriefcase's picture

I just don't know how I would get through these days without this place. Without these articles and all the fantastic comments, I would feel completely cut off from anything good and right. I would feel all alone in a world of complete overwhelmig retardery and sock-puppet faggotry.

Thank you.

Tue, 10/09/2012 - 18:38 | Link to Comment Dr. Engali
Dr. Engali's picture

There are a lot of us who share the same sentiment I'm sure.

Tue, 10/09/2012 - 19:24 | Link to Comment knukles
knukles's picture

Geez... that be the truth, my brothers...

And to think ot was only yesterday that the Dr. Paul Krugman after I'd told him he was a fucking tool whose only role here was for "ridicule and humor" asked me directly was it not true that "we're here to solve problems."

Jesus H Fucking Christ.
I'd go mad without ZH.
Mrs K might say I've done that with, but does encourage me to either go golfing or sit silently pecking away at the keys....

Tue, 10/09/2012 - 18:04 | Link to Comment RSloane
RSloane's picture

Almost the entire site is unreadable except for the emotionally-disturbed far left.

Tue, 10/09/2012 - 19:25 | Link to Comment knukles
knukles's picture

Perfect example of why I need ZH....

Tue, 10/09/2012 - 18:13 | Link to Comment SafelyGraze
SafelyGraze's picture

nobody can touch the *real* pros at ctv news who teleprompted B Brown to utter the following.

"Some investors aren't confident with what gold is backed by- or if its backed by anything at all, as compared to something like the US dollar. Investors are comfortable that the US dollar is backed by the American government, so that no matter what is happening to the US economy, something like the US dollar is backed by the Federal Reserve, that's going to be around a year from now. That's a much more comfortable investment for them."

Tue, 10/09/2012 - 18:17 | Link to Comment logicalman
logicalman's picture

You have to force yourself to read the crap put out by the MSM so you know what they WANT you to believe.

You should then do your own research.

Without both you are surely missing something.

 

Tue, 10/09/2012 - 19:27 | Link to Comment knukles
knukles's picture

Yes, the official organs of the NWO.
Without reading them one would think this shit was "normal" for everybody else, too.

Tue, 10/09/2012 - 18:39 | Link to Comment delacroix
delacroix's picture

puffho from huffpo

Tue, 10/09/2012 - 19:14 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

After reading this article I have come to realize that my preconceptions about

The Fed were all wrong. The Fed just wants to help us little guys by giving us a

hand up. Steve Liesman was right all along." We're from the government, and 

we're here to help you" are words that should relieve all our anxieties. Isn't it great

to live in a country whose leaders only have our best interest in mind? You'll have

to excuse Zorba now, it's time for his medication.

P.S.   Where can I buy one of those T-shirts?

Tue, 10/09/2012 - 19:20 | Link to Comment Its_the_economy...
Its_the_economy_stupid's picture

redpill"s comment is so "on the money" that it simply MUST be picked up by the broader audience

Tue, 10/09/2012 - 20:42 | Link to Comment Slightly Insane
Slightly Insane's picture

That's why its called the Bloviating Post!  There is more truth on the Onion.

Tue, 10/09/2012 - 17:54 | Link to Comment daxtonbrown
daxtonbrown's picture

Bonnie Kavouss, you ignorant slut.

Tue, 10/09/2012 - 18:13 | Link to Comment redpill
redpill's picture

I bet the little bankster-fluffing queef factory wants free birth control, too.

Tue, 10/09/2012 - 20:38 | Link to Comment nmewn
nmewn's picture

Its Freeee!!!

They're like little crystalline berries growing on the condom trees in The Bernank's backyard...like totally, fer sher...do dee do...la la la...weeeee!!!...giggle giggle.

Fucking pea brained looters.

Tue, 10/09/2012 - 19:50 | Link to Comment Totentänzerlied
Totentänzerlied's picture

Myth #N+1 -- Central banks must combat deflation to avoid depressions

"UCLA economist Andrew Atkinson, and Minneapolis Federal Reserve Bank economist Patrick Kehoe, in a 2004 American Economic Review article, have shown that there is no correlation between deflation and depression.10 Looking at the evidence across 17 countries over more than 100 years, they concluded, “A broad historical look finds more periods of deflation with reasonable growth than with depression, and many more periods of depression with inflation than with deflation. Overall, the data show virtually no link between deflation and depression.”11 Even for the Great Depression, they find that while all 16 countries for which there were data experienced deflation only 8 of them had a depression. And the relationship between deflation and depression was not statistically significant. For all other periods, beginning in 1820 for some countries, 65 of 73 deflation episodes had no depression and 21 of 29 depressions had no deflation. They wrote, “In a broader historical context, beyond the Great Depression, the notion that deflation and depression are linked virtually disappears.”12When all periods are put together, they found that “a 1-percentage-point drop in inflation is associated with a drop in the average real growth rate of just 0.08 of a percentage point, say, from 3.08 to 3.00.”13 Finally, when they break the data into Pre-WW II and Post-WW II, they find a stronger correlation between deflation and depression for the early period, but a correlation between inflation and depression in the later period."

Tue, 10/09/2012 - 17:25 | Link to Comment Troll Magnet
Troll Magnet's picture

Huffpo is so fucking worthless I can't even wipe my ass with it.  

Tue, 10/09/2012 - 17:50 | Link to Comment aleph0
aleph0's picture

 

 

I saw this earlier ... and wondered why the  Onion logo was missing :

 

The Federal Reserve Has Many Haters Spreading Rumors!!!

http://www.youtube.com/watch?v=edB3Vuaj838&feature=g-hist

Tue, 10/09/2012 - 18:27 | Link to Comment Esso
Esso's picture

Good Lord, what a fucking tard. I could only stomach a minute or so.

There is nothing left here worth saving.

Tue, 10/09/2012 - 21:57 | Link to Comment ZeroAvatar
ZeroAvatar's picture

Years ago, when I was first getting around the internet, I followed the links over to Huffpo.  It didn't take more than I think 3 articles to realize that the site was a piece of shit.  I didn't need anyone to make that decision for me.

 

   I have since learned to look for 'signs' of liberal brainwashed Huffpo Obama picklesmokers:

 

   1.  Use of the term 'Hater', 'hating' or 'hate'.

 

    2.  Square rimmed, photo-grey lensed glasses are sometimes a giveaway.

 

     3. Hipster-like dress, clothes that don't match, are hyper-conservative or non-revealing.

 

      4.  Anyone dumb enough to believe Obama is Presidential material.

 

I'm sure there are MANY more, but at least this is a start.   You have to be on the lookout for them.  The best defense is a good offense.

 

EDIT:  Business Insider is another Liberal mind-numbingly false information site.

 

Wed, 10/10/2012 - 09:08 | Link to Comment RallyRoundTheFamily
RallyRoundTheFamily's picture

I had to Arrow up for that gem

"liberal brainwashed Huffpo Obama picklesmokers"

Tue, 10/09/2012 - 20:56 | Link to Comment mick_richfield
mick_richfield's picture

You don't have a printer?

Tue, 10/09/2012 - 17:40 | Link to Comment Pladizow
Pladizow's picture

The real con: The Fed creates base money out of thin air and they say, "but the interest earned, after expenses are deducted, is paid to the treasury."

The real money is earned where the banks use this fed created base money to create credit money, through fractional reserve banking, where 9 additional dollars are created out of thin air, based on the original fictional dollar given to them by the FED.

The original dollar is a mere distraction, the real magic is the 9 additional!

Wouldnt you give up the pennies so that your cartel can keep the dollars?

Tue, 10/09/2012 - 17:35 | Link to Comment French Frog
French Frog's picture

"In short, it’s safe to say that there are indeed plenty of myths about the Fed, and that Bonnie Kavoussi believes pretty much all of them."

Herein lies the problem because unless one has actually taken the time to educate him/herself and (try to) understand the intricacies of our financial system, then one will be quite happy to accept general/basic answers to very complicated issues and Bonnie Kavoussi is (sadly) a prime example of that.

Tue, 10/09/2012 - 18:59 | Link to Comment The Alarmist
The Alarmist's picture

The banking system is for most people like the water or electricity systems.  You stick your card in a slot, hit a few keys, and you get stuff to take home and consume or use.  

If one day you stuck the card in and nothing happened, or you turned the faucet and nothing happened, or you flippped the switch and nothing happened, do you know what you would do? Most people nowadays have no idea, and that is what separates this Greater Depression from the Great Depression of the 1930's.

Tue, 10/09/2012 - 18:02 | Link to Comment Stoploss
Stoploss's picture

Women are not exempt from hanging..

Wed, 10/10/2012 - 01:22 | Link to Comment resurger
resurger's picture

i love this comment!

Tue, 10/09/2012 - 19:41 | Link to Comment Abiotic Oil
Abiotic Oil's picture

Uhhhh, Bonnie, Ron Paul does not advocate for a return to the classical gold standard but instead he advocates for competing currencies.

Tue, 10/09/2012 - 20:29 | Link to Comment Zap Powerz
Zap Powerz's picture

This website (ZH) gives me hope that after the collapse there will still be enough bright, capable, resourceful people still left to rebuild a decent society.

Please, for Mother Nature's sake, do NOT let the Zombies get you guys.  We are going to need all the help we can get!

Tue, 10/09/2012 - 17:22 | Link to Comment blu
blu's picture

These guys need better names to be taken seriously. "Wouters and Smets" is top of the leader board right now.

Tue, 10/09/2012 - 17:57 | Link to Comment Urban Redneck
Urban Redneck's picture

These two amateurs should join Bonnie in the corner so they can all wear dunce caps together.

Here is our preferred monetary reform. <CLICK LINK> The primary step in monetary reform, then, is to turn FRNs into 100-percent-reserve redemption claims for gold coins.

If you don't fix the balance of payments FIRST, then it is strictly a recipe for Enriching Foreigners and Impoverishing Yourself, and RETURNING DIRECTLY TO BULLSHIT MONEY THAT GOT YOU INTO THIS MESS AS SOON AS YOU HAVE BEEN PARTED FROM YOUR GOLD.

If you are simply going to link to something else and claim "that" is the (entirety of) "your" plan.  AT LEAST USE A FULL BORE DEFENSE OF, AND TRANSITION PLAN TO, THE AUSTRIAN SCHOOL.  Otherwise, you discredit it as a viable solution.

 

Tue, 10/09/2012 - 17:26 | Link to Comment Wakanda
Wakanda's picture

Bonnie can pucker up and gently, very gently, kiss my arse.  Ben and crew must be desperate to truck that load of shit out into the blogosphere.

She could rate up there with Judith Miller as world class shill.

Tue, 10/09/2012 - 18:11 | Link to Comment conspicio
conspicio's picture

It rubs the lotion on its skin or else it gets the hose again. Yes, it will, Precious, won't it? It will get the hose!

Okay... okay... okay. Mister, if you let me go, I'm an important writer who graduated from Harvard and all my peers tell me repeatedly I am brilliant. FUCKING BRILLIANT!! YOU HEAR THAT?... I guess you already know that.

Now it places the lotion in the basket.

Please! Please I wanna go home! I wanna go home please!

It places the lotion in the basket.

I wanna see my boss Arianna! Please I wanna see my...

Put the fucking lotion in the basket!

Tue, 10/09/2012 - 18:19 | Link to Comment Wakanda
Wakanda's picture

You're on your own with that scenario conspicio.  ; >

Tue, 10/09/2012 - 19:22 | Link to Comment EscapingProgress
EscapingProgress's picture

LMFAO! Most hilarious post I've seen so far on ZH, conspicio.

Tue, 10/09/2012 - 19:23 | Link to Comment Kayman
Kayman's picture

Ariana sold out, including her tiny, little soul a long time ago.

Tue, 10/09/2012 - 19:52 | Link to Comment Likstane
Likstane's picture

I don't have a clue what that was, but I think it was funny.

Fri, 01/04/2013 - 19:56 | Link to Comment conspicio
conspicio's picture

Silence of the Journalists. Featuring a guest appearance by Ben Bernanke as Buffalo Ben. He uses the method acting for the role. So when he says "I'd fuck me, I'd fuck me hard" you just knew that wasn't the first take...

Tue, 10/09/2012 - 17:25 | Link to Comment Duke of Con Dao
Duke of Con Dao's picture

I don't know nuthin' 'bout no FED but Ben appears at end of this mash...

why? no other reason then cause he's Ben!

YouTube - Corporations are the Luckiest People! Obama bitch slaps Mitt for being Ridiculous!

Tue, 10/09/2012 - 18:28 | Link to Comment Bay of Pigs
Bay of Pigs's picture

How many times you going to post this clip anyway?

We got the point the first time asshole. Give it a rest.

Tue, 10/09/2012 - 17:25 | Link to Comment Dr. Engali
Dr. Engali's picture

Well the fact it appeared on the huffpo says it all.

Tue, 10/09/2012 - 17:36 | Link to Comment Rainman
Rainman's picture

fukkin liberals all non-think alike.

I've been in business 25 years, and I have no idea what you just said."

Tue, 10/09/2012 - 18:09 | Link to Comment RSloane
RSloane's picture

Yep. Its like a clearinghouse for people who want to be misinformed.

Tue, 10/09/2012 - 18:32 | Link to Comment divide_by_zero
divide_by_zero's picture

Fresh from a Soros propaganda clearinghouse somewhere.

Tue, 10/09/2012 - 21:14 | Link to Comment Ness.
Ness.'s picture

Did you 'say' Soros... and propaganda!??!  NO I say!!  Not possible.  Oh wait.  I forgot (sarc) about this little ditty...

 

http://www.chicagonow.com/publius-forum/2010/10/george-soros-millions-buying-political-reporters-for-npr/

 

Big Bird has no idea.

Tue, 10/09/2012 - 17:26 | Link to Comment darteaus
darteaus's picture

She not stupid.

She is simply an arrogant elitist attempting to keep the charade going so she continues to collect her house slave rations.

Tue, 10/09/2012 - 17:30 | Link to Comment Wakanda
Wakanda's picture

That's stupid in my book.

Tue, 10/09/2012 - 18:55 | Link to Comment Dr Benway
Dr Benway's picture

Yes, it would be stupid for the kleptocrones to steal so much it collapses society, as they would then face street justice. But for each individual leech it is still rational to steal as much as possible. Tragedy of the fucking commons.

Tue, 10/09/2012 - 19:08 | Link to Comment Wakanda
Wakanda's picture

Society is collapsing because they stole too much.  Bonnie's article is a stopgap to protect stupid kleptocrats.

Tue, 10/09/2012 - 17:34 | Link to Comment Skateboarder
Skateboarder's picture

There lived a tyrant called the Fed
Made us poor with ungodly debt
Sucked the life out of a fruit once juicy
Lauded by idiots like Bonnie Kavoussi

Tue, 10/09/2012 - 17:29 | Link to Comment Duke of Con Dao
Duke of Con Dao's picture

oh yeah ... here's Cliff Notes version of Santelli's rant today... did I miss ???

YouTube - Did White House serve up B.S. from BLS on Jobs Numbers? Ask Rick Santelli about the Conspiracy.

Tue, 10/09/2012 - 17:32 | Link to Comment lostcause
lostcause's picture

A myth only remains a myth until the truth is revealed. When that day comes know one knows. However, I believe it's coming sooner than we all think.

Tue, 10/09/2012 - 17:48 | Link to Comment Winston Churchill
Winston Churchill's picture

The wizard behind the curtain will look like Krugman.and be naked.

Tue, 10/09/2012 - 18:18 | Link to Comment redpill
redpill's picture

thank you I now have some bile in my mouth

Tue, 10/09/2012 - 17:38 | Link to Comment Currency is Debt
Currency is Debt's picture

Quick but v.important facts.

US National debt in 1971 was 400 billion it is now 40 times larger that is a 4000% increase. 

When the debt appears unsustainable when looking at the present, the Fed is happy to conclude that earning a yield on several thousand percent greater principle more than makes up for the fact that thedebt is rolled-over, repudiated or partially re-paid.

The result is greater income from the yield and increasing claims on magic money.

Do the math - a group of people now owe you 100million at 7% they cant pay/service it, so instead of allowing them to default - you increase the debt by 10x (1000%), now they owe 3.5% on 100million.The interest income is now 500% greater than before. It works like a charm until hyper ends the charade

Tue, 10/09/2012 - 19:32 | Link to Comment Its_the_economy...
Its_the_economy_stupid's picture

Yes, butif you keep converting fiat to go;d while simultaneously suppressing PM prices w "ginned up" futures, you can game the system till it crashes

......central bank playbok

Tue, 10/09/2012 - 17:40 | Link to Comment Diesel Seven
Diesel Seven's picture
Those that can, do, those that can't, teach, those that are so fucking liberal they have to get a degree from Harvard to study the history of economic thought, write for the Huffington Post. Half the shit they post is so lop-sided and illogical they make Fox news look like a brain trust. Asset purchases by the Fed fuck up and distort the fabric of asset pricing. Anybody in the market for a 30-year treasury or some MBS securities for some buy-and-hold investing. Sorry for the profanity, but I get so pissed when I see the stupidity of these people. Its okay to have an opinion, but have some reasonable fucking rationale for God's sake (state your numbers and assumptions). Per the Huff Post, here is the author's background and contact info: Bonnie Kavoussi is an economics reporter at The Huffington Post. She has written for the Boston Globe, the New York Observer, and the San Antonio Express-News. She is a graduate of Harvard University, where she studied economics, international economic history, and the history of economic thought. She is based in New York. Bonnie can be reached at bonnie.kavoussi@huffingtonpost.com, and she can be followed on Twitter at @bkavoussi. Have a nice day and don't forget to pick-up your Obama Phone on the way out.
Tue, 10/09/2012 - 18:14 | Link to Comment francis_sawyer
francis_sawyer's picture

Obama needs to be in President...

Tue, 10/09/2012 - 22:10 | Link to Comment Umh
Umh's picture

I don't give a damn about his esteem.

Tue, 10/09/2012 - 18:17 | Link to Comment ThisIsBob
ThisIsBob's picture

He didn't make that phone.

Tue, 10/09/2012 - 18:19 | Link to Comment redpill
redpill's picture

You didn't make that joke

Tue, 10/09/2012 - 19:27 | Link to Comment Skateboarder
Skateboarder's picture

You didn't drink that beer... someone else drank it for you.

FUCK YOU, SOMEONE! Bring this man's beer back!

Tue, 10/09/2012 - 21:26 | Link to Comment Ness.
Ness.'s picture

I drank his beer.  It was tasty too.  I'll replace it with a 10oz. beer.  See how that works?

Tue, 10/09/2012 - 17:39 | Link to Comment Dasa Slooofoot
Dasa Slooofoot's picture

She is a graduate of Harvard University, where she studied economics, international economic history, and the history of economic thought. She is based in New York. Bonnie can be reached at bonnie.kavoussi@huffingtonpost.com, and she can be followed on Twitter at @bkavoussi.

 

Ah.  

Tue, 10/09/2012 - 17:43 | Link to Comment The Shootist
The Shootist's picture

Maybe Blythe Masters will invite her to post on her blog. Looks like she might really be going places.

Tue, 10/09/2012 - 17:52 | Link to Comment Winston Churchill
Winston Churchill's picture

Just emailed the article to her.

Feel free to follow suit.

Tue, 10/09/2012 - 18:08 | Link to Comment Skateboarder
Skateboarder's picture

Didn't you hear? They changed the name to Tardvard University.

Tue, 10/09/2012 - 18:10 | Link to Comment Turin Turambar
Turin Turambar's picture

She ought to sue Harvard for the return of her money.  Theft is against the law in the private sector, and Harvard is not (yet) an appendage of the goverment, despite it's success as a fertile training ground for those with statist aspirations.

Tue, 10/09/2012 - 19:01 | Link to Comment Temporalist
Temporalist's picture

There ought to be a class action lawsuit against Harvard for claiming people like her "graduated".

Tue, 10/09/2012 - 19:11 | Link to Comment machineh
machineh's picture

First comes FExit. Then HARxit.

Off with their pointy little heads, each and every one of them.

Tue, 10/09/2012 - 20:49 | Link to Comment TrulyBelieving
TrulyBelieving's picture

Wow, not only do I believe myths about the FED, but now discover I've been believing myths about Harvard and Huffington Post as well!

Tue, 10/09/2012 - 18:29 | Link to Comment Zero Govt
Zero Govt's picture

"Bonnie Kavoussi calls us “Fed-haters.” So she, a Fed-lover, is at pains to correct these alleged misconceptions."

Oops, that's really going to hit a nerve at ZH ...i'm betting this goes to 7 pages and 360+ comments

Regards Bonnie and her propaganda, my only thought is can we pitchfork her same time as Krugman, all systemic crones/apologists in a batch together?

Tue, 10/09/2012 - 17:43 | Link to Comment e-man
e-man's picture

Huffpo = Permanent Kool-aid party. 

Tue, 10/09/2012 - 17:48 | Link to Comment Currency is Debt
Currency is Debt's picture

From 1950 to 1975 the US National Debt increased from 257billion to 533billion a 100% increase.It took 25 years.

Since 75 we have been increasing the national debt by 200% every 13-15 years. Bush and Obama are set to do a combined 400% increase in 16 years, one of the worst accumulation in percentage terms in recorded US history.

 

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

Tue, 10/09/2012 - 17:51 | Link to Comment backhandtopspin...
backhandtopspinslicer's picture

Hope the Bonnie gets painful v.d. and spreads it like wild fire to the ruling elite. That boys and girls is my early X-Mas wish

Tue, 10/09/2012 - 17:51 | Link to Comment q99x2
q99x2's picture

Oh boy Oh boy Oh boy have I a FED speech for my speech class next week. Audience will be picking up pitch forks by the time I'm done.

Tue, 10/09/2012 - 17:57 | Link to Comment mantrid
mantrid's picture

monetary illitaracy, the greatest plague of our times

Tue, 10/09/2012 - 17:59 | Link to Comment e-man
e-man's picture

I sometimes wonder if its not a case of "Now the magic doesn't work unless we all close our eyes really tight..."

Tue, 10/09/2012 - 19:35 | Link to Comment Kayman
Kayman's picture

"I sometimes wonder if its not a case of "Now the magic doesn't work unless we all close our eyes really tight...""

You, sir, are Nobel Prize material and I am deadly serious.

Tue, 10/09/2012 - 17:59 | Link to Comment NeedleDickTheBu...
NeedleDickTheBugFucker's picture

She just sounds like a Krugman-wannabe.  Harvard, Princeton, it's all the same school of thought, unfortunately with little or no basis in fact in most instances.

Tue, 10/09/2012 - 18:02 | Link to Comment masterinchancery
masterinchancery's picture

The extreme price stability for 100 years before the Fed was created, and the destruction of 98% of the dollar's value since then, are a simpler way of explaining how idiotic this article is.  The Fed, of course, was created specifically to help big banks, its shareholders, and free spending politicians, and it did that through money printing and inflation. Surprise, surprise.

Tue, 10/09/2012 - 18:02 | Link to Comment bidaskspread
bidaskspread's picture

HuffPo’s Myth #6: “The Fed is causing food and gas prices to rise.” - Are you fking kidding me, how do you think broker-dealers  calculate margin interest, out of thin air you stupid b!tch. Lower margin interest gives incentive to more length, more buyers/demand increases the prices. Who is John Galt?

Tue, 10/09/2012 - 18:02 | Link to Comment NoTTD
NoTTD's picture

I marvel at how many otherwise sensble people still read HuffPo.  

Tue, 10/09/2012 - 20:29 | Link to Comment JuliaS
JuliaS's picture

My beef is with #5 (in this pile of shit article) - The price stability mandate.

Gold standard does not promise price stability, period! It does the exact opposite by providing instant feedback to changes in supply and demand of all the other goods priced against gold.

Loose a harvest? See prices of food rise! Find oil? Watch the price of gas decline! Go to war? Suffer inflation or hyperinflation even before the war's over.

Since it takes time for fiat to propagate through the financial foodchain it tends to have a dampening effect on prices. Also, due to the habit of deficit financing by the central planners, the rise in cost of selected commodities is almost always met by printing and dilution of the overal monetary supply, causing all prices to rise for everyone instead of affectinng specific buyers of specific products.

Gold does not promise stable pricing. It offers accurate pricing. Meanwhile the Fed notes offer nothing and deliver even less than that!

Tue, 10/09/2012 - 18:04 | Link to Comment Arkadaba
Arkadaba's picture

Have to say that I am somewhat heartened by the comments in response to the original piece on HuffPo - people aren't buying it. I especially liked:

In short, a hit piece written by someone who is more qualified for reviewing Chick-lit books for the Hunffington Post Book Club rather than breaking down monetary policy as it pertains to the henchmen for the plutocracy. 

Tue, 10/09/2012 - 18:05 | Link to Comment booboo
booboo's picture

Huffpo, is that that blog that is run by Mr. Douglas' wife on Green Acres.

Tue, 10/09/2012 - 18:13 | Link to Comment RSloane
RSloane's picture

Haha yes it is. Guess who was a guest-host on CNBC last week? Yup Mrs Douglas, errr...Mrs Huffington. I have no idea what she said. After I screamed I changed the channel.

Tue, 10/09/2012 - 18:37 | Link to Comment Dr. Engali
Dr. Engali's picture

I don't know which is more painful watching her or Steve Liarman.

Tue, 10/09/2012 - 18:21 | Link to Comment Bear
Bear's picture

No i think it's run by Arnold Ziffel.

Tue, 10/09/2012 - 18:06 | Link to Comment NeedleDickTheBu...
NeedleDickTheBugFucker's picture

1.5 years out of Harvard and clearly she didn't learn shit.

Tue, 10/09/2012 - 18:14 | Link to Comment JuliaS
JuliaS's picture

On the contrary, it is exactly what she ended up learning.

Tue, 10/09/2012 - 18:26 | Link to Comment Bear
Bear's picture

Better than Sandra Fluke's twelve years ... she can't even afford a few pills or condoms. But, with her degree, she might attract someone that can. Oh yea, she's marred already

 

Tue, 10/09/2012 - 18:19 | Link to Comment francis_sawyer
francis_sawyer's picture

7 years of college down the drain!

~~~

http://www.youtube.com/watch?v=bjIH1jdx2_A

 

Tue, 10/09/2012 - 18:55 | Link to Comment delacroix
delacroix's picture

7 years of harvard, and she still has to suck someone's dick to get a job.

Tue, 10/09/2012 - 20:11 | Link to Comment hawk nation
hawk nation's picture

She at least added some value to society.

Tue, 10/09/2012 - 21:16 | Link to Comment Treason Season
Treason Season's picture

It's an Ivy League thing.

Tue, 10/09/2012 - 18:08 | Link to Comment ozziindaus
ozziindaus's picture

well, here's my OPINION.

 

  1. AGREE: The FED does not print or credit money out of thin air. It backs every penny through actual asset purchases. 
  2. AGREE: Liquidity injections through FED bond purchases contributes directly to the PUBLIC debt BUT allows the PRIVATE DEBT holders (you and I) to leverage even higher through fractional reserve lending. If you're worried about the Public debt levels, think about the Private debt. http://tinyurl.com/Private-debt
  3. AGREE: Up until about a year ago, you'd get slaughter on this sight if you disagreed with the hyperinflationists and yes, the FED was always blamed for it.
  4. AGREE: Some people just get too worked up seeing hockey sticks but as Mish asked numerous times, and I'm paraphrasing, "If you counterfeited a trillion dollars and buried it in your back yard, would there be inflation?"
  5. AGREE subjectively: A gold standard, IMO, will place too much control on too few people. 
  6. AGREE:Although oil is the proxy to gold, there are other more powerful forces affecting energy prices than just the dollars value. For instance, as a lead up to favorable presidential incumbents, there is a strong possibility to see both oil and the dollar rise simultaneously. 
  7. AGREE: QE has at least avoided stagflation although it has empowered the banks more so than the public. The pressure will be felt when the banks eventually meet their reserve requirements and hold the economy hostage. Timeframe, 2013.
  8. AGREE: As stated above, the US dollar is closely tied to oil if anything BUT it's the US military that really defends it's value. 
  9. AGREE: The world does not YET have a solution. What would replace the dollar with enough trust and liquidity....and I use the word trust very lightly. 
  10. DISAGREE: Although unemployment is a FED mandate, it was never their intention to fulfill. The sole objective of the FED is to support it's member banks. Keeping unemployment levels below the riot threshold allows them to continue their monopoly. 
  11. AGREE: The FED purchases safe assets for the same reason anyone else would. There are no public services here. 

10/11 aint bad. 

Tue, 10/09/2012 - 18:29 | Link to Comment JuliaS
JuliaS's picture

The only thing that I do agree on is #1 - the Fed does not create money by itself. There is a collusion between the Fed and the Treasury that creates money through deficit monetization. Each agency holds equal amount of power, yet carries no responsibility for the consequences of its actions. Question Ben and he'll blame Geitner. Question Geitner and he'll blame Ben. Meanwhile both will be laughing and buying eachother drinks after work.

Tue, 10/09/2012 - 18:39 | Link to Comment ozziindaus
ozziindaus's picture

The treasury will hold auctions regardless. As we can tell from bond yields, there are enough interested parties out there. My gripe is what the treasury does with the proceeds especially when it comes to war.

Wars are purely inflationary. A million dollar bomb exploding is some serious capital destruction which makes you wonder why wars occur during financial crisis's. Wars add to the GDP and in many cases prevents the GDP numbers falling into "technical" depression levels. Good for popularity, bad for everyone else except those connected of course.

Tue, 10/09/2012 - 19:08 | Link to Comment Bay of Pigs
Bay of Pigs's picture

"there are enough interested parties out there"

LOL. Are you kidding? How could you say such a thing? Or are you like a lot of posters who fail to read the articles here and just throw random shit out?

And quoting Mish on "inflation" is pretty rich. Not exactly an expert on that subject, to put it mildly. 

Tue, 10/09/2012 - 18:58 | Link to Comment oldschool
oldschool's picture

4.  AGREE: Some people just get too worked up seeing hockey sticks but as Mish asked numerous times, and I'm paraphrasing, "If you counterfeited a trillion dollars and buried it in your back yard, would there be inflation?"

This seems an inapt analogy.  If the Fed were burying the money in the banks in the manner he implies -- ie, replacing dirt with money and the money wasn't going to go anywhere -- he'd have a point.  But there are two elements of the analogy that I question.  First, the Fed money is not replacing dirt.  If I'm not mistaken it's replacing reserves that have gone out the door and into the wide world, not into the ground.  Second, the money in the banks (or in your backyard) can be dug up and spent (and from the market signals, it seems to be leaking out already).  Then what?

Tue, 10/09/2012 - 19:23 | Link to Comment ozziindaus
ozziindaus's picture

Low demand=low velocity=money in the ground. If YOU and I do not demand credit, who will? As I mentioned above, the private debt holders create inflation through credit demand multiple times greater than the government. This is a fact. 

QE money deposited back into the "FED MEMBER BANKS" by the Treasury through bond auctions simply get pumped back into the FED earning measly interest. This acts two fold. It fulfills the reserve requirements and allows the banks to invest....but the investment is not domestic and therefore does not hit the street.

http://www.zerohedge.com/contributed/2012-09-26/qe3-jobs-wall-st

Tue, 10/09/2012 - 20:03 | Link to Comment riphowardkatz
riphowardkatz's picture

if the money has no function then remove the money.you can't because it isnt dirt and being in the reserves it serves a function. It is proping up a market that needs to clear. 

 

who will demand credit? federal government. btw maybe you didnt see but microsoft opened a line for the first time ever.10 ipos coming out this week. thats people demanding capitol. thats money velocity. regardless velocity is a dumb rearview mirror tool that serves no function in speculating on what is going to happen

Tue, 10/09/2012 - 21:50 | Link to Comment oldschool
oldschool's picture

Thanks for the reply.  I still think the analogy fails because, in reality, no one would print money just to bury it.  It is printed to have an effect, and it ultimately will, because it is not actually buried.  Even if most of the banks' investment is initially made abroad (which it might or might not be), it is in circulation and affects prices in a global market of which we are a part.  "The street" that you say it never hits is longer than you acknowledge.

Tue, 10/09/2012 - 22:27 | Link to Comment ozziindaus
ozziindaus's picture

You're right, no one would just bury it but what if there was no demand for it even with interest rates approaching zero? This is effectively like burying it. It's like a battery charging up with no load. The energy is there but the current is not flowing so what work is the battery performing?

An article was just posted regarding Cash heavy Corps. Why aren't they spending? They can obviously earn more then they can borrow for? Answer, lack of aggregate demand of course. But to answer your original question "....it's replacing reserves that have gone out the door and into the wide world, not into the ground...", QE is replacing reserves that EVAPORATED through default ($16T during the GFC I believe). That money no longer exists. The only way to replenish those lost funds is to expand credit......but again, no one is borrowing so the FED injects liquidity into it's member banks to keep them below the insolvency threshold. They're not doing you, me or the broad economy any favors but a desperate act of self preservation. 

To illustrate how bad demand is, a good example is housing. I hear there's a recovery but whatever. Houses are way below pre bubble prices, interest rates are near all time lows so what gives? What gives is a lack of demand and confidence so your money tied up in your house is as good as being buried. 


Tue, 10/09/2012 - 23:04 | Link to Comment Bay of Pigs
Bay of Pigs's picture

You're getting closer. Hard to believe you've been here 3 years dude and you havent figured it (the FED) out by now.

Do you own any GOLD? SILVER?

Wed, 10/10/2012 - 09:29 | Link to Comment oldschool
oldschool's picture

Are you sure the money evaporated?  I've never seen that happen, have you?  In a default, the creditor's money is indeed "gone" from his perspetive.  But where did it go?  Into the ether, or into another guy's pocket?  And whereto from there?  

I know that in the accounting world it may be said to have evaporated in a sense.  But in the real world, not so much.  I will admit I have only a limited understanding of high-level finance.   I'm here to learn, not to teach.  For what it's worth, the one area where I think you're right is in certain parts of the derivatives market -- that part that is pure gambling.  There, no wealth is created by the betting that goes on, and renegging on a bet is essentially evaporative.  But with asset-backed securities, the mortgagor who renegs does pocket the value not delivered and, I suspect that value is accounted for int the market.  Or...?

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