This page has been archived and commenting is disabled.
The Pandering And Politics Of The Fed's Punch-Bowl
Authored by Princeton's Daniel Cloud,
People at the Fed are people in politics, who need to promote their allies and maintain their patronage networks. So perhaps it’s significant that the last two times the Fed tightened, it was in a President’s second term. It’s safer to anger an incumbent who is leaving, and dangerous to anger one who may have another six years in office. The party that lost the Presidency after one term, as a result of a crash in financial markets, would never forgive the Fed for its intervention. So if you are in the business of blowing up bubbles to win points with incumbents, and popping them at times when that is less of a concern, of course the President’s second term is when you do the popping.
But why not wait another year or two? The Fed’s mistake, last time, was to believe its own hype, and wait too long. The result was that the crash coincided with the presidential election, and actually decided it in favor of one party, at a time when it was otherwise uncertain who would win. That looked a little too much like direct tampering, and it ended up threatening the Fed’s “independence” (immunity from democratic oversight) by really angering the Republicans, who did little to block an audit they could have stopped if they’d wanted to. The Fed, as an institution, doesn’t really want to do that again. Better to get the crisis out of the way now, while there is still time for people to forget who they are really angry at before the next Presidential election, and sink back into the pointless search for vulnerable scape-goats that is the political parties’ bread and butter.
It’s also better, on an institutional level, to have the crash while Bernanke is still at the helm, so that it can be him, and not his successor, who is discredited by the catastrophe. To ensure his faction’s continued dominance for another long interval, the handover has to happen while Obama is still president – but after the crash. They have just about enough time to accomplish all that, to crash the market, let the Chairman fall on his sword, just as Greenspan did, and replace him with another dove as the renewed demand for a lender of last resort (in other words more and more drastic QE, more opportunities to hand out huge amounts of free money to friends and allies) becomes deafening.
In this scenario, beliefs about an economic recovery play no role in motivating the tapering talk. We may underestimate our opponents by supposing they do. We could, instead, think of them as perfectly rational, on their own terms. Perhaps the Fed has their eyes wide open; perhaps they know exactly what they’re doing, perhaps they knew what they were doing the last two times. It defies logic, after all, to suppose that they could make the same huge mistake twice, and not even notice, learn nothing at all from the experience. Yet this is what they publicly pretend.
It seems more likely that what’s really driving everything is the American electoral cycle. Well, what did we expect?
»
- 11943 reads
- Printer-friendly version
- Send to friend
- advertisements -
Great insights to the Real Political Economy of the Fed.
Which brings me to the Real Question for Debate:
Why is a Central Bank granted such power and authority?
Oh of course I understand the machinations and relationship of the CB, banks, money flows, political influence, etc. No question about that
I mean philosophically.
The only folk whose even touched this third rail is Ron Paul and look what happened.
Ergo, the power and influence must be restrained, the system reformed....
The endless printing ability removed....
Monetization halted...
The Coinage Act of 1792 enforced (penalty of Death for Debasing the Currency)
Torn between remaining sober and preparing for the end, or getting drunk and observing.
Thoughts?
Sober so you can remember it....
Should be one helluva show!
Truth be told, I am favoring the latter at present. I am guessing the plug doesn't get pulled on a Saturday night, but one never knows.
And I remember bits and pieces of everything witnessed inebriated, just couldn't swear to whether it was reality or imagination.
Barry and Co. http://i39.tinypic.com/2lm9q1u.jpg
Authored by Princeton's Daniel Cloud,
...Princeton. Must be talking about the town and not the Ivy League University with that name. No one from Bernanke's University writes articles like this.
What better time to pull the plug than on a Fri or Sat night when no one is watching? 48hrs head start on the sheeple.
E) All of the above
Well if the above theory is correct -- that crashes are reserved for incumbent of second-terms, then all that is necessary to guarantee an endlessly rising market, is an endless series of one-term presidents.
Why hasn't Wall Street figured is out and continuously backed the challenger and de-funded the incumbent?
.
Kick back and spark up a reefer.
"Jay time is a way of living
It's a natural thing from day to day
Pass it now, you won't regret it
'cause now it's jay time right away"
http://www.youtube.com/watch?v=DVx00Wv-Kdg
Is that a different form of sober?
"That would be telling."
These people make two dollar whores look like saints....close the markets...period. .
No, Ron Paul is not the only one to take on the Fed. Rick Perry R-TX is a prime recent example of others.
Evidence please! Otherwise I'll just explode laughing at you...
"rick perry audit the fed" in Google returns 3,890,00 results.
BAD LOGIC. Does anyone worry about "angering" their pet hamster by putting him in a cage?
This gentleman is speaking my language and understands how the Fedeal Reserve is through and through a political branch of the government
There is not such a thing as an "independent Fed".
That is correct.
The Fed is an arm of the government, created by it. The most laughable edict yet, from government, to it, was to create employment under Dodd-Frank.
Guys with a printing press, counterfeiting currency, to buy government debt.
Mmmkay.
Paraphrasing Dennis "Cuckoo" Kucinich, the Federal Reserve is just at "Federal" as the Federal Bureau of Investigation.
Fuck you Bernanke's successor.
And purely as an aside. Fuck you Bernanke.
...and fuck you, Greenspan, you old criminal prune.
yawn ZH having a day off?
I prefered the theory that uncle ben wanted to declare victory and then depart glorious. markets a bit bubbly anyways so talk em down a bit, tweak the QE a bit, depart in a blaze of glory.
Kind of you to offer the wages of future generations as fuel for said blaze of glory. I am sure future generations will look to you and your fellow travelers as heroes.
If one believes Bernank is but a pawn in the big game then your theory is rather twisted.
Too simple. Take the cyberwarfare/bonesaw template we just read about and apply it to the central banking system. {Taps stiletto toe impatiently in the wings}
Things could get interesting if the spooks get into a serious disagreement with the banksters.
The bankster will be attempting to bribe 'our leaders' on one phone while the spooks will be blackmailing them on the other.
+1
Perhaps Quantum Dawn II offers an "opportunity" to "solve" a few of these "problems" and place the blame on a more politically-correct foreign target. What's not to like?
the fact that ever since the Cold War edifice was erected this stuff has never worked. "that's a lot of history" all based upon the "theory" (which conservatives subscribe to) that debasement of money "works" in the sense of paying for everything. right now the only one's "paying" are East Asians and their massive sovereign wealth funds. I'm really not sure if New York City is going to survive this one but we shall see. "I've seen the public policy future" and it's not a game of chess in Central Park.
Everyone drop your drones or the beard gets it.
Wow, that was big mosquito. The parasites are neverending.
Just ask Carter about the FRB?!
,... but on another note, is america's democracy being hijacked,... or for a better word, blackmailed by immigration?
The 'GOP' love's slave labor, whereas the 'Dem's' are plagiarized as compassionate manumission's. How quaint a anachronistic a`priori to say the least?
These new citizen's will contribute to social security, and medicare while being isolated from its 'picked fruit bearing trees'... but hell, they'll be part of the american dream. There will be no doubt that the democrats will win-over Congress for the next score?! Twenty-something, to zero!
So, do we want a one-party political system that the FRB helped bring about implicitly? Why not? Everything get's passed today if the President says so... just ask the master-supreme`istism 'obam'bee-care taxidermist', roberts?
Sigh,... I just hope that my grandchildren's children will be able to fall-back upon the ageis of 'Affirmative Action', as a bonafide minority saftey-net in a gereration or two!?
After all... think of the Robotic's taking over what's left of manufacturing, agriculture, medicine, and the capitalist Algo-HFT free [buzzsawism/prism`ism] markets-- having but codified cryptologist linquistic's mapping your cubic destiny`ism leftovers!!!
Actually the illegals once amnestied they will immediately demand free shit. Once they get their free obamaphone, they'll call their friends, family and anyone else who wants free stuff to come as well. And once these NEW ILLEGALS get to the border, Federal Border Patrol agents will be waiting to give them a free ride to their final destination!!
ps - I never did understand why the border patrol had interior checkpoints instead of being on the BORDER.
The Border Patrol does interior checkpoints because it provides opportunities for civil forfeitures of things of value. At the border, future Free Shit Army members won't have anything worth seizing.
Forward (over the cliff)!
They already get free shit. Our streets highways and our relatively much better rule of law cost taxpayers a lot.
Really only one thing to say:
END THE FED.
I likered this one.
Fuck it. It is time to move on. Things are changing now. The way brittle systems like the one centrally planned from above can survive is if there are few adjustments to be made. But with any large system once cracks appear predatory systems move in to take advantage. That is what we are seeing in the news over the last few weeks. Opportunities are quickly arising for those who turn on the system. It has money and no morality and therefore only the loyalty of mercinaries to support it. And, you know the growth in real wealth is not there to support it. When this evil empire of a NWO falls it will fall faster than Virgil's.
Well there may be political pandering but let's be clear. The demopublican party is controlled by large corporations including big banks.
If you can't stand the heat, get out of the Fractional Reserve!
Musical Dollars Music is getting a bit more difficult to hear.
RE
http://doomsteaddiner.com
who owns the fed:"we do the people of the usa" obvious lie.
obvious lie #2. "the fed is controlled by congress and the president", well now how many congressmen or presidents see the feds books and view it's gold assets??
obvious truth #1. "the fed requires .gov debt, promotes it, bribes with it, all the while congress and presidents can deny any part in the fed's money printing, after all see lie #2.
obvious truth #2. " the fed's listed owners (large international banks) are benefited by the CBank.
obvious truth #3. the fed and all central banks control world governments, economy and wealth.
obvious fact #1. a federal republic under the consitution cannot exsist with an independent central bank who is owned by other than the people of that republic.
obvious question #1. are the central banks with the FED at the top "the rulers", or are they the servents of our true rulers , who remain in the shadows??
Daniel Cloud
Degrees109 Marx Hall
Princeton University
Princeton, NJ
dcloud@princeton.edu
Ph. D. with honors in philosophy, Columbia University, 2006
Experience2010 - Present
Researcher, Princeton University Philosophy Department
Currently teaching an introductory philosophy of science class.
2007 - 2010
Junior Fellow, Princeton University
Taught courses in the philosophy of biology and the philosophy of economics, and participated in teaching Princeton's core humanities course.
2006 - 2007
Postdoctoral Researcher, Institute for Biocomplexity and Informatics, University of Alberta at Calgary
Helped model the dynamics of gene-regulatory networks in cancer cells.
1998 - 2006
Graduate Student, Columbia University Philosophy Department
Studied the philosophy of science, focusing mainly on biology and the social sciences.
1993 - 1998
Founding Partner, Firebird Fund Management.
1993, 1989/90
Studied at Columbia's School of International and Public Affairs.
1990 - 1992
Equity Analyst, W. I. Carr, Hong Kong.
1983 - 1989
PublicationsDid various jobs in the People's Republic of China. Learned to speak Mandarin.
'Monte Carlo simulation of a simple gene network yields new evolutionary insights.'
Journal of Theoretical Biology, Volume 250, Issue 3, 7 February 2008, Pages 468-474
M. Andrecut, D. Cloud, S.A. Kauffman
'Schrödinger's Crystal.'
Columbia University Thesis, 2006
'Biological information and natural selection.' a chapter in Information Processing and Biological Systems. Springer, 2011
The Lily: Evolution, Play, and the Power of a Free Society. e-book, 2011, available on Amazon (Link)
The Fed better pop that bubble now because they'll never be forgiven if we end up with Sarah Palin or Rick Perry in the White House. Hillary would be bad enough.
When rates go up, the economy will die. Companies will need to borrow to survive. The banks will begin to loan out their excess reserves because they will be able to make a return. And the Hyperinflation begins.
The Fed adds the extra money to the budget that allows the waste. Without it we would live within our means and what fun is that?
The fed's tightening is all about regime change. They needed to get Obama in last time in order to bring in obamacare. Now they need to get the democrats out in order to shore up businesses and open up the southern borders in order to bring in cheap labor
I think they also need to get the wars in the ME ramped up. The dems have no credibility regarding those topics and they are thus confusing the sheep
" So perhaps it’s significant that the last two times the Fed tightened, it was in a President’s second term."
The bond crash of 1994. Orange county CA went bankrupt. Greenspan raised the rate from 3 to 6% during clinton's first term.
" They have just about enough time to accomplish all that, to crash the market, let the Chairman fall on his sword, just as Greenspan did"
Greenspan never fell on his sword- he was known as The Maestro, while he was in office.
Obama found it getting hot in the kitchen
Created a crisis
And will look like a hero when the first WOMAN Fed Chair saves the day MOAR QE
Never let a crisis go wasted (and collect some tax revenues as people barf stocks like the Fiscal Cliff)