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David Einhorn "I Asked Bernanke Questions, And The Answers Were Frightening"
Ben Bernanke may be gone from the helm of the world's most centrally planned economy, but his ample cluelessness remains. David Einhorn, president of Greenlight Capital, better known for comparing QE to jelly donuts and who recently confirmed what we have been saying for a long time that the second dotcom bubble is here, spoke with Bloomberg TV covering a wide range of topics, but what caught our attention was his synopsis of a private dinner he had with Chairsatan-emeritus Ben Bernanke, on March 26.
What he found, in his own words, is disturbing.
"I got to ask [Bernanke] all these questions that had been on my mind for a very long period of time, right? And then on the other side, it was like sort of frightening because the answers weren’t any better than I thought that they might be. I asked several things. He started out by explaining that he was 100 percent sure that there’s not going to be hyperinflation. And not that I think that there’s going to be hyperinflation, but it’s like how do you get to 100 percent certainty of anything?"
It goes without saying that only fools are 100% certain of anything, which in fact explains pretty much everything.
So is it too late to cross off the final "conspiracy theory" of the tinfoil hat list: that the entire world is led by clueless Keynesian economist fools, whose adherence to perpetatuing the broken and insolvent status quo means that the only outcome possible after this final, all-in (luckily) bubble finally bursts, is either systemic collapse or world war? Or do we actually have to live through it before we are proven right once more?
That's ok, we are in no rush.
Curious for more? Here is the full transcript of the key part of the exchange between Bloomberg anchors Schatzker and Ruhle, and Einhorn.
RUHLE: ... you recently had dinner with Ben Bernanke. What went down? We didn’t get to be there.
EINHORN: Well, it was -- I watched him for years in front of Congress and speaking and watched him on TV and “60 Minutes” and --
RUHLE: And what was your opinion of him before you had dinner?
EINHORN: I was -- I’ve been critical. I’ve been critical of him for a very long time. And the dinner for me, in one way it was cathartic because I got to ask him all these questions that had been on my mind for a very long period of time, right? And then on the other side, it was like sort of frightening because the answers weren’t any better than I thought that they might be.
SCHATZKER: What did you ask him?
EINHORN: I asked several things. He started out by explaining that he was 100 percent sure that there’s not going to be hyperinflation. And not that I think that there’s going to be hyperinflation, but it’s like how do you get to 100 percent certainty of anything? Like why can’t you be 99 percent certain and like how do you manage that risk in the last 1 percent? And he says, well, hyperinflations generally occur after wars and that’s not here. And there’s no sign of inflation now and Japan’s done a lot more quantitative easing than we’ve done, and they don’t have it. So if there is a big inflation, the Fed will know what to do. That was kind of the answer.
RUHLE: What did you say?
EINHORN: That was it. Then it went to the next question. So then a few minutes later it came back and I got to ask him about the jelly donuts. And my thesis is that it’s like too much of a good thing. Like lowering rates and quantitative easing and these stimulative things, they help but with a diminishing return. And eventually you go too far and it’s like eating the 35th jelly donut. It just doesn’t help you. It actually slows you down and makes you feel bad. And my feeling has been that by having rates at zero for a very, very long time the harm that we’re doing to savers outweighs the benefits that might be seen elsewhere in the economy. So I got to ask him about this.
SCHATZKER: Okay, and what did he say?
EINHORN: Well first of all he says, you’re wrong. That was good. And then he said the reason is if you raise interest rates for savers, somebody has to pay that interest. So you don’t create any value in the economy because for every saver there has to be a borrower.
And what I came back to him was I said, but wait a minute. You said for a long time we haven’t had enough fiscal stimulus, and who’s on the other side of the low interest trade? It’s the government. And so if the government -- if we raise the rates, the government would have to pay more money to savers. You’d have the bigger deficits. You’d create the stimulus, the fiscal stimulus that you’ve been complaining that Congress wouldn’t give to you, right? And savers would benefit from the higher rates and because savings is spent at a very high rate in terms of interest -- interest income on savings is spent at a high percentage, you’d get a real flow through into the economy.
SCHATZKER: One of the questions you’ve raised about quantitative easing in one of your letters to investors was about inequality. Did you get any satisfaction from Ben Bernanke on the question of whether quantitative easing exacerbates inequality?
EINHORN: Yeah, that did come up and I don’t remember exactly what he said. So I don’t want to --
SCHATZKER: It wasn’t memorable.
EINHORN: No.
SCHATZKER: How about this notion that Warren Buffett has propagated that the Fed has become with its $4 trillion balance sheet the greatest hedge fund in history?
EINHORN: Yeah. I’m not sure that’s meant as a compliment.
SCHATZKER: But did that issue come up?
EINHORN: Yeah. There were people who were asking, yes, and he says the Fed can manage their way out of it when the time comes.
SCHATZKER: But in a persuasive way? Did he convince anyone?
RUHLE: Or did he say Janet’s problem now, not mine? I’ll have another drink.
EINHORN: He was very supportive of Janet.
SCHATZKER: No doubt.
RUHLE: Are you?
EINHORN: I want to keep an open mind here. I saw her speak at the Economics Club a couple weeks ago and I was impressed by her speech. I thought -- she said, look, we have a base expectation, but things change. And when things change, we’re going to change our policy. I thought that was good. She’s -- I don’t look at one economic factor to drive things. I’m going to look at all of the factors. I thought that was good. I think the way she’s approaching problems at least conceptually is very good. I’d love to see if she has a better reason why rates should remain at zero at this stage in the economy, but you take these things and see where she goes. She’s just gotten started.
* * *
Yes. She "just" has. And yes, Bernanke's problems are now her problems.
Full Bloomberg TV interview below:
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I don't think we have any choice on that now..is it Frisky's or Kibbiles and Bits?
Kibbles & bits beats being their slave.
Cat Food !! I can't afford that!! I need to dig a Ditch and Collect Worm to fill my Stomach this way I do not need to pay the 15% Sales Tax to the Scum Bags !!
Shutdown the TV...It is a real Killer with nothing but a Propaganda!!
They promised to inflate their way out, and they have and continue to keep those same policys in place. Good for them , not so good for the sliding temporary middle and under classes.
Supposedly the smartest people in finance and investing and one is defending money printing while the other is trying to figure out if it's good and will work.
We're screwed.
All I hear when that weasel speaks is...Laces Out.
Wow, Q & A about a 23 year epic fail in monetary experimenting just ask the Japanese. No need to ask questions here I think.
Nothing to see here . . . move along.
I am 1000% certain that Obama was the CIA's Manchurian Candidate.
Every Pres since Carter has been vetted by the CIA - Bushes are inner circle, Clinton - google Mena Arkansas, Reagan - see Bush, H.W.
Obama;s mother was AID when it was a front for the company in Indonesia's turmoil - maternal grandmother worked for the firm that was a front for Pacific financial endeavors and grandfather was likely in the Company. I suspect Obama was a construct toprevent a REAL progressive from getting elected after the BushII fiasco - Hillary was SUPPOSED to get the nomination. She'd play along and get the blame when the economy went to hell but things blew early because the repubs didn't steal enough votges in 2006 and the Dems took the House - starting audits on Freddie and Fannie. The financial crisis blew early before BushII got out. Barry wasn't supposed to get the Presidency - Hillary was but lost out to a wave of revulsion over Bush and the 'Hope and Change' marketing blitz. May explain all the loose ends in Obama's background - nobody expected too close a look.
The plan was to blame the economic blow up on the Dems and then have the Repubs race in on ANOTHER wave of 'Anyone but the last guys' to finalize the grip of the oligarchy. Seems like it's still the plan but they're behind schedula on starting WWIII with Iran - they just can't get THAT rolling so Crimea/Ukraine may be plan C (since Syria as Plan B fell apart as well)
If any of that crap were true the CIA would have exposed and taken Zero out a long time ago. Instead the majority of Zero's past remains a mystery. Try again.
What!?
I have to come up with a more plausible conspiracy theory?
How udderly unnecessary.
YOU try again.
CIA doesn't expose anyone for puppet presidents. They do what they're told or they get a plot next to JFK.
ALL of the alphabet agencies get their marching orders from the deep state unelected (real) government.
All must have their sacrificial cheese to offer to the Popes of the Provalone.
~~ h/t Francis Sawyer ~~
Eihnhorn basically said " I am just as smart as I thought I was. and Ben proved it."
wow this crowd is even more jaded than I usually am. This is really interesting interview. Einhorn does not fall into the Schiff/Faber KWN crowd. So to hear him say this is pretty cool.
He is just working an angle.
Your jadedness is contagious.
Dude I am intrigued with this interest rate thesis of his. I wonder if the fed goes for it.
Also it is cool to see someone in his camp not call him (bernak) a goddamn genius every 3 seconds for a change and actually just be unimpressed. It's just too bad he stops there.
Fed won't. US govvy is broke. Higher rates mean exponential servicing pressure and an expedited bankrupt nation. Fed will NEVER raise rates willingly. If it happens from some external event, then that's the sign the Fed has lost control.
nope what if the fed separated the interest rate markets and assigned 0% (essentially) to UST's and then different (higher) rates out to mortgage rates etc.
On one hand I don't think the fed will ever "encourage" people to save again, and that is what higher rates would do. On the other hand I am interested in hearing more about how Einhorn sees that "flowing through" into the economy. Amazingly, Einhorn, who criticizes the fed, is advocating blowing out the deficits again to do this (creating stimulus that congress would not approve). This only works as long as debt does not matter....so far so good I guess...
Wouldn't that make our debt look even less attractive in comparison to rising returns on similarly rated bonds and cause funding and servicing issues? I guess they could just have the fed and Belgium continue to buy it up though...
Banks still need plenty of UST's for collateral. Pensions still need them for other reasons and if need be we can just start killing people if they don't buy them. Also when we convert 20% of your 401k to a mandatory Myra that should suffice.
Ah of course, I keep thinking this is a free market...my bad.
Ah yes, Belgium. Stand by for 11,000 Metric Tonnes of Waffles in the "imports" category. They sure think everybody is stupid.
Hey! Belgium makes damn fine beer and guns too! and I think the return on a waffle is probably better than US paper so they get the short end of the stick on this one.
Bang on....................watch the USD for the word.
"And then he said the reason is if you raise interest rates for savers, somebody has to pay that interest."
Unbelievable.
creating bigger deficits which acts as the stimulus that congress would not approve....
Hey, if you're saving you have TOO MUCH MONEY.
They're all clueless about what money obviously is. Money is "a promise to complete a trade". This is obvious from examining trade: (1) Negotiation; (2) Promise to deliver; (3) Delivery.
With simple barter, (2) and (3) happen on the spot, and the item bartered is more often money than anything else.
But money allows (2) and (3) to happen over time and space. Money is originally created by traders; certified by the manager of the Medium of Exchange (MOE) as money; placed by the trader into the marketplace where it circulates as an item of simple barter; and on promised delivery, is returned by the trader to the MOE manager and extinguished.
If delivery does not take place as promised you have DEFAULT. DEFAULTed money must be reclaimed by an equal amount of INTEREST collections and extinguished to "guarantee" that INFLATION is always zero, everywhere. The relation is INFLATION = DEFAULT - INTEREST.
The QE they are discussing is money without a trading promise. It is DEFAULT and counterfeit on its face. The Fed shoots for an abritray 2% INFLATION and has obtained 4% on average for 100 years. Why do they do this if the obvious right value for INFLATION is zero?
I'll tell you why. Government's trading promises can only be met by tax collections and counterfeiting. People won't voluntarily pay for government services (i.e. they balk at higher taxes). The government's creaping crud won't stop creaping. So government finances itself with INFLATION.
The imbalance between government counterfeiting (DEFAULT) and INTEREST collections is now huge. INFLATION naturally is increasing. But government has it's thumb on the scale. The meter reading is distorted. We're not far away from the thumb slipping off the scale ... and whammo ... hyperflation.
You and I as traders see this everyday at the supermarket and gas station and department store. Prices have been going up steadily at an increasing rate and the government is concerned about deflation. They define a thing called "core inflation" and exclude food and fuel, the two items most responsive to INFLATION because they are both amazingly low margin enterprises.
It's a really sick game ... and obviously Einhorn, Bernanke, and those TV guys don't get it ... or do they?
And if you think they're not clueless, ask them to show you a time series of DEFAULTs, the obvious driver of INTEREST collections and INFLATION. There has never been one you say? In all of history? Duh!
Thank you, withglee, for the post of the day, week, and maybe the month and year.
Free - or nearly free - money is extending its reach. I recently received a 15-month line of credit at 0% and have spent two weeks wondering what to do with my newfound bounty.
Since we have roaring inflation in food (coffee, for instance, is going to go sky high; beef is already off the menu), I'm thinking of spending my 1/5th on food and other staples, and thank myself for my foresight when the prices are 20% higher.
Another 1/5 to 2/5th on silver, figuring they can't smash it down much further, and, my food savings over the next six months will provide plenty of capital savings by which to service said 0% debt. I'll keep 2/5ths to 1/2 as reserve.
I also have equal amounts of credit at much higher rates, so, in case of emergency, those sources are available, but, heading into full retirement (I'm 60 and have been semi-retired for 10+years), I figure I might as well roll with it.
Just a case in point, with interest rates this low, gambling becomes very attractive. For instance, a $100 bet on a horse to show (third, a very safe bet) at 2-1, might pay out $130. That's like making 3% on $1000 in one bet on one day. Multiply that out a hundred or so times over a year and it's like having $100,000 in CDs without anywhere near the capital.
The concept of flow over stock is intriguing. I guess I'm starting to get it as I age gracefully.
I suggest you buy a pressure cooker (less than $80). When you go to the store or farmer's market, buy the bargain meat, fruits and vegetables in bulk; buy enough 8 oz Ball jars to hold it (about $9 for 12 jars ... reusable many times); and can it. To fix a meal, peruse your jars. select a meat and a couple vegetables. Heat in jars in boiling water 10 or 15 minutes and you have a great tasting nourishing meal (the food is already fully cooked and tender ... zero loss of flavor). This practice has saved me over 50% on food costs since I started it. I wish I'd done it my whole life.
I am older than you and no longer make trading promises: (1) I might die and not be able to deliver. (2) The thought of the government as a partner has come to disgust me.
With a properly managed MOE, INTEREST collected from responsible traders who don't DEFAULT is zero. Most people I know have never DEFAULTed on anything so getting zero INTEREST would be no novelty. Further, putting your surplus money under a rock for retirement is a viable plan with guaranteed zero INFLATION.
With non-zero INFLATION and low INTEREST collections, you're easy prey for the international money manipulators. They can bump INTEREST collections; make claims about INFLATION; arbitrarily restrict certification of trading promises; and compete against you with counterfeit money. They call it the business cycle. It's a farming operation.
As far as the horses: I've always viewed life's purpose as "being of value". I fail to see the value in horse racing ... plus of course, that too is rigged.
Note: With a properly managed MOE, all governments would be much smaller. Rollovers are DEFAULT. Show me any government that doesn't rollover its debts. Traders with a high propensity to DEFAULT pay high INTEREST and are not competitive in the marketplace. They are naturally shunned.
I recently received a 15-month line of credit at 0% and have spent two weeks wondering what to do with my newfound bounty.
If it is an unsecured loan use it up right away and cap it off by not paying the fuckers back - they create the "money" out of thin air and you are expected to pay them back with actual cash . . . . forget about your "score", the advertising focus on the "credit score" issue is a huge part of the overall scam going on. People can actually get by quite nicely without having to take loans and use credit cards. Businesses are an entirely different matter though.
no, again you are wrong for the millionth time.
Money is SOLID TANGIBLE ATOMS of PHYSICAL use which have INTRINSIC value which is forever a thing not measurable as a PRICE.
Interest & fiat currency are merely inventions to trick people into accepting their own slavery, like domesticating a wild animal. There's nothing legit about it in nature which is why sometimes you can't tame it and instead it tries to kill you.
Fine. You take your "SOLID TANGIBLE ATOMS" and try to buy a gallon of gas or a WhataBurger.
What I describe "is" money. What you describe "is" an item of barter. The "money" I describe "is" an item of barter immediately after it is created by a trader making a promise and getting it certified, and right up to when it's extinguished on delivery. People would rather have it than your "atoms" for relatively short periods of time. And when properly managed, supply and demand for it is always in perfect balance. It's the nature of the trade.
The crap money we use is better than anything else available to us ... even gold. Now if you want to store it, that's another matter. It "leaks" at the rate of 4% per year on average. In 100 years, 96% of it has leaked out. Further, a select group is entitled to counterfeit it for their own enjoyment. That's part of the leak. And it can be manipulated. That's where the "business cycle" comes from. It's the international banker's farming operation.
INTEREST "is" an important element of a properly managed MOE. How else are you going to recover "money" left circulating after a DEFAULT and know you've "guaranteed" INFLATION to be zero? You can't measure INFLATION accurately or quickly, but you "can" use behavior that guarantees it is zero all the time, everywhere.
If you're a responsible trader (don't DEFAULT), you don't have to worry about INTEREST. For you, it's zero. INTEREST is not something made up in a room by LIBOR. It has a ligitimate purpose in a properly managed MOE.
Currency which stands for "a promise to complete a trade" is just that. If you want to say a trading promise is "fiat", go ahead.
And note, proper management of any MOE is not concerned with prices. It is only concerned with two things: (1) Keeping the media in totally free supply everywhere at all times; and (2) "guaranteeing" INFLATION is zero, everywhere at all times.
I wish you well in dealing with your hangup.
interest is a sign of a mismanaged MOE. A properly managed MOE is one that can't be managed. "Managed" means rigged, fraud, manipulated. There's no benefit to management of any medium of exchange by any mechanism whatsoever.
If individual parties want to have credit/debt upon each other that's fine but the value of MY trades, money, production should be independant at all times from such activities.
I have no hang-ups : I have only a desire to be free of attack on my life, my property, my health, my personal choices of transactions or to have none, from parties who otherwise are not involved with me and should not be.
Fine.
If you want a gallon of gas, how do you get it?
If you get it the same way I do ... by bartering 14 worthless pieces of metal we call quarters and you don't want to do that, what would you prefer to do?
Take all the freedom you want.
Reject all the managment you want.
How does your recommended system work?
a piece of metal is as worthless as a gallon of gas.
My recommendation is NO SYSTEM.
Systems get corrupted. We need face to face trade with on the spot valuation, measuring utility, mass, opportunity cost, no fiat units, no interest, no debt, no system.
My only reason not to get a gallon of gas myself out of a machine of my building is if someone else can do it for me with less complexity, danger, material cost & time. All honest offers are open. It's that simple. Whoever shall offer/provide shall be met with what I will produce/offer on the spot for the same. It's that simple. It's not a system.
It's called honest trade. That's a description not a system.
"And then he said the reason is if you raise interest rates for savers, somebody has to pay that interest."
But lending out TRILLIONS to banks at 0% and then paying THEM BILLIONS in interest (even at today's low rates) for parking that money at the Fed is somehow 'affordable?'
Banks are making BILLIONS off government money FOR DOING NOTHING while their 'reserves' have been magically restored through government largess.
The money that would be paid out in interest IS STILL GETTING PAID but it goes to BANKS not individual saver.
The money EARNED through labor is grossly devalued by all the money created out of thin air which goes to banks, then earns MORE money after being 'invested'.
Instead of YOU getting interest on the money you WORKED FOR, banks are paid that interest on money they got for free.
IN the 70's you saw people paid 11% on the savings they worked for while inflation raged at 14% - today banks are collecting 2% on money they got for FREE, paying YOU 0.25% while gov lies like hell about inflation claiming it's 2% wile its 4-5 times that nad going higher.
Not everyone is getting peanuts.
The Fed makes a solid 6% by law all day, every day by pushing buttons. On trillions.
Pretty good gig if you can get it.
Einhorn is a douche bag for publicizing a dinner conversation. I hope Bernanke and Banksters burns in hell, but that is out of line
You can't be serious.
dinner conversation is a barbarous relic
Don't worry, there is a draft executive order banning them.
QQQBall is totally right. This is journalistic malpractice to interview Einhorn on his recollection of what Bernanke said (who isn't there to correct the record) at a dinner party. It's a joke on that basis alone.
But boy, if you read his actual words, it gets even worse!
Don't you have a luxury condo in Haifa?
That property is too expensive, cheaper to "settle" elswhere on free land.
That property is too expensive, cheaper to "settle" elswhere on free land.
First you have to rip out all of the 100 year old olive trees though.
Well, what can Ben say. You either believe in a religion or you don't. He wouldn't be one of the world's leading economists if he didn't believe the religion.
I know what they had at that lunch!
Thin Gruel
These huge, pulsating financial brains ALWAYS forget to consider the human factor. They are so enamoured of their charts and graphs and stats and figures, they forget that at the heart of all this are PEOPLE.
They were doing it 30+ years ago with "trickle-down". Great in theory, but forgets about the fact that once someone HAS something, they rarely want to let it go. The laws and regulations that were in place forced them to, and they were passed for a REASON.
All the little tricks they've been pulling to stabilize the banks have eroded confidence in the whole system. And all the wonderful numbers they put out there will NOT restore that trust.
The "wealth effect" of a booming stock market isn't going to get people out buying if their own eyes are telling them things are not that good.
Numbers and figures are great, but without a basic knowledge of human nature you can't be sure just HOW they will react to them.
poppycock!
42 + poo = 1 kergillyum berzillyun dollers!
Plain as day. Krugman and Bernanke can't both be wrong, right?
I don't care what they said last nite, I'd like t0 know what they said the last 5 years!
We need Francis Sawyer for this kind of analysis.
A pox on both their houses.
The fact these "rich" and "smart" people have faith in the Fed knowing what they are doing........ is even more fuckin' disturbing quite frankly.
Bernanke is a corrupt ideological moron. Kind of how he got the job.
Diminishing marginal utility? No, David, Moar is always better! Just ask Krugman...
"SCHATZKER: How about this notion that Warren Buffett has propagated that the Fed has become with its $4 trillion balance sheet the greatest hedge fund in history?"
WTF? That senile old fart propagated nothing. Another observation lifted from the pages of the Hedge by a kleptocrat to be passed off as their own.
The old fucker is just jealous that the Fed can fleece the sheeple...that's usually his M.O.
Buffet: "[The Fed] is under no pressure, none whatsoever to have to deleverage,” Buffett said. “So it can pick its time, and if you have somebody wise there -- and I think Bernanke is wise, and I certainly expect his successor to be -- it can be handled. But it is something that’s never quite been done on this scale. It will be interesting to watch.”
Listening to crazy old Buffett is kinda weird because he has to cheerlead due to his position and what is at stake for his evil empire, but he always says what he really thinks somewhere in there if you pay attention.
For example:
"and I think Bernanke is wise, and I certainly expect his successor to be"
Shameless cheerleading
"It will be interesting to watch.”
Were all fucking doomed.
The crazy old fucker is not as senile as most people are saying. He may not be raking in the profits like in the past but he is taking his money and buying real assets like farmland, railroads, etc. His moving more from from equities to real assets tells me he knows something is coming down the pike and nice guy that he is he still maintains the "why would you want to buy gold" shtick on the MSM like CNBC.
I'm bored with Bernanke and Yellen. This isn't a type of boredom that comes from a lack of interest in how they're fucking us over; I'm genuinely pissed about that. It's the type of boredom that originates from futility. You can ask them all the questions you want and you'll still get the same bullshit answers, but when you keep asking them the same questions over and over again expecting a different outcome, or maybe a spark of honesty that never comes I don't see the point in that.
Get back to me whenever you come to the realization that you cannot fix problems by asking questions or working through our current system, Einhorn.
Jesus Christ,
Am I the only one that cringed at that simplistic explanation of the relationship between savers and borrowers?
That is how a child understands the world, in absolutes and ignoring all details and unique circumstances....
The people that run the world aren't really the most intelligent, they are just the most confident smartest-n-savviest people of society.
...sociopathic, power-mad, greedy, ...
To give BS (at least some very minimal) credit, it's about the only thing they could have done - and as long as the "market" plays/played along - if your broke, but yet liquid. The alternative would have been utter collapse which was obviously not allowed (and still isn't) even though it'd be the right way to clense the system and start over. In the end, the chips will fall anyway, so they bought time, time to get prepared for the transition, and if it's only for that, I'm glad it did.
Jesus Christ,
Dealt with guys like the Bernake with the only recorded act of violence in his lifetime. He went into the Temple and physically threw out the Bernakes of his day. Cool on Jesus! Too bad the dickless wonders running our .gov don't have the balls to do the same thing. We are doomed.
Savings is positive capital formation and should be rewarded. Bernanke is a fucking asshole- wants to reward debtors. Fuck You Bernanke. When you die I will piss on your grave daily.
Savers do eventually ~spend~ their money. Usually during their retirement (i.e., baby boomers) so it does end up back into circulation...Banks destroyed that with ZIRP.
I totally agree, but, when my friends open this link, this: Bernanke is a fucking asshole- wants to reward debtors. Fuck You Bernanke. When you die I will piss on your grave daily. will be one of the first things they see after watching the video!. PERFECT!! +100
bernanke is criminally insane ...
Off topic (but from the interview):
Why would anybody be "massively long Apple?" That's an honest question. What the hell can Apple do at this point? Is there a huge untapped market for $800 phones somewhere?
That's actually a great question. I think it gets right to the heart of the bizarre unreality we're all experiencing. Because you're right of course. There's no business case at all to think Apple stock can go up a lot. So the only reason anybody could be "massively long Apple" is that they think a lot of other people are as irrational as they are and will get caught up in the next Pog-buying frenzy. And when you think about it, they might not be wrong.
But there's no business reason to think that.
i'ts really not that big a question. because - the fed printed money pumped into the stock market. as he coyly said once 'we are not actually printing money'. no - they aren't printing paper dollars - they are printing zeros on bank balance sheets, and that get's pumped (as agreed and planeed) into stocks. so the 'hyper-inflation' that he doesn't see (because he chooses to ignore it) is in the stock market. and that said - yes, apple and all the other crap stocks will continue to go UP as long as (and probably well after) they continue to print. unless of course, they stop printing and wall st. throws a hissy fit. at which point, they will print even more.
Like he said in the interview. They make 3-4 year plays. If you think the tech sector is due for a correction in the next 1-2 years investing in a stock that would be a flight to safety within the sector is the right move. Even if Apple takes a bath they'll be the fist to recover and/or have the cash to capitalize on the burst bubble with acquisitions of quality companies that can't weather it.
Like IBM did?
when things like this come out it makes me question the theory that this is all a preplanned, an organized group calling the shots. Maybe our govt, the fed, all these institutions are really just basic everyday schmucks who have no clue what is going on.
Well, this is depressing. In 2008 I thought Bernanke was crazy and we'd all be in the toilet by 2010. Well, whatever Bernanke did, we did not go entirely into the toilet. Score a big one for Ben. And things certainly did not go as he expected, or we'd have much more inflation - so why he says he's sure it won't go hyper I dunno - maybe he could have said?
So it's sounding rather like he succeeded, insofar as he did, in some large part in spite of himself.
I shouldn't be shocked I guess, that's probably the most common story in the world.
The point wasn't to save the economy. The point wasn't to avoid hyperinflation. The point was to continue to fleece everyone and maintain the addictive cycle of debt.
tarsubil - correct. and in terms of 'employment' mandate - the big banks - citi, bac, jpm, wfc all employee about 300,000 people each. that's a lot of people. and he kept them from having to axe 15 or 20% and BETTER he kept their ceo's and top staff in big money. that's what the code word 'employment' meant. and still means. it won't change, because THE FED IS OWNED BY THE BIG BANKS. and the head of the fed WORKS FOR THEM. not you or me.
How does any of the crap we've seen in the past 6 years qualify as "Stimulus?" It's not stimulus at all, for God's sake. It's just stuffing caulk into a gaping hole in the hull below the waterline. If we were going to do stimulus, we'd have taken the various piles of money we're talking about here (I've heard estimates between $3 Trillion and $12 Trillion, and I favor the larger number) and sent every man, woman and child in America a check for $40,000. Then we'd have some freakin' Stimulus. People would have paid off debt, bought stuff, done whatever it is that people do besides hunker down, default on debt and not spend a dime they don't have to.
Jesus Luigi, it's not "Stimulus" to print a bunch of non-existent money and use it to balance out and sop up Himalayan levels of equally non-existent overly abstracted debt. And that's why there won't be hyperinflation as a result; there's no actual new money being created because it's all instantly absorbed by the abstract unreal debt the new money is being printed to balance out. And none of that money has escaped the hermetically sealed laundry cycle into the actual economy where real money is used and hyperinflation could happen.
At least, that's my uninformed opinion. Which seems to be at least as pertinent as Mr. Bernanke's.
It wasn't stimulus, it was asset transfer and theft. It created a bubble in one end of the market while depriving the other end of liquidity. As always, it isn't going to go well for those at the wrong end. You can't stimulate where there is a lack of opportunity and deep unfairness in wealth distribution and lawlessness in the financial sector.
Stimulus would require $1 of assets created for every $1 spent. At the same time, you have to stop destroying assets already created, for instance cash for clunkers or Solyndra which dumped salable goods in the trash. In this instance nothing was created, assets were destroyed and those connected received the goodies. Others, not so much.
Q1: Are you the devil?
A1: Yes
Q2: How sure are you?
A2: 100%.
Q3: Do you love Yellen?
A3: Not anymore after she's pissed my bed sheets.
Q4: Do you think you'll get away with this shit?
A4: Greenspan did.
So, Einhorn confirms what everybody on ZeroHedge has known for 5 years: that Bernanke never had a clue what he was doing and just blustered his way through.
Bukkakke pretty well screwed the pooch, and inflation is coming while recovery, not so much.
Can he, like, not use the word 'like' so much in his comments?
BB "So you don’t create any value in the economy because for every saver there has to be a borrower."
But surely by putting a cost on money you direct those funds to the best combination of utility and risk. I know an economist could express it 100 times better. It seems odd that Bernanke doesn't realise free money misprices risk.
I hope everyone remembers Bernanke and his family when the day the dollar dies. How he enabled it's death.
The perfect question:
Why come you don't have a tattoo?
He does have a tattoo on his Johnson - it reads; "Eat at Janet's - Albuquerque, New Mexico" and it is written long ways in 24pt type . . . . :/s
And [Bernanke] says, well, hyperinflations generally occur after wars.
As does the Fed's act of monetization of debt [QE].
Q.E.D.
May I now start collecting $250,000 speaker fees, errr, payoffs?
I am pretty sure we have been at war for the last ten years. Call me crazy. But I think we are fighting the most expensive war in history and it is getting bigger.
hyperinflation is the wrong issue. the real issue is persisent 5-10% inflation over several years that would steal everyone's savings and bail out borrowers
i don't understand why this hasn't been done or maybe it has but has been hidden under layers of bad data only the fed knows how to decipher. shadowstats seems to bear this theory out.
Only bankruptcy, non-payment, bails out borrowers. Inflation otherwise eats into the cost of everything so that there's much less to use to pay any debts still owed. Inflation is never forgiving to borrowers.
This is the reason: if a person doesn't go bankrupt, and is to pay the debt owed, that means their income must rise! INFLATION DOESN'T RISE INCOMES as we can plainly see in today's reality. This is no theory, this is what's happening right now. INFLATION UP, wages stagnant.
" Be frightened. Be very frightened "
- Veronica, (Geena Davis) The fly, 1986
Shudda asked differnet questions!
Once you know someone is an idiot at best or a sociopathic criminal (or works for them) at worst, do you really want or need to ask them any questions?
How could you not ask if Bernanke is worried about the US losing it's reserve currency status and then depending on his response remind the stupid fucker that we no longer have the AAA credit rating because of his Federal Reserve policy.
Please Say how a conversation between condesention and one fully invested (in his own theory) informs anyone? Of course Bernanke feels he is right to believe he has "evidence"his monetary policy theorys are "working so far" ?? I was there in Tokyo when doctoral candidates assisted the great man in advising Japan before assendend the Fed Thrown. He was self protective when he told the BOJ and the japanese pols that they had a better than average chance of quickly working QE into a well known and accepted " tool" for policy of national banks. You could hear the breath of each would-be-doctoral studend being drawn - in horror. " He has the gall of the whole PH.D. profession in hand as he tells his clients something for which nothing exists in the literataure. Yet he continues, undisturbed and sure that professional oourtsey will prclude pointed questions. One Ph.D. from the BOJ looked at me and said. " we should have the war, if he believes all that." Of course this is not just a war, it may be the meaning of the 21st Century. The converstion was utterly pointless and your little exchange proves we will always be played with if you let you do what passes for news of a famour conservation. Obviously we are taken for fools.
If you raise interest rates for savers, somebody has to pay that interest. So you don’t create any value in the economy.
This is probably the scariest and most ignorant thing I have ever heard. WTF is this guy thinking? He basicly said the debt market has no purpose in an economy. No wonder banks don't loan to real businesses and the economy is cratering.
Henry Hazlit, in Economics in One Lesson, refutes the fallacy that there is a fixed limit to the amount of new capital that can be absorbed or used for capital expansion, but that’s only “in a free economy, in which wages, costs and prices are left to the free play of the competitive market….”
Said Hazlitt in 1946, updated in 1979:
“If [additional capital] is set aside and saved, it will absorb itself and pay for itself. For producers invest in new capital goods—that is, they buy new and better and more ingenious tools—because these tools reduce costs of production …
“The steady reduction of unit costs of production by the addition of new capital does either one of two things, or both. It reduces the cost of goods to consumers, and it increases the wages of the labor that uses the new equipment because it increases the productive power of that labor. Thus a new machine benefits both the people who work on it directly and the great body of consumers …
“In the case of the workers who use the new machines it increases their real wages in a double way by increasing their money wages as well. A typical illustration is the automobile industry. The American automobile industry pays the highest wages in the world, and among the very highest even in America. Yet (until about 1960) American motorcar makers could undersell the rest of the world, because their unit cost was lower. And the secret was that the capital used in making American automobiles was greater per worker and per car than anywhere else in the world….
“It is true that the U.S. has been losing it world economic leadership in recent years, but because of our own anticapitalist governmental policies, not because of ‘economic maturity.’”
-- Henry Hazlitt, Economics in One Lesson (copyrighted 1946) -- 1979 new edition
Einhorn and Bernanke have no clue.
Einhorn is an asshole too. I would like to have dinner with Benny boy. I'd feed him his testicles. This cunt faced motherfucker has stolen several hundred thousand from me. Fuck you Bernanke
There are probably thousands that feel the same way.
It's amazing Corzine is still walking around. Seems like Corzine's son couldn't stand him and ended up committing suicide.
It'll never happen with Bernanke's son because he's just as big as an a-hole, He's an arrogant physician.
I will say this with certainty. Hyperinflation is our near future. Bernanke says what he has to say to justify what he did. His ability to lie to himself is probably why he was able to go so far over the edge and cement hyperinflation as the only outcome. We will not escape the effects of his actions. Now I know why all the ignorant banker sheeple believe hyperinflation will not happen and continue to shout deflation. They were following the leader like lemmings. Heres the thing. Weimar thought they had a deflation problem too. Chew on that one.
wait, I got a genius idea!
Instead of having too many dollars chasing too few goods, how about everyone gets enslaved, no dollars need to chase any goods because they're produced by slaves who need not be paid at all, and when the overlords deal with each other they'll just agree to trade valuable items of property, art or gold or anything else for a batch of slaves to do something like... work the mines this season or perhaps help clean up a little radiation spill.
See? Hyperinflation avoided, world is saved!
Credit currency cannot fuel a hyperinflation. There are only $1.23Trillion FRNs in circulation around the globe, the rest is credit and credit currency is not legal render. Credit currency has no value, it either exists or it don't. Everything that you believe will cause hyperinflation to occur will cause credit currency to POOF! out of existence, leaving nothing behind but the debt. You can't spend debt. The Bernanke can be 100% certain that there will no hyperinflation because he has learned that credit only exists for as long as the assets that back it retain their value and the institutions that administer to it remain solvent.
There are no physical world objects that correspond to "money", "debt", "interest rate". These are abstractions, mental fictions, to better organize and utilize real assets, including ingenuity and labor.
In theory there are definitions, rules, conventions governing how these mental fictions are employed, how costs and benefits are distributed. Confiscating the income producing value of financial instruments via taxes, inflation, financial repression(or other types of capital controls) is no different than confiscating real property.
When confiscation is achieved by illegitimate means using deception and force, it's corruption, oppression, tyranny.
B and E are discussing "interest rates" in a frame of reference as if "interest rates" were a physical world object with independent reality, scientifically definable objective characteristics.
They reify the abstract pretending it's a "thing" instead a set of rules and when the rules are changed or flouted the "thing in itself" is changed. They're debating if there's a contract for a voluntary exchange of goods, can a CB amend the terms so one side doesn't have to follow through on the exchange?
ZIRP and QE aren't extensions of the theory behind central banking. They directly contradict it. CB theory and ZIRP/QE both can't be right. Of course both could be wrong.
And then he said the reason is if you raise interest rates for savers, somebody has to pay that interest. So you don’t create any value in the economy because for every saver there has to be a borrower.
IOW, debt. The Fed can’t have capital formation, it needs to have debt.
Otherwise, the big investment banks would have to pay the interest to their savers for the use of their money.
Or individuals or corporations would use their own savings to pay for something instead of going to the bank and borrowing it. But with QE flowing and zero interest rates tempting, people and businesses won’t save, they will borrow from the big banks who will loan out their money created out of nothing and earn interest... on nothing.
G. Edward Griffin explains: “[W]hen the money is created out of nothing for the government it is spent by the government. On the banking side, however, when money’s created out of nothing it's not spent by the banks it is loaned by the banks to you and to me and we spend it. Notice that when they loan it to us we have to pay them interest on it. Think about this for a minute. This money was created out of nothing and yet they collect interest on it which means that they collect interest on nothing. Not too shabby!”
Bernanke selected the health of the banking cartel over America’s savers …and the American people. Inflation is hurting the people, devaluing the purchasing power of their income, and rewarding, not the banks, but the Big Banks and their partners in government, those who get first use of the fiat money before it devalues from overprinting.
It’s the government that Bernanke wants to survive and not the people
Bernanke works for the Big Bankers and he probably still does. He’ll stick to this line as long as he lives; otherwise, they’ll can him and he won’t get his just due. Too bad about Greenspan, he’s become increasingly senile and forgot the script.
Only a fool misses what happened here, from Greenspan's beginning to Bernanke's ending in an age of technological advances: America and American workers have been economically weakened while government has grown into a monster Leviathan, wars of Empire building have been financed around the globe, and big bankers as insiders have become obscenely wealthy beyond the comprehension of average Americans.
Money has two uses; one is to buy things, another is to loan it to somebody for the interest. And what Bernanke’s saying is, savers can use their money to buy something but they can’t use it to loan to somebody, because the banks want to create that money out of nothing and get the interest.
Not only is Bernake a crook, but he admits it. In selecting the Big Banks, as he does, he drove the US toward economic collapse. In the years between Greenspan and Bernanke the U.S. economy has been constantly weakened, small business has been hurt substantially because of interest rate policy, real inflation has continued in spite of the official reports, unemployment and underemployment has raged because of poor economic conditions, and much of commerce and manufacturing has been hurt because of being forced into higher risk investments and offshore operations.
Wage earners are hurt because they can’t save, even for a down payment for a house.
And, of course, both welfare and warfare provide a source of immense borrowing and provide banking corporations with huge profits in the form of interest income.
Says Griffin:
“I came to the conclusion that the Federal Reserve needed to be abolished for seven reasons:
Who can argue with that? And that's how bad it is
Here's the part I like the best because of the insidious genius of it.
First Law of Thermodynamics. Money is merely a representation of your labor. You convert your energy into currency. Currency= energy.
Credit money or newly printed money has no energy imparted to it when it comes into existence, therefore to be a conduit of energy means that it must take energy from every dollar that came before it until it equalizes with all the dollars in existence.
Currency is a very poor storage unit of energy because it can be drained at will before you can get that energy to do it's work for you.
Inflation done sucked your batteries dry. Energy Vampires.
Yes! Savers are not owners! Owners don't need to save because they can create or destroy at the source.
This basically makes everyone not an owner a slave. We don't own our money. They do!
The good question is who is they and how did we get from here to there?
I'm thinking the forefathers were insiders and only insiders have a clue.
"summa potestas"
Einhorn should have just asked him: Where exactly does the FED keep the Unicorn? And, are the Skittles it shits Non-GMO?
Video doesn't work here with FF and IE.
It does not also for me, FF28 on debian/linux.
All of this must have been a shock for "David"
I would have been more interested in his answers to two really simple questions, "Ben, have you tried to refinance your mortgage (at age 60), and how did that go?" And, "Ben, could you explain why U.S. companies, key actors who could borrow...and expand the money supply...refuse to do so, and continue to amass cash/deflate?"
The only difference between the two is that Einhorn is a rich idiot.
You can say that again.
The only difference between the two is that Einhorn is a rich idiot.
I am disappointed by the discussion here.
Do you people not understand that the entirety of our economic ponzi scheme is dependent upon interest rates falling to zero? Do you not understand that interest rates will never, ever be allowed to rise, because that means the entire system goes kaput?
As such, zero interest rates and hyperinflation of all currencies is an inevitability. All fiat currencies eventually return to their intrinisic value, zero, and the mechanism by which they do so is hyperinflation. No exceptions.
I bet you we will see some new and inventive ways to extend and pretend before we get to the final act.
Some of them will involve bullets.
Will that discussion make you happier?
Before it blows up say goodbye to your 401K's, IRA's, etc. Anyone that continues to maintain (and continue to contribute to) those types of accounts in this climate is a fool. Cash out, take the tax hit and buy physical commodities that you maintain possession of - NOW!
You're just as wrong as the ones you're disappointed by.
I asked a monkey some questions and the answers were "eek eek can I have a banana"?
More Bullshit!!
Is this for real? An interview of someone who claims to have asked Bernanke some questions and his recollection of what Bernanke said? Just when you think journalism can't get any worse.
And did he actually say that the GOVERNMENT pays interest to savers? Wow.
Interest rates go up to tamp down growth, to encourage saving rather than spending. We don't have growth. If you deduct QE out of GDP (which you should, and Karl wrote a great piece describing it in detail over at Market Ticker), then you see that we are in a major recession. There is no growth; therefore, no rising interest rates.
OK, so Einhorn turn out to simply be another crony lightweight. I would have thought better of him... guess not.
Jesus how much is this confused douche wealth? 100% we wont get hyper inflation and the zillionaire doesn't get it? Must have been an off day for dave
Part two of California Rancho Mirage conference: Shoving a gun down the throat of the Central Planning steering committee might just turn fate into a positive mode.
Gen X is supposed to pay baby boomers expansion infrastruture.. Gen Y pools think Gen X will pay into their future. Enjoy a small clip to re-evaluate math. It was a mind blowing live presentation. Some people may receive an audio copy in dropbox. Winks
http://kgcdirect.com/
Sorry, the DC lobbying info was not made available to share.
Thank goodness "David" alerted us!
Anybody and everybody whose livelihood is connected in any way to the success of the financial sytem has had the Fed's tongue up their ass for 5 or 6 years.
Guess what?... A 4 Trillion Dollar rim job is not going to save the world from anything.
There is a huge difference between, say a mother robbing a store to get money to feed her children, and a thug that just wants the fun and beer money. The desperate mother knows what she is doing is wrong, but feels compelled to do it, while the thug only serves himself and doesn't care about right or wrong.
When you look into the background of Bernanke and Greenspan, especially Greenspan, you will find people that knew what they were doing was wrong, and just didn't care. They served themselves at the detriment of all others--they are thugs.
"The guillotine knos the difference too."
"Japan’s done a lot more quantitative easing than we’ve done, and they don’t have it. So if there is a big inflation, the Fed will know what to do. That was kind of the answer."
These freaks love to hold up Japan... Japan is not America... the American people will break long before we reach those levels.
Interesing. One Heb asked another.
David is actually too kind to these guys.
If you are part of the inner circle you have to tread lightly or you are completley OUT. You can talk privately about all the issues but in public you tow the line, show respect and basically do not really get into the issues. Being in his position he cannot afford to pull a Standard and Poors type move (downgrade). He likes his job so he does not rock the boat too much.
that would be "toe the line" not "tow the line".
YOU GOT IT OR YOU DON'T. TOUGH SHIT. The ones who brought this to us will be found.
at least he had answers......
https://www.youtube.com/watch?v=A1jeJmeeMjs
Talking to Bernanke about money is like talking to Pope Urban Vll about planetary motion.
the fed chief has been candid since leaving his post. doug noland at prudent bear actually quotes him on some of it, not second hand, and yes ducklings the man is fucking scary
Much more like eyes wide shut on Einhorns task of a non interview. More like realizing he's fucked royally if the 10 billion he controls goes down the shitter with the rest if he exposes too much to too many in the wrong aspect of response to a question. Guys a newbie to the realization he's in a Catch 22. If this is where the remainder of the Money Bosses are within the traditional circle of finance are concerned, then we, you and I, should be more concerned than just bullshit comments about this interview. You and us should have been covering our ass or we're about to be the one who's being traded for cigarettes.
Banker? Banker? Has anyone seen a Banker?
Quiet, isn't it?
Its basically the herd waiting to hear the gunshot before stampeding.
You don't want to be anywhere near that area when it starts .....
What an asshole. Rates are low becuase "someone has to pay that interest"?
Borroing money SHOULD cost something. There is real risk in not being paid + the value of the money you are giving up to another person.
Bringing rates so low for so long blows another massive bubble. Insurance companies, pensions all invest in bonds. You are now screwing them in the future. Rates go up and the bonds hit the floor - cannot be sold. You have locked them into low rates for another 15-20 years.
It also enables the tards in DC to continue to pile on the debt without voter ramification. Wait until rates revert - THEY WILL, here and in Japan. Try telling the American public that taxes across the board have to go up 50% because we cannot afford the debt payments.
300B to 800B (normalized 4%-5% rates) is a big jump when you only bring in 2.3T in taxes. The rest of the taxes are taken by entitlements. That leave 0 for the govt/military/NSA to run on.
Good luck selling that one. They know it can't happen. Those who actually do pay taxes would refuse. Those who do not pay taxes would riot if the benefits are cut off.
The reason he wont say that hyper inflation is possible is that it is unlikely and he is employing the junker priciple.
Clearly einhorn knows this so he is merely being dramatic.
Wall St is a sham and we live in a credit card economy which is good for centralized control because you hold all the cards. If some poor smuch is dumb enough to finance a business with cash you can wipe him out overnight by financing a competitor
Will he trade 'paper' smokes in prison?