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Bernanke Says Economy Needs To Crash Periodically So We Can Be Sure We're Pushing It Hard Enough

Tyler Durden's picture




 

If you’re a journalist, it’s always exciting to get the chance to interview courageous people - you know, war heroes, revolutionaries, innovators, political dissidents and the like. 

Of course when it comes to courage, there’s scarcely a man alive that compares to Ben Bernanke. Indeed, he even had the courage to use the word “courage” in the title of a book about monetary policy knowing very well that doing so would likely lead to all manner of contemptuous ridicule. 

FT’s Martin Wolf recently got the opportunity to chat with courageous Ben over “firm, juicy” swordfish and grilled halibut at McCormick & Schmick’s in Chicago. Predictably, the interview is replete with cringe worthy soundbites, some of which we present below. 

First, Wolf asks Bernanke about the contention that the policies pursued by the Fed have served to increase inequality. Recall that Blogger Ben penned a lengthy post on this topic several months ago. You can read our critique here. Generally speaking, the former Fed chair resorts to the same line of argumentation to defend himself: 

“Rising inequality’s an important issue for the US. But it is a long-term trend that goes back at least to the 1970s. And the notion that the Fed has somehow enriched the rich through increasing asset prices doesn’t really hold up, for a couple of reasons: one is that the Fed basically has returned asset prices and the like back to trend; another is that the reason stock prices are high is because returns are low."

 

“It’s ironic that the same people who criticise the Fed for helping the rich also criticise the Fed for hurting savers. And those two things are inconsistent. But what’s the alternative? Should the Fed not try to support a recovery?”

 

“If people are unhappy with the effects of low interest rates, they should pressure Congress to do more on the fiscal side, and so have a less unbalanced monetary-fiscal policy mix. This is the fourth or fifth argument against quantitative easing after all the other ones have been proven to be wrong. And this is certainly not an argument for the Fed to do nothing and let unemployment stay at 10 per cent.”

Obviously, none of that makes much sense. The first argument is just silly. In a nutshell, he's saying this: the poor have been getting poorer vis-a-vis the rich since the 70s, so what difference does it make if the Fed accelerated the trend a little bit? Second, we’re not entirely sure what “back to trend” means here. If he means “skyrocketed 200% to all-time highs”, well then sure, we suppose he’s correct. Third, we’re not sure that helping the rich and hurting savers are in fact two “inconsistent” ideas. You can help the rich (i.e. inflate the prices of the assets they own) while simultaneously making it a bummer for them to hold cash in bank savings accounts. If my equity portfolio is up 100% in a year, I’m not going to be overly concerned about the fact that the million dollars I have in a savings account only earned $10,000 in interest that year versus $40,000. Besides, I don't need to stash money in a savings account when I can just buy a Picasso for $180 million and watch it appreciate three fold on the back of the very same policies that are driving my stocks higher. Finally, “blame fiscal policy” has become central bankers’ standard defense when it comes to explaining away the fact that monetary policy hasn’t worked.

Moving on, Wolf asks Bernanke to address to contention that by forestalling creative destruction, the Fed is allowing the vestiges of speculative excess and misallocated capital to hang around from crisis to crisis. Unsurprisingly, Ben dismisses that argument out of hand: 

“As for allowing the economy to go into collapse, this is the Andrew Mellon [US Treasury secretary] argument from the 1930s. And I would think that, certainly among mainstream economists, it has no credibility. A Great Depression is not going to promote innovation, growth and prosperity.”

Probably not, but then again, “mainstream economists” are almost always wrong and Bernanke might want to take a look at the role the Fed has played in driving down crude prices and thus contributing to the global deflationary supply glut before deriding the creative destruction argument.

It only gets sillier from there as Bernanke goes on to claim that “serious studies” show no link between the Fed’s post-dot com bust policies and the housing bubble:

“The first part of a response is to ask whether monetary policy was, in fact, a major contributor to the housing bubble and all that happened. Serious studies that look at it don’t find that to be the case. People such as Bob Shiller [a Nobel laureate currently serving as a Sterling professor of economics at Yale University], who has a lot of credibility on this topic, says that: it wasn’t monetary policy at all; it came from a mania, a psychological phenomenon, that took off from the tech boom and moved into housing.”

Let that sink in.

Bernanke is essentially saying that low interest rates had nothing to do with the housing bubble. Rather, the crisis was actually your fault for being crazy. 

As for the idea that it “took off from the tech boom”, Ben might want to study his history a bit closer - the Fed played a role in inflating the dot com bubble too.

He then proceeds to spread the blame around by chiding reckless regulators and the structure of the repo market:

“The second general argument is that, while I think the Fed had some complicity, it wasn’t so much in monetary policy but, together with the other regulators, in not constraining the bad mortgage lending and excessive risk-taking that was permeating the system. This, together with the structural vulnerabilities in the funding markets, and so on, led to the panic.”

Next, Bernanke says speculating about whether the system is stable is “fool’s game” because “either it is fine, in which case nobody remembers your prediction, or something happens, and then . . . ” He doesn’t finish, but we’ll finish the sentence for him “...and then you look like an idiot.” This is something Bernanke knows from first hand experience:

And the punchline to the entire interview comes when Bernanke recounts an anecdote he got from a former professor: 

"My mentor, Dale Jorgenson [of Harvard], used to say — and Larry Summers used to say this, too — that, ‘If you never miss a plane, you’re spending too much time in airports.’ If you absolutely rule out any possibility of any kind of financial crisis, then probably you’re reducing risk too much, in terms of the growth and innovation in the economy.”

So, according to Ben Bernanke, the economy needs to crash every few years to confirm it's being pushed hard enough. Perhaps that logic helps to explain why the FOMC has become a perpetual bubble blowing machine.

Now we know why it looks like the Fed is deliberately attempting to widen out swings in the financial cycle on the way to engineering ever larger booms and more spectacular busts...

... it's because they are.

 

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Fri, 10/23/2015 - 10:08 | 6702451 astoriajoe
astoriajoe's picture

Not to state the obvious, but Fuck you Bernanke. 

Fri, 10/23/2015 - 10:12 | 6702467 SWRichmond
SWRichmond's picture

Yes, so what if a few million poor lose everything and live the rest of their lives in despair?

Fri, 10/23/2015 - 10:20 | 6702502 15horses1donkey
15horses1donkey's picture

Let This Sink In: http://zhc0.com

'now you listen to me, and i'll only say this once. We Are Not Sick Men.'

Fri, 10/23/2015 - 10:27 | 6702509 Bobbo
Bobbo's picture

Someone needs to flush the toilet.  They can do it, or we can.

 

zhc0 ?  I'm in !

Fri, 10/23/2015 - 10:30 | 6702554 ParkAveFlasher
ParkAveFlasher's picture

"These guys today, they don't know how to hit CTRL-P.  It's more art than science.  Back in my day, we knew what we were doing."  - Ben Bernanke.

Fri, 10/23/2015 - 10:35 | 6702586 Ignatius
Ignatius's picture

i.e, if race car drivers aren't dying they're not trying.

Fri, 10/23/2015 - 10:38 | 6702614 SumTing Wong
SumTing Wong's picture

I was just thinking we need to put Bernanke in a car and see how hard he can hit the wall. If it doesn't kill him, he isn't trying hard enough.

Fri, 10/23/2015 - 10:45 | 6702649 DaveyJones
DaveyJones's picture

I feel the same way about strollers

fuck you ben
you're not even good at lying

Fri, 10/23/2015 - 11:13 | 6702767 Stackers
Stackers's picture

If you're not shooting yourself in the head ..... then you're not playing Russian roulette enough.

Fri, 10/23/2015 - 11:42 | 6702866 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

If the opposition has no credibility, why is Bernanke wasting his time defending his legacy from it?

Fri, 10/23/2015 - 11:52 | 6702901 Arnold
Arnold's picture

You know how retirees like to putter.

Fri, 10/23/2015 - 12:06 | 6702948 Fish Gone Bad
Fish Gone Bad's picture

‘If you never miss a plane, you’re spending too much time in airports.’

So this is how the great one reasons?  Let's change a few workds to equally good/bad words

‘If you never kill your family, you’re spending too much time with them.’

This can not be Bernanke's first STUPIDISM.

Fri, 10/23/2015 - 12:15 | 6702986 redpill
redpill's picture

Then why did you save the banks Ben, you fuck!

Fri, 10/23/2015 - 14:02 | 6703309 eatthebanksters
eatthebanksters's picture

So, why do we pay guys like Bernanke so much money to fuck things up?  Just sayin...

Fri, 10/23/2015 - 13:50 | 6703264 MadVladtheconquerer
MadVladtheconquerer's picture

In the gym, if you ain't tearin' no tendons, you ain't liftin' no weight.

Fri, 10/23/2015 - 12:11 | 6702971 SILVERGEDDON
SILVERGEDDON's picture

15horses1donkey.

IF ZERO HEDGE HAD A FUCKING CURRENCY OF IT'S OWN, IT WOULD BE MINTED IN INCORRUPTABLE NON HYPOTHECATED NON DERIVATIVE NON MARGIN ABLE SILVER OR GOLD.

Jesus, fucking kids these days. You all think technology is a miracle. All it is is electrons that can be made to go poof any fucking minute now.
Crypto currency is just a fancy name for digital fractional reserve banking - without the reserve, or the bank.

If I blew up your phone right now, you would look like a cow at the slaughterhouse just at the moment the bolt gun goes off - " How could you do this to me ? What'll I do now ? "
Improvise. Adapt. Overcome. Triumph over adversity.
And, transform your idea into minting a fucking physical coin out of noble metals, with Tyler's permission before he copyright lawyers your ass into bankruptcy.

Fri, 10/23/2015 - 12:26 | 6703031 Shaznardickleze...
Shaznardickleze the Doon's picture

Quit talking about it and do it. Old man. Bitching and moaning about kids when you know damn well you're just as childish.
https://youtu.be/5-sfG8BV8wU 

Fri, 10/23/2015 - 12:26 | 6703034 OscarMayerAmsch...
OscarMayerAmschelRothschild's picture

There's nothing *fractional* about it either, you dolt. Digital gold. Geez, old people these days. You don't understand thermodynamics and believe that electrons can just go "poof".  And about blowing up the phone, there are plenty of ways to back up your keys...

Fri, 10/23/2015 - 13:05 | 6703149 LooseLee
LooseLee's picture

Now where have I heard that line (dubbed, of course) before?

Fri, 10/23/2015 - 13:02 | 6702930 KnuckleDragger-X
KnuckleDragger-X's picture

He's done his best to wipe his fingerprints off and let Yellen be the patsy. I just wonder where his hideout is going to be once the people with guillotines show up for a philosophical discussion....

Fri, 10/23/2015 - 11:00 | 6702708 truthserum
truthserum's picture

Open your mind, shut your mouth and leave the keyboard alone. You might just start loosing less money. You'll never get it.

Fri, 10/23/2015 - 10:08 | 6702452 blown income
blown income's picture

Fuck you Bernanke!!

 

Prick!

Fri, 10/23/2015 - 12:32 | 6703048 DavidC
DavidC's picture

For a man who isn't a moron, Bernanke certainly speaks like one.

There was an interview with Greenspan some years ago (unfortunately I've not been able to find it) where he actually said during the interview, about the housing bubble and his actions, 'Prove me wrong'!

DavidC

Fri, 10/23/2015 - 15:28 | 6703667 Banker Buster
Banker Buster's picture

Yellen said it too.  She said something along the lines that in hindsight it probably would have been better to have raised rates sooner.  What blows me away, now that Yellen is in the drivers seat, she is making the same mistake Bernanke did by keeping rates low for to long.  These people are not as smart as they claim.  

Also in an interview with Paul Tudor Jones on Bloomberg, he flat out said that the fed policies of low rates are hurting savers and helping debtors by raising asset prices.  Sorry Bernanke and Yellen but Paul Tudor Jones knows a lot more about the markets than you do.   

Fri, 10/23/2015 - 10:10 | 6702454 Oldballplayer
Oldballplayer's picture

We have to break it in order to fix it.

Never thought we'd hear that again.  Its been seven years.  I guess that is a little longer than the average American attention span.

Fri, 10/23/2015 - 10:16 | 6702481 Mr. Magoo
Mr. Magoo's picture

I say give Ben a one way ticket to Iceland. Apparently they are the only ones who have the balls to lock up these low life scumbags

Fri, 10/23/2015 - 10:54 | 6702690 Mr. Magoo
Mr. Magoo's picture

Now that is equal justice

Fri, 10/23/2015 - 10:10 | 6702455 Osmium
Osmium's picture

I wish Bernanke would have spent more time in airports, and less time fcking up the country.

Fri, 10/23/2015 - 12:18 | 6702999 Citxmech
Citxmech's picture

Pushing on fucking string.

Let the market actually work and you won't have to worry about the economy turning into a shambles that needs propping-up to prevent the mother of all collapses.

Fri, 10/23/2015 - 10:10 | 6702459 Lady Jessica
Lady Jessica's picture

We Bene Gesserit pray constantly for this sucker to burn

Fri, 10/23/2015 - 10:10 | 6702460 Usurious
Usurious's picture

anybody seen Ann on the idiot box since she made this most famous quote?

 

How many f---ing Jews do these people think there are in the United States?

— Ann Coulter (@AnnCoulter) September 17, 2015

Fri, 10/23/2015 - 10:13 | 6702470 JamaicaJim
JamaicaJim's picture

Coulter needs to do MILF porn....BBC...would help her credibility.....at least in my eyes....talk the talk Annie....

Fri, 10/23/2015 - 12:21 | 6703013 Citxmech
Citxmech's picture

Ayeee!  Would you actually watch that shit?  (Eye Bleach would be required therapy).

Now Michelle Malkin on the other hand. . . . 

Fri, 10/23/2015 - 10:11 | 6702465 JamaicaJim
JamaicaJim's picture

<---------Delusional Prick

<--------Delusional Prick

no choice in the matter....he's a delusional prick

Fri, 10/23/2015 - 10:15 | 6702480 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

You give him too much credit. He knows what he is saying and doing.

He is an evil sociopath.

Fri, 10/23/2015 - 10:35 | 6702585 Kayman
Kayman's picture

Bernanke is a sociapath ?  Maybe, but he certainly is a diversion and a tool.  Focus attention on the drivel he spouts, while diverting eyes away from the greatest theft in American history.

Fri, 10/23/2015 - 13:04 | 6703143 villainvomit
villainvomit's picture

Agreed.  At least there are still some, that do not beleive his hornswoggling and boondoggling. (sp check)  Same for similar bullshitters no matter at what school they "teach".

Fri, 10/23/2015 - 10:12 | 6702468 Nid
Nid's picture

Did the "reporter" forget to add that, clearly, Ben drank a bottle of Scotch before his Swordfish was served?

Fri, 10/23/2015 - 10:12 | 6702469 Shadow1275
Shadow1275's picture

Translation: Please accept the coming collapse as normal and part of the process and do not question the obvious unconstitutional ponzie scheme

Fri, 10/23/2015 - 10:13 | 6702471 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

If you absolutely rule out any possibility of any kind of financial crisis, then probably you’re reducing risk too much, in terms of the growth and innovation in the economy.”

 

Reducing risk too much...?!? Is that what all this central bank intervention is doing...?? Reducing risk...??!?

We are truly living in the matrix right now. This is going to be epic when it blows.

Tick tock, tick tock...

Fri, 10/23/2015 - 10:15 | 6702472 Mr. Magoo
Mr. Magoo's picture

I say give Ben a one way ticket to Iceland. Apparently they are the only ones who have the balls to lock up these low life scumbags

Fri, 10/23/2015 - 10:14 | 6702475 Hohum
Hohum's picture

So said the great innovator.

Fri, 10/23/2015 - 10:14 | 6702476 yogibear
yogibear's picture

Bernanke should be wearing an orange jumpsuit and in shackles sharing a cell with bubba.

Instead he's hailed and glorified.

He even has arrogance to boast he had courage with his book.

Bernanke buckled and  bailed out the TBTF banksters so they could move on to larger bets and risk.

What an insult for every decent American.

Fri, 10/23/2015 - 10:22 | 6702489 Dr. Engali
Dr. Engali's picture

Rising inequality is a long term trend that goes back to the 70's? Let's see what two major events happened in the 70's? Oh yeah, Nixon went to China and opened the door for the great job exodus, and Nixon cut the dollar from that barbaric relic known as gold. But let me guess, those two facts have nothing at all to do with it right Bernank? You fucker.

Fri, 10/23/2015 - 10:28 | 6702494 Catullus
Catullus's picture

 

“It’s ironic that the same people who criticise the Fed for helping the rich also criticise the Fed for hurting savers. And those two things are inconsistent. But what’s the alternative? Should the Fed not try to support a recovery?”

 

I save money to accumulate those ever increasing in price assets. As a saver, I'm hurt by the increase in the money supply chasing the same assets. The fed helps the rich by both supporting the asset prices that they already own AND bailing them out when their leveraging to accumulate those assets goes awry 

I would argue that the ONLY THING the Fed does by bailing out banks is maintain the status quo of who owns assets. It's only a mechanism for control. Nothing else.

Fri, 10/23/2015 - 11:05 | 6702735 DaveyJones
DaveyJones's picture

well said

it's shocking that those in power erect systems to maintain things as such

Fri, 10/23/2015 - 10:25 | 6702499 Ghostdog
Ghostdog's picture

I thought he and his cronys said they have perfected everything and no more recessions?.... Cunt

Fri, 10/23/2015 - 10:21 | 6702505 Son of Captain Nemo
Son of Captain Nemo's picture

Ben Bernanke didn't see a housing bubble... Because....

It was a failure of imagination!

Fri, 10/23/2015 - 10:21 | 6702506 desirdavenir
desirdavenir's picture

Re. Fed and housing bubble. Actually, the mortgage rates for real estate were (are ?) more aligned on the 10Y rate than on the short term rate. In the 2000s, the former was mostly dependent on chinese appetite for US bonds, and thus on US trade deficit. So the "goldilock economics" was like "great economy (= more consumption)" (leads to more trade deficit, leads to greater chinese appetite for US bonds, leads to lower 10Y rate, leads to lower mortgage rates) " leads to housing appreciation, which can be used to fund more consumption (= even greater economy)"

Fri, 10/23/2015 - 10:22 | 6702510 Turin Turambar
Turin Turambar's picture

Please, somebody just go ahead and put a bullet in this guy's brainpan.  Doh!  Looks like I'm going to be added to yet ANOTHER government list of radicals!  :-O

Fri, 10/23/2015 - 10:22 | 6702516 madbraz
madbraz's picture

i think we need a jackson hole conference to get all these lunatic shyster corruptos together and pray that divine intervention/astronomical dumb luck brings a small sized meteorite impact.  it would be a shame to lose such a good ski resort, but humanity would stand a chance.

Fri, 10/23/2015 - 10:22 | 6702517 IndianaJohn
IndianaJohn's picture

Bernankie says; It saves time to not listen to a goat.

Fri, 10/23/2015 - 11:09 | 6702751 DaveyJones
DaveyJones's picture

and it strategically wastes time to tell a story about one

Fri, 10/23/2015 - 10:22 | 6702518 MadVladtheconquerer
MadVladtheconquerer's picture

The POOR losing EVERYTHING.  Seems oxymoronic.  What do the poor have left to looze except their lives?

Welfare?  WIC?  Free Iphones? 

Fri, 10/23/2015 - 10:23 | 6702524 withglee
withglee's picture

"My mentor, Dale Jorgenson [of Harvard], used to say — and Larry Summers used to say this, too — that, ‘If you never miss a plane, you’re spending too much time in airports.’

I have worked with arogant bastards who said that too. They miss a meeting and 20 people (who were responsible enough to make their flights) are inconvenienced ... but those twerps were running at peak efficiency. They were always total losers.

You don't have to be a rocket scientist to know delays, while not anticipated, are inevitable. Leave time for delays. When they occur, carry work or reading material to fill the time. Make the slack time be at the end of your trip ... not at the beginning or in the middle.

Fri, 10/23/2015 - 11:20 | 6702787 Kirk2NCC1701
Kirk2NCC1701's picture

And if you do miss the plane, you're gonna spend even moar time at the airport. Clearly, math and common sense are not their strong suit.

With scammer friends like that, who needs enemies?

Fri, 10/23/2015 - 10:26 | 6702528 desirdavenir
desirdavenir's picture

another thought, on why the last graph is so sad : first US emptied its savings accounts to fund its lifestyle (savings&loans crisis), then lost its shirt in the dot-com casino, then it mortgaged its house (real estate bubble), and now it mortgages its industry (share buybacks using leveraged loans). Is there any equity left in the US (or, for that matter, in any developped keynesian country) ?

Fri, 10/23/2015 - 10:24 | 6702529 buzzsaw99
buzzsaw99's picture

what he's really saying is the bankers need churn to get their full bonuses

Fri, 10/23/2015 - 10:25 | 6702532 Bay Area Guy
Bay Area Guy's picture

Ben, just shut up.  For the love of God, just shut the fuck up.  You never let the MARKET go down, but you sure as hell fucked up the economy something royal.  So just shut your fucking hole for the rest of your miserable fucking life.

Fri, 10/23/2015 - 10:26 | 6702536 BeerMe
BeerMe's picture

These people need to hang.  Criminals.

Fri, 10/23/2015 - 10:29 | 6702547 venturen
venturen's picture

I agree it should crash...but the gamblers should punished and their firms broken up....not steal from savers to reward gamblers. 

Fri, 10/23/2015 - 10:32 | 6702550 williambanzai7
williambanzai7's picture

If you never miss a plane etc...

That is one of the most stupid fucking things I have ever heard.

d

Fri, 10/23/2015 - 10:34 | 6702582 MadVladtheconquerer
MadVladtheconquerer's picture

Dude!  You have your priorites all wrong!  That should be YOUR gun and it should be pointing in the OTHER direction!

OTOH, when do the monkeys start flying out of her cleft?

Fri, 10/23/2015 - 10:35 | 6702584 Dr. Engali
Dr. Engali's picture

Am I weird if that just gave me a stirring in my pants? Two of my favorite toys, guns and a nice hot booty.

Fri, 10/23/2015 - 10:42 | 6702628 Ignatius
Ignatius's picture

Banzai has posted A LOT of fine art, but somehow this one shall remain forever in my memory.

"You can't stop looking at it, can you?"  --  Dana Carvey

Fri, 10/23/2015 - 10:48 | 6702664 Dr. Engali
Dr. Engali's picture

Yeah, I'm definitely keeping this sumbitch.

Fri, 10/23/2015 - 10:49 | 6702671 MadVladtheconquerer
MadVladtheconquerer's picture

Depends on WHOSE gun and WHOSE booty!

Fri, 10/23/2015 - 11:39 | 6702853 Temporalist
Temporalist's picture

Seriously...if you never miss a plane then you are puntcual and don't travel a lot...like most serfs that aren't central planners or academicians.

Fri, 10/23/2015 - 10:30 | 6702557 venturen
venturen's picture

Just want to say....he admits to be dumber everytime he speaks. He obviously lacks any idea was happened, or what will happened. It is embarassing....at least Greenspan had some idea. Bernanke is an idiot! 

Fri, 10/23/2015 - 10:31 | 6702561 Conax
Conax's picture

They have the bullshit spewing from both ends this morning.

Criminy.

Reading ZH requires hip waders on Fridays.

Fri, 10/23/2015 - 10:32 | 6702566 Uranium Mountain
Uranium Mountain's picture

If you haven't shot yourself while handling firearms then you've probably reduced your risk too much!

Fri, 10/23/2015 - 10:32 | 6702567 MadVladtheconquerer
MadVladtheconquerer's picture

Sitting in a back room waiting for the big boom:  https://www.youtube.com/watch?v=3uCAWUXYKUM

 

Fri, 10/23/2015 - 10:33 | 6702573 Bell's 2 hearted
Bell&#039;s 2 hearted's picture

"He then proceeds to spread the blame around by chiding reckless regulators"

 

 New York Federal Reserve Bank considered "sheriff" for Wall Street.

Fri, 10/23/2015 - 10:34 | 6702576 khakuda
khakuda's picture

Nicely written.  The worst part about this is that this mindset is still empowered and making decisions and no one can do anything about it.  He is the one who speaks from both sides of his mouth.  "We did QE to raise asset prices and create a weatlh effect"  "QE didn't increase the wealth divide"

"The Fed acts as a stabilizing force on the economy" "The economy needs to crash on occasion to ensure we are pushing it hard enough."  Yet, we have had (so far), two epic market and/oreconomic crashes in the past 15 years.

Fri, 10/23/2015 - 10:33 | 6702578 chinaboy
chinaboy's picture

Now the helicopter sounds logicall: he has an evil agenda!

Fri, 10/23/2015 - 10:35 | 6702589 Bell's 2 hearted
Bell&#039;s 2 hearted's picture

"If you absolutely rule out any possibility of any kind of financial crisis, then probably you’re reducing risk too much"

 

 

but not on MY watch, of course

Fri, 10/23/2015 - 10:37 | 6702609 Piranha
Piranha's picture

why isnt this guy in jail already?

Fri, 10/23/2015 - 11:25 | 6702808 waterwitch
waterwitch's picture

Along with Jamie, Mel, and ?

Fri, 10/23/2015 - 10:39 | 6702617 THE DORK OF CORK
THE DORK OF CORK's picture

Martin Wolf is much more then a common reporter, he is a high priest of liberal materialistism. It's become clear to all now that these guys are engaged in a holy war against former european peasantry - the previous bedrock of these now broken societies. They are quite clearly enjoying themselves. The total destruction of what remained of Spain musthave been especially sweet.

Sat, 10/24/2015 - 01:33 | 6705593 rex-lacrymarum
rex-lacrymarum's picture

Wolf - Keynesian dunderhead, panderer to power, has never seen a printing press he didn't like. Crypto-commie scum. 

Fri, 10/23/2015 - 10:42 | 6702632 r0mulus
r0mulus's picture

Bernanke is a dirty fucking thief.

Fri, 10/23/2015 - 10:43 | 6702636 Australian Economist
Australian Economist's picture

Mr. Mellon had only one formula: ‘Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate’.He held that even panic was not altogether a bad thing. He said: ‘It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people’

Unfortunately Hoover didn't take his advice and Bernanke hasn't learned anything from the Great Depression despite his so called expert knowledge on the subject.

Sat, 10/24/2015 - 01:31 | 6705590 rex-lacrymarum
rex-lacrymarum's picture

Exactly - the Krugmans of this world often use Mellon as a kind of "anti austerity example", but they always neglect to mention that Hoover never took his advice and instead intervened, intervened, and then intervened some more. Incidentally Hoover produced the biggest peace time deficit the US had ever seen up to that time. FDR in his election campaign accused Hoover (rightly) of being an "unconscionable spendthrift" - only to proceed the spend even more once he was in power. 

Fri, 10/23/2015 - 10:43 | 6702638 Atoyota
Atoyota's picture

"So, according to Ben Bernanke, the economy needs to crash every few years to confirm it's being pushed hard enough"

 

so if correct then why TARP?

natural selection in both nature and economics is a positive filter

Fri, 10/23/2015 - 10:44 | 6702641 giggs
giggs's picture

This absolutely fucking infuriates me.

Fri, 10/23/2015 - 10:56 | 6702655 THE DORK OF CORK
THE DORK OF CORK's picture

                      The First Carlist War was a civil war in Spain from 1833 to 1839, fought between factions over the succession to the throne and the nature of the Spanish monarchy. It was fought between supporters of the regent, Maria Christina, acting for Isabella II of Spain, and those of the late king's brother, Carlos de Borbón (or Carlos V). The Carlists supported return to an absolute monarchy. Historical background Edit At the beginning of the 19th century, the political situation in Spain was extremely problematic. During the Peninsula War, the Cortes met in Cádiz and elaborated the Spanish Constitution of 1812, at that point possibly the most modern and most liberal in the world. After the war, when Ferdinand VII returned to Spain (1814), he annulled the constitution in the Manifest of Valencia, and became an absolutist king, governing by decrees and restoring the Spanish Inquisition, abolished by Joseph I, brother of Napoleon I. Francisco Cea Bermudez, an important official during the Trienio Liberal, presided over the 1832-1834 cabinet James (Jacob) Rothschild, head of the French branch of the family Nathan Rothschild and his brother James increasingly involved in Spain, providing the key financial platform for the Spanish governments The 1805 Battle of Trafalgar had all but shattered the Spanish navy, with the Peninsular War leaving the Spanish society overwhelmed by continuous warfare and badly damaged by looting. While the Spanish Empire collapsed, the maritime trade trickled to the Americas and Philippines, and Spain's military struggled to keep their colonies, with Mexico getting its independence in 1821. The customary overseas revenue to the metropolis was at a historic low, the royal coffers were empty. Financing (solvency) and recruitment to the military became an overriding concern for the Spanish Crown, with the governments under King Ferdinand VII failing to provide new solutions and stability. During the Trienio Liberal (1820-1823), the progressive liberals decided to resort to the international money lenders to revert the economic meltdown Spain was facing. They turned to Paris, and particularly London, where many liberals (many of them Freemasons) had fled on Ferdinand VII's comeback (1814). In London and Paris, the liberals ruling (shortly) Spain engaged in negotiations with the Jewish financiers Nathan Rothschild and James Rothschild. They bailed out the Spanish liberal regime, with Great Britain also supporting it on its last stage, not so much on the strength of its liberal tenets but with a vested view to securing the debt engaged in previous years.[1] The 1823 intervention of a reactionary international alliance, the Sacred Alliance, restored Ferdinand VII on the Spanish throne, but the Bourbon king refused to assume the debt incurred by the 1820-1823 liberal rulers with the Rothschilds based in London and Paris. For more than a decade, the pending liberal debt became for Ferdinand VII's negotiators a persistent sticking point with the Jewish financiers during talks for new loan requests.[2] Against a backdrop of on-off bankruptcy and solvency issues, towards the end of his life, Ferdinand VII promulgated the Pragmatic Sanction giving hopes for a liberal rule. Ferdinand VII of Spain had no male descendant, but two daughters, Isabella (later known as Isabella II of Spain) and Luisa Fernanda. So he promulgated the above "Pragmatic Sanction", to allow Isabella to become Queen after his death, returning to traditional rules of Spanish succession. Without the above Pragmática Sanción, Carlos de Borbón, the king's brother, would have normally become king.[3] He and his followers, such as Secretary of Justice Francisco Tadeo Calomarde, pressed Ferdinand to change his mind. But the agonizing Ferdinand kept his decision and when he died on 29 September 1833, Isabella became the legitimate queen. As she was only a child, a regent was needed, so her mother Queen Consort Maria Christina was appointed. A strong absolutist party did not want to lose its position. Its members knew that regent Maria Christina would make liberal reforms, so they looked for another candidate for the throne; and their natural choice, with the background of the Salic Law, was Ferdinand's brother Carlos. The differing views on the influence of the army and the Church in governance, as well as the forthcoming administrative reforms paved the way for the expulsion of the ultra-Conservatives (absolutists advocating for Carlos) from the higher governmental circles, not that it opened the doors to the most progressives. Cea Bermudez's centrist government (October 1832-January 1834) inaugurated a period of opening and return to Spain of many exiles in London and Paris, e.g. Juan Álvarez Mendizabal (born Méndez). The rise of Cea Bermudez was followed by a closer collaboration and understanding with the Rothschilds, who in turn clearly encouraged the former's reforms and liberalization, i.e. the new liberal regime and the incorporation of Spain to the European financial system.[4] However, with state coffers yet again empty, the impending war, and the Trienio Liberal loan issue with the Rothschilds still not settled, Cea Bermudez's government fell.[5] Confronted with war breaking out in Basque territory and before matters ran out of control, the envoy of regent Maria Cristina's government, the Marquis of Miraflores (a middle-of-the-road liberal), contacted London's City bankers to open a line of credit with the Spanish Treasury (thus pay the next installment of external debt due in July 1834 and get new credit), as well as the British Government in order to garner its political endorsement. An agreement with Nathan and James Rothschild and a loan advance of 500,000 pounds to the Marquis of Miraflores paved the way to the establishment of the Quadruple Alliance that sealed British and French protection to the Spanish government, including military operations (April 1834).[6] As written by one historian: The first Carlist war was fought not so much on the basis of the legal claim of Don Carlos, but because a passionate, dedicated section of the Spanish people favored a return to a kind of absolute monarchy that they felt would protect their individual freedoms (fueros), their regional individuality and their religious conservatism.[7] A vivid summary of the war describes it as follows: The Christinos and Carlists thirsted for each other's blood, with all the fierce ardour of civil strife, animated by the memory of years of mutual insult, cruelty, and wrong. Brother against brother – father against son – best friend turned to bitterest foe – priests against their flocks – kindred against kindred.[8] The autonomy of Aragon, Valencia and Catalonia had been abolished in the 18th century by the Nueva Planta Decrees that created a centralised Spanish state. In the Basque Country, the kingdom status of Navarre and the separate status of Álava, Biscay, and Gipuzkoa were challenged in 1833 during the central government's one-sided territorial division of Spain. The resentment against the growing intervention of Madrid (e.g. attempts to take over Biscayan mines in 1826) and the loss of autonomy was considerably strong.

Fri, 10/23/2015 - 10:50 | 6702674 CHoward
CHoward's picture

Two questions.  One - why is this man still alive?  Two:  What fucking drugs is he on?

Fri, 10/23/2015 - 10:57 | 6702699 taopraxis
taopraxis's picture

After the crash of 2008, I made a number of predictions, some of which actually came true. First, I said there is no exit, that the Fed's only exit plan was to extend and pretend to have an exit plan while they expand their balance sheet (pyramid scheme). Second, I said that while there may be a statute of limitations on financial fraud, there is no statute of limitations on crimes against humanity. I said people will *never* forget what is essentially the biggest bank heist in the history of the world...nor, have people forgotten. Everyone knows the banksters are crooks.

Fri, 10/23/2015 - 11:03 | 6702717 GRDguy
GRDguy's picture

Stupid is as stupid does.  Where do they find these people like Bernanke?

Oh, that's right, Ivy League universities.  Princeton, Harvard, Yale, etc. 

Fri, 10/23/2015 - 11:06 | 6702741 Herdee
Herdee's picture

No mention of the NeoCon psychological phenomenum in the Wolfowitz Doctrine of US Foreign Policy.I guess it doesn't matter if you'd rather bomb country after country and dump billions overseas.You only end up like Detroit.Bernanke never mentions that the Fed is the NeoCon piggybank of corruption.

Fri, 10/23/2015 - 11:17 | 6702776 yogibear
yogibear's picture

A Bernanke mask for Halloween would be pretty scary. 

Great mask for bank robbers.

Fri, 10/23/2015 - 11:22 | 6702799 lu86cky
lu86cky's picture

and...

 

 

if you never shoot yourself in the head you aren't playing enough russian roulette

 

 

by the by, wasn't QE was implemented to stabilize the economy?  if so, then Bernanke's signature policy decision was designed to undermine the exact result he is now proclaiming is a sign of a healthy economy.

 

my only question - where can i get paid to be that stupid?

 

oh wait.  The Fed.

Fri, 10/23/2015 - 11:25 | 6702802 undercover brother
undercover brother's picture

Now you suggest the economy needs to crash, but while you were Fed Chair you green lighted TARP, which bailed out countless banks and corporations from their criminal and financially hazardous behavior, created quantitative easing which artificically inflated assets as you bought every garbage sub prime loan and security under the sun, crushed interest rates and with it the savings of millions, expanded the fed balance sheet to close to $5 trillion, artificially held interest rates to historical lows thus causing even more hazardous investing and used the Fed assets to become an active participant in the stock market manipulation.  Had you adhered to your current mindset and allowed the bad banks and corporations to pay for their mismanagement and crimes by declaring bankruptcy and be reorgainized things would be vastly different.  bond holders would have had to take their losses on bad investments, the stock market would be lower now and the global banking business would look much different, but the economy would be on much sounder footing and beginning to bounce back, interest rates would be stabilized and more accurately pricing risk, savers would be rewarded, etc etc.   Sadly your policies were a failure for the greater economy as we are now entering yet another recession/depression despite all that you've done.  Bernanke = Failure

Fri, 10/23/2015 - 11:25 | 6702810 Kirk2NCC1701
Kirk2NCC1701's picture

"...you're not pushing it hard enough".

Yeah, right. Is that like "if you're not red-lining that car or warp engine for a few hours, you're not pushing it hard enough"?

What could possibly go wrong?

Fri, 10/23/2015 - 11:43 | 6702869 ILikeBoats
ILikeBoats's picture

A lot of older people, as is sane, held mostly cash after they turned 70, and were able to do OK from the normal, regular interest rates - if you had $300K saved after a lifetime of working and after you sold your house and moved into a modest apartment, at 6% you would get $1500 a month plus SS benefits. 

Bernanke stole the money from those people and transferred it to the banks and the well-connected.  They are not the same people!

Fri, 10/23/2015 - 11:51 | 6702895 Phillyguy
Phillyguy's picture

FED presidents, including Ben Bernanke, work for large Wall St Banks. Their first order of business is to keep bank profits up. The US public (working people) are little more than an ATM, providing funds for the FEDs QE program- basically a mechanism for transferring vast amounts of taxpayer $$ to the wealthiest segments of US society. The ECB and BOJ (largest purchaser of stocks on the Nikkei) behave in a similar manner. 

Fri, 10/23/2015 - 11:51 | 6702897 Who was that ma...
Who was that masked man's picture

Yeah.  If you never starve to death, you aren't dieting hard enough.

Fri, 10/23/2015 - 12:47 | 6703058 Exalt
Exalt's picture

Sorry Bernanke but you don't any make sense. First we got into this mess because the economy was producing a "business cycle". Your kind promised us we'd never see a recession again. Now we're seeing depressions and you say it's healthy if the whole thing crashes? WAIT WHAT. We went from garden variety recessions to economic collapses and now you're justifying that? Why don't you accept the garden variety recession? Is that not healthy? Is that not more healthy than a crash? Covering your ass and talking out of it at the same time. Don't your handlers read your dimwit speeches before they hand them to you? Fuck you Ben Bernanke.

Fri, 10/23/2015 - 12:45 | 6703073 wisebastard
wisebastard's picture

Try that with your car...............you know because your car engine needs to BLOW UP every once in a while so that you know you are pushing it hard enough

Fri, 10/23/2015 - 12:46 | 6703074 Tenshin Headache
Tenshin Headache's picture

More like, "if you don't occasionally crash the plane, you're not flying close enough to the ground."

Fri, 10/23/2015 - 12:56 | 6703113 moneybots
moneybots's picture

“As for allowing the economy to go into collapse, this is the Andrew Mellon [US Treasury secretary] argument from the 1930s. And I would think that, certainly among mainstream economists, it has no credibility. A Great Depression is not going to promote innovation, growth and prosperity.”

 

It is not about allowing it to collapse.  It is about causing it to collapse.

Math says 100% of booms end in a bust.  Math has a perfect record.

Fri, 10/23/2015 - 12:58 | 6703124 moneybots
moneybots's picture

"Bernanke Says Economy Needs To Crash Periodically So We Can Be Sure We're Pushing It Hard Enough"

 

Translation: Bernanke admits he can't beat the laws of math.

Fri, 10/23/2015 - 13:04 | 6703140 moneybots
moneybots's picture

 

“If people are unhappy with the effects of low interest rates, they should pressure Congress to do more on the fiscal side, and so have a less unbalanced monetary-fiscal policy mix. This is the fourth or fifth argument against quantitative easing after all the other ones have been proven to be wrong. And this is certainly not an argument for the Fed to do nothing and let unemployment stay at 10 per cent.”

 

It is an argument for the FED to do nothing.  The FEDs screws up everything it touches.

The best argement agains QE is that Bernanke wrote in 1988, that QE doesn't work.


Fri, 10/23/2015 - 13:04 | 6703144 Raoul_Luke
Raoul_Luke's picture

"...the reason stock prices are high is because returns are low."

That has to be the stupidest thing I have ever heard an (alleged) economist say.

Fri, 10/23/2015 - 13:05 | 6703147 grekko
grekko's picture

What a dick!

Fri, 10/23/2015 - 15:50 | 6703174 PrimalScream
PrimalScream's picture

I will say these things in reply to Mr. Bernanke ...

The idea that Central Bankers should ever be in CONTROL of an economy is the absolute antithesis of a Free Market.  It was only ever necessary that the Fed establish proper safeguards to protect the American Banking system - nothing more.  And if the members of the Fed had influenced the policies (operating rules) of American markets so that these markets provided Free, Fair and Open trade to all persons regardless of their financial worth - so that all investors from the smallest to the greatest had an equal opportunity - then the health and prosperity of America would have been assured.

And the Fed has failed miserably with this essential goals.

Fri, 10/23/2015 - 13:31 | 6703220 Demdere
Demdere's picture

I have a universal comment now. No need for thinking in the future.  Perhaps I can make a universal blog from this.

It isn't any more insane than the other craziness they expect us to believe.

https://thinkpatriot.wordpress.com/2015/10/23/3663/

https://thinkpatriot.wordpress.com/2015/10/22/pan-galactic-buggery-game/

Fri, 10/23/2015 - 16:28 | 6703933 polo007
polo007's picture

http://realmoney.thestreet.com/articles/10/22/2015/more-qe-would-be-reward-banks

More QE Would Be a Reward to Banks

By Roger Arnold
 
Oct 22, 2015 | 4:00 PM EDT
 
In the past few months, I've written several columns concerning the recessionary trajectory the U.S. is on and how the Fed would respond if that continues.

Although a recession is not yet inevitable, the preparation for how the Fed will respond, if required, has begun.
 
On the recession issue, the Chicago Fed National Activity Index (CFNAI) released this morning validates the recessionary trajectory with the opening remarks of:

"The Chicago Fed National Activity Index ticked down to -0.37 in September from -0.39 in August. Two of the four broad categories of indicators that make up the index decreased from August, and all four categories made nonpositive contributions to the index in September" (emphasis is mine).
 
On the monetary response issue, as I discussed earlier this week in the column, "When Bad News Is Exactly That -- Bad," the San Francisco Federal Reserve Bank has already indicated that a probable response by the FOMC will be negative short-end rates coupled with another round of quantitative easing (QE).

As I discussed in 2011, monetary and fiscal policy come in two basic forms, pull through and push through, which may also be considered reward and punishment.
 
In that context, the implementation of another round of QE may be considered the pull through; a reward provided to the banks for agreeing to accept the push-through punishment of negative short-end rates.
 
The first issue to deal with is the potential structure of what another round of QE would involve and when it would be supplied.
 
The last round of QE involved the purchase of agency mortgage-backed securities. The idea was to allow the Fed to purchase what had become illiquid mortgage securities from the banks in order to provide the banks the capital necessary to make new mortgage loans and in the process drive the mortgage rates down to stimulate consumer demand for home purchases.
 
As I've noted previously, that structure required approval by the U.S. Treasury, and the next round of QE will, too, because the Fed's mandate has not been expanded by Congress to allow it the opportunity to purchase other than Treasury securities without first getting approval from the Treasury secretary.

 
The next round of QE will likely require the Fed to go beyond mortgage securities and into purchasing other kinds of bank loans that will likely become illiquid as a result of the economic deterioration.
 
Those loans will likely be concentrated in autos, commercial real estate mortgages and commercial and industrial.
 
This, too, will require Treasury secretary approval.
 
However, it is also likely the Fed will use the potential for it to expand into those areas by requesting that the executive and legislative branches coordinate and supply a fiscal response this time that is complementary to the goals of the monetary efforts.
 
In addition to requiring the fiscal support, the Fed will require the banks to agree to accept negative short-end rates in order for a round of QE targeted at these other kinds of loans.
 
The next issue concerns the timing of the Fed moving forward with a round of QE structured this way.
 
Until the bankers agree to accept the negative short-end rates and the government agrees to provide a complementary fiscal response, the Fed will wait to implement the next round of QE, even if the Treasury secretary approves.
 
The executive and legislative branches won't have the political support necessary to coordinate and respond with a complementary fiscal stimulus package, however, until there's been enough of a deterioration in economic activity and capital markets to afford for such.
 

That's a normal part of the political process, though, as there is too much risk to the continued viability for re-election faced by individual legislators to warrant even attempting a pre-emptive fiscal stimulus measure.
 
A fiscal package is only politically viable as a reaction to economic and market events that have already caused the electorate to not only acquiesce to the necessity of it, but request it.
 

The most important part of this process for investors, as I wrote about earlier this week, is that the current expectation of a pre-emptive monetary response to market instability or weak economic reports indicating an imminent contraction in private-sector activity is imprudent.
 
The Fed is telegraphing its willingness to supply a monetary response as the legislative mandate requires, but the experience of the past seven years has also proved that a monetary response provided in the absence of complementary fiscal measures is not just inviable but actually counterproductive.
 
At this stage, the most likely catalyst for encouraging the required response by bankers and fiscal authorities will be a decline in oil prices, but it may instead first be evidenced by continuing deterioration in the biotechnology and technology sectors.

Fri, 10/23/2015 - 21:11 | 6705041 P'Od_Accountant
P&#039;Od_Accountant's picture

Hey, how about stop interferring in the free market, monetizing bad debt, letting firms that make bad bets go under you fucking piece of shit.

Sun, 10/25/2015 - 02:25 | 6708240 onmail1
onmail1's picture

Bernanke : 'And before the crash my fellow cabals will convert all their monies into paintings & vanish, they will reappear in Israel'

another one

'u know I did not cause it (crash) , it is a simple law , what goes up comes down, lets accept it, its natural'

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