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The Doves Resume Their Crying: Fed's Evans Sees More Easing As Necessary To Avoid "Debt Trap"; Fed Must Act Now
While Italy's Mario Monti earlier said that the country with the still ridiculously high bond yields would be somehow able to avoid a debt trap on its own (for its second largest debt load in the entire Eurozone), the Chicago Fed's Evans just said that America, which has the lowest rates in the world (with the possible exception of Japan) just said that unlike Italy, the US apparently needs far more help, and "further monetary stimulus is needed" to avoid a relapse into the debt trap. This probably means that sooner or later Italy will follow through with statements that "Italy is not the US" - after all, they are perfectly ok as is.
Some other headlines form the just released speech by the crying dove who will not be on the FOMC voting committee next year:
- Fed's Evans says employment and growth are stuck in neutral, inflation likely to remain moderate
- Fed's Evans says US liquidity trap scenario 'more compelling'
- Fed's Evans says imperative for Fed to undertake action now
- Fed's Evans says without new developments or policy changes, US won't reach escape velocity anytime soon
- Fed's Evans says Fed has fallen short in employment mandate, risks under running inflation goal
- Fed's Evans says low rates should stay in place unless inflation breaches 3%
Full speech below for those who want a glimpse of what happens next year whent he FOMC has 9 doves and 1 dawk (a dove-hawk hybrid) on the voting board.
A Risk Management Approach to Monetary Policy
Introduction
It is my pleasure to be here in Muncie today to speak to you about my views on the progress of the recovery and on the course of monetary policy. I would like to thank Steve Smith, president of the Muncie Forecasting Roundtable, for that kind introduction.
For those of you who follow monetary policy deliberations, you will certainly be aware that I was the lone dissenter at the last policy meeting held in early November. So it should come as no surprise when I say that the views that I am presenting today are my own and not necessarily those of the Federal Open Market Committee (FOMC) or my other colleagues in the Federal Reserve System.
Real Output Gap
Four years ago the U.S. economy entered what developed into the deepest recession since the Great Depression. Two and a half years ago the recovery began. Yet, despite both accommodative monetary policy and fiscal stimulus, the pace of improvement has been agonizingly slow. Real gross domestic product (GDP) is only just back to where it stood at its pre-recession peak in 2007, employment growth is barely enough to keep pace with natural growth in the labor force and the unemployment rate remains extraordinarily high.
Earlier this year, most forecasters thought that the recovery was gaining traction and that economic activity would increase at a solid — though not spectacular — pace through 2012. The labor market was beginning to show some long-awaited improvement, and the financial repair process seemed to be making progress. Analysts thought that higher prices for energy and other commodities would weigh on output growth, as would supply-chain disruptions from the disaster in Japan. But these factors were expected to be transitory, and most forecasters thought growth would improve significantly once these influences had passed.
Unfortunately, the news over the past several months has proved this forecast to be too optimistic. To use an automotive analogy, employment and growth are stuck in neutral. Job growth has been disappointing, and the unemployment rate just last month dipped below 9 percent. Revised data indicate that annualized real GDP growth in the first half of 2011 was only 1 percent and improved only modestly to a 2 percent pace in the third quarter. Consumer spending has been particularly sluggish. Furthermore, the weakness in GDP growth began before the bulk of the effects of higher energy prices hit the economy and before the disaster in Japan happened. This timing, along with the continued softness of most economic indicators into the early summer, indicates that the slowing in output growth was not all due to temporary factors. Even with slightly firmer economic data that have come out recently, the sense of building momentum seems absent. Rather, the headwinds facing consumers and businesses are even stronger than we had thought.
Against this backdrop, the outlook has weakened substantially. Last June my colleagues on the FOMC and I were projecting real GDP growth would be around 2-3/4 percent in 2011 and 3-1/2 percent in 2012. As I alluded to a moment ago, some of the recent incoming numbers — on manufacturing activity and automobile sales, for example — have improved. Even so, our latest forecast made in early November revised down our outlook for 2011 by a full percentage point and projected GDP growth at just 2-3/4 percent in 2012 — barely above most analysts’ views of the potential rate of output growth for the economy. Such growth rates certainly are not strong enough to make much of a dent in the unemployment rate and other measures of resource slack. Indeed, the FOMC’s latest forecasts are for the unemployment rate to remain above 8-1/2 percent through 2012 and to fall only to about 8 percent in 2013. Without new developments or changes in policy, I don’t believe the U.S. economy is poised to achieve escape velocity anytime soon.
Inflation Outlook under 2 Percent
What about inflation? Large increases in energy prices pushed headline inflation — as measured by the 12-month change in the total Personal Consumption Expenditures Price (PCE) Index — up from about 1-1/4 percent last fall to almost 3 percent this summer. These higher prices certainly took a bite out of households’ budgets. But they did not portend a permanent ratcheting up of inflation. Core PCE inflation — which excludes the volatile food and energy components and is a better predictor of future overall inflation — has been just 1.7 percent over the past year. Furthermore, prices for energy and many other commodities have softened of late. And with the unemployment rate still high and capacity utilization low, resource slack continues to exert downward pressure on prices. In addition, measures of longer-run inflation expectations are at the low end of the range they have been running since last November.
Putting these factors together, I would argue that inflation is likely to remain moderate over the foreseeable future. The FOMC forecasts for core inflation were concentrated near 1.8 percent this year, and its forecasts for total inflation were in the range of 1.5 percent to 2.0 percent in[for] 2012, 2013 and 2014. My own assessment is that inflation will be at the lower end of these ranges.
Fed Performance
These disappointing forecasts pose a challenge for monetary policy. The Fed is charged by Congress in the Federal Reserve Act to encourage conditions that foster both maximum employment and price stability. This is what you hear us refer to as the Fed’s “dual mandate.” Given the high unemployment rate and low job growth, I think it is clear that the Fed has fallen short in achieving its goal of maximum employment. I will return to this point shortly. As for the price stability component of our dual mandate, the majority of FOMC participants — including me — judge our objective for overall inflation to average 2 percent over the medium term. With my own view that inflation is likely to run below this rate over the next few years, I believe we run the risk of missing on our inflation objective as well.
Two Different Perspectives on the Economy
Central bankers must formulate monetary policy with the understanding that our knowledge is imperfect. We may have incomplete and sometimes competing views of the forces that generate current economic conditions. This is especially true in the difficult circumstances we face today. In my view, we should try to formulate a monetary policy strategy that carefully balances the risks associated with the reasonable alternative economic scenarios that we face and is as robust as possible to miscalculations as to which of these scenarios is predominantly true.
Let me now discuss two quite different perspectives that could account for the disappointing slow growth and continued high unemployment that we confront today. These two conditions are important to consider in that they have markedly different monetary policy prescriptions.
The first storyline I will refer to as the “structural impediments scenario.” In this scenario, the recent period, which has been referred to as the Great Recession, was accompanied by an acute period of structural change, skills mismatch, job-killing uncertainties and excessive regulatory burdens. Accordingly, these structural impediments have caused the natural rate of unemployment to increase.
The structural impediments scenario sounds plausible to many, but I do not find it compelling. As best I can tell, it rests on lots of conjecture about economic forces and outcomes that are not confirmed by the evidence at hand. As an economist seeking firm quantitative explanations, I am not aware of any rigorously studied economic models[1] that both match critically important time-series properties of the data and support the notion that today’s high unemployment rate arises from special structural impediments[2]. Even generous estimates of the impact of structural reallocation and other factors on today’s equilibrium, or the so-called natural rate of unemployment, do not come anywhere near the current 9 percent rate of unemployment.
Nevertheless suppose this scenario were true. In this case the role for additional monetary accommodation is modest at best: The economy faces a supply constraint that monetary policy simply cannot address. Accordingly, those subscribing to this view think that additional easing would likely raise inflation without having a sizable impact on unemployment. In this scenario, our running a more accommodative monetary policy potentially risks repeating the stagflation of the 1970s. At that time, the Fed did not understand that the changing structure of the economy had caused the natural rate of unemployment to rise. In an effort to reduce the unemployment rate, it provided too much accommodation that only served to raise inflation and inflation expectations. To avoid that mistake today, under the structural impediments scenario, the Fed should revert to a “business-as-usual” monetary policy and begin to consider removing excess accommodation before inflation rises above its target and inflation expectations start to creep unalterably upward.
There is a second competing storyline — one that I refer to as the “liquidity trap scenario.” First, consider what occurs during normal times when nominal rates of interest are considerably above zero and real rates of interest are positive. If the supply of savings increased but the demand for investment remained unchanged, market forces would drive down real interest rates to some natural rate of interest that equilibrates savings and investment. This market dynamic is thwarted in the case of a liquidity trap.
Here, cautious behavior holding back spending — whether it is due to risk aversion, extreme patience or deleveraging — causes the supply of savings to exceed the demand for investment even at very low interest rates. Today short-term, risk-free interest rates are close to zero and actual real rates are only modestly negative. But they are still not low enough — because short-term nominal interest rates cannot fall below zero, real rates cannot become negative enough to equilibrate savings and investment.
As I weigh the evidence, I find the case for the liquidity trap scenario more compelling than one for the structural impediments scenario. My assessment has been influenced by the book titled This Time Is Different: Eight Centuries of Financial Folly[3] by Carmen Reinhart and Kenneth Rogoff. Reinhart and Rogoff document the substantially detrimental effects that financial crises typically impose on the subsequent economic recovery. As we all know, the recent recession was accompanied by a large financial crisis. When I look at the U.S. economy today, I see it tracking Reinhart and Rogoff’s observation that such recoveries are usually painfully slow — and are so for reasons that have little to do with structural impediments in the labor market and the like.
Liquidity traps are rare and difficult events to manage. They present a clear and present danger that we risk repeating the experience of the U.S. in the 1930s or that of Japan over the past 20 years. However, liquidity traps have been studied over the years in rigorous analytical models by a number of prominent economists, including Paul Krugman, Gauti Eggertsson, Michael Woodford and Ivan Werning.[4] Variants of these models have successfully explained business cycle developments in the United States. The lesson drawn from this literature is that the performance of economies stuck in a liquidity trap can be vastly improved by lowering real interest rates and lifting economic activity using an appropriately prolonged and forward-looking period of accommodative monetary policy. Of course, such monetary accommodation is the antithesis of the policy prescription for the structural impediments scenario.
A Risk-Management Approach to Policy Changes
Of course, I realize that I could be wrong in my assessment. So let us consider how we should conduct policy when we don’t know for sure which scenario is really the one we face today. How can we avoid risking a repeat of either the stagflation of the 1970s or the slow growth of the 1930s?
The problem, of course, is that policies that are optimal for the liquidity trap scenario would tend to generate higher inflation without significant reductions in unemployment if the structural impediments scenario were true. Conversely, policies that are optimal for the structural impediments scenario would leave the economy unnecessarily mired in depression and deflation if we were actually in the liquidity trap scenario.
A Middle Ground Proposal
Fortunately, between these two extreme scenarios, there is a robust middle ground policy approach. The Fed could sharpen its forward guidance in two directions by implementing a state-contingent policy. The first part of such a policy would be to communicate that we will keep the funds rate at exceptionally low levels as long as unemployment is somewhat above its natural rate. The second part of the policy is to have an essential safeguard — that is, a commitment to pull back on accommodation if inflation rises above a particular threshold. This inflation safeguard would insure us against the risks that the supply constraints central to the structural impediments scenario are stronger than I think. Rates would remain low as long as the conditions were unmet.
Furthermore, I believe the inflation-safeguard threshold needs to be above our current 2 percent inflation objective — perhaps something like 3 percent. Now, the “3 percent inflation” number may seem shocking coming from a conservative central banker. However, as Kenneth Rogoff recently wrote in a Financial Times piece, “Any inflation above 2 percent may seem anathema to those who still remember the anti-inflation wars of the 1970s and 1980s, but a once-in-75-year crisis calls for outside-the-box measures.”[5] I agree wholeheartedly with Professor Rogoff.
And actually, this middle ground policy guidance is not as out-of-the box as one might think. Importantly, it is consistent with the most recent liquidity trap research, which shows that improved economic performance during a liquidity trap requires the central bank, if necessary, to allow inflation to run higher than its target for some time over the medium term. Such policies can generate the above-trend growth necessary to reduce unemployment and return overall economic activity to its productive potential. In fact, I have seen model simulation results that suggest to me that core inflation is unlikely to rise as high as 3 percent under such a policy.
But suppose the structural impediments scenario turns out to be correct. In this case, inflation will rise more quickly and without any improvements to the real side of the economy. In such an adverse situation, the inflation safeguard triggers an exit from the now-evident excessive policy accommodation before inflation expectations become unhinged. We would not have the desired reductions in unemployment, but then again, there wouldn’t be anything that monetary policy could do about it. We would suffer some policy loss in that a 3 percent inflation rate is above our 2 percent target. But we certainly have experienced inflation rates near 3 percent in the recent past and have weathered them well. And 3 percent won’t unhinge long-run inflation expectations. We are not talking about anything close to the debilitating higher inflation rates we saw in the 1970s or 1980s. We would also know that we had made our best effort.
Conclusion
Today, I have outlined an appropriate course for monetary policy to take when we cannot know with certainty the degrees to which various forces are driving the economic weakness we currently face. If, as I fear, the liquidity trap scenario describes the present environment, we risk being mired in recession-like circumstances for an unacceptably long period. Indeed, each passing month of stagnation represents real economic losses that are borne by all. In addition, I worry that even when the economy does regain traction, its new potential growth path will be permanently impaired. The skills of the long-term unemployed may atrophy and incentives for workers to invest in acquiring new skills may be diminished. Similarly, businesses facing uncertain demand are less inclined to invest in new productive capacity and technologies. All of these factors may permanently lower the path of potential output.
As I said in the fall of 2010 and I repeat the message again today: I think state-contingent policies such as those I just described are a productive way to provide such necessary monetary accommodation. There is simply too much at stake for us to be excessively complacent while the economy is in such dire shape. It is imperative to undertake action now.
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Why is gold weak today?
We're saved! Why be in the pm's when you'd get a better return in stocks?
How the Central Banks fund new issues of liquidity:
To free up their balance sheet, a way to get cash onto the asset side, they sell, or at least since the 60's, lease gold reserves to each other. Once they do then they have cash on their balance sheet and leverage up 10 to 1 using fractional reserve lending. There is your liquidity.
How does it affect the gold price?
First, it decreases demand because it satisfies other Central Banks want and need for gold. The second move, and the one around the corner, means there is less supply, and this will increase gold's price.
Because the paper-gold/silver-manipulation systems are still online.
...And when they are eventually taken off-line:
Moon-shot bitches!!
Because on a radically strong day, you must go after the honest money.
Dumb ass.
Learn the rules!
why is the CRIMEX price being quoted for the official spot. Hard to believe it took MF Global to show some how corrupt the system is, maybe the miners will finally stop giving away their PM at the CRIMEX prices
Gold is weak because the system is corrupt. No other explanation needed. You believe in the US financial system you would also have to believe in the Easter Bunny! Here is one to consider if you think I am wrong, if equity outflows have been at all time highs for 14 months, how did stocks go up 1000 points in a week?
i love his comment that the fed is 'underperforming their inflation target'
what an asshole.
he talks again about a 'liquidity trap' - what if the reason we're stagnating was that everyone is just sitting back waiting for these jerks to print again and ride that wave - what if our whole system is so corrupted that the only way seen to make money now is just taking the 'easy' way and riding a flood of new dollars being printed.
here's an idea: tell everyone you're done and send the signal that real people are going to have to come up with real solutions - and i'll bet we slowly start rebuilding on solid ground.
Allow me to translate:
"Austerity" for you and me, "QE-Wheeeee!" for WS, banksters and politicians. It's a cornerstone of biflation, baby! Real economy? Could drop dead at this point, nobody would even know......they could silence the whole thing with repression and have a record-breaking stock market to legitimize their policies.
Those are my thoughts almost to a "t"... you nailed it, sir!
What Evans and the other central banker thieves want you to believe is that this so called debt trap must be avoided at all costs-- and the only way to do so is to allow their contorted, misguided measure of inflation to run to unacceptable levels. That way, we can "grow" ourselves out of a problem-- that they, themselves, help create. Someone might bother to tell Evans that the "food and energy" he loves to avoid comprise a much higher proportion of someone's income if they are struggling below the poverty line.
The reality is this so-called "solution" doesn't address the core problem, of which is essentially this: our financial system sucking the life out of the U.S. economy by preventing raw risk-based capital formation. Dumping more incremental capital going into a poorly run and highly corrupt banking system (and that includes such policies as supporting subsidizing ultra low interest rates to the banking system) isn't going to solve our problems any more so than did allowing Japanese banks to benefit from similar conditions in the 1990's. All those policies did was allow the banks to siphon off more capital from a struggling economy and allow them to take greater risks on top of high leverage. Perhaps one should fall back on Jon Corzine and MF Global as a current real world example of the bad things that can happen when one employs cheap debt with unlimited leverage.
In the meantime, you have both fiscal and monetary policies that are embracing lower living standards among the 99% of the population outside the banking sector, while supporting the subsidization of a finanical sector and a U.S. Government that continues to prove they are colletively making really bad decisions with its (our) capital. While Evans is trying to avoid the "debt trap" phenomenon, he appears totally oblivious to the fact that he is supporting a massive capital destruction cycle-- to which in large part is driven by allowing protected entities access to low cost debt and allowing them to make very poor capital allocation decisions.
I see these guys at the Fed as more criminal than stupid.
the liquity trap is the 'tbtf' banks getting money at zero and leaving [sucking dry] out [squeezing] the economies lifeblood for a deliberately 'designed-to-fail', false dichotomy,... that being, small business's, and entrepreneurs anemia.
kiss
"One of the evils of paper money is that it turns the whole country into stock jobbers. The precariousness of its value and the uncertainty of its fate continually operate, night and day, to produce this destructive effect. Having no real value in itself it depends for support upon accident, caprice, and party; and as it is the interest of some to depreciate and of others to raise its value, there is a continual invention going on that destroys the morals of the country."
Thomas Paine
Yep. You could wake up one morning and find it's worth only a quarter what you thought it was the night before
what? debt trap? The disease causing global financial instability is the debt supercycle peaking in 2007. One can not go back to the halcyon days of debt pyramid. Already the 99% are at their end. They can barely stay afloat on their current balance sheet. More debt is meaningless. No one can qualify. No one can afford it, unless average wages rise 30%.
'If, as I fear, the liquidity trap scenario describes the present environment, we risk being mired in recession-like circumstances for an unacceptably long period. Indeed, each passing month of stagnation represents real economic losses that are borne by all.'
We're from the Fed and we're here to help. Congress is theater. Obama is a blundering idiot. Welcome the 'technocrats'.
I hate this word, "technocrat". I mean, it all started with "technical" governments (in Italy, I think) and now in English it's entrenched as "technocrat".
Even as a slur it's ineffective because most people don't understand it...
----
OT -> GM, did you see my reply? About "No Comparison between Nigel Farage and Ron Paul"? here 1932824
Now I have. Nigel isn't Paul but points out major inconsistencies in the Euro project. Take a clue from the reception of your comments there. Some people who commented were actually from Croatia so I suggest you lend an ear.
Technocrat is a bullshit term that is a great way to delude the masses that everything is under control. The Eurocratz are swimming in sea of bureaucracy; so they're impotent. Pretending to install 'technocrats' like Monti and pretend he is an 'expert' will not work. Banking shills are now the new deity. The problem is the believers are all out of faith...
How do you avoid a trap you've already fallen in?
Right on!!! The fed hasn't realized they are stuck in a black hole of debt they created. I marvel they haven't figured out there is no escape by printing more money thus creating even more debt.
Mr. Fed meet Mr. Kondratieff.
Oh, I think you underestimate them. It's been clear since the late 1960s that this debt party could not continue forever. That's why they took us off the gold standard, just to buy time. When the tech stock bubble burst, and the economy did a big belly flop on the runway, they knew it was time to execute their plan to loot and scoot. They only appear to be idiots if you believe a single thing they say in public.
TPTB have had ten years to get ready for this collapse, ten years during which gold rose at a steady 20-25% rate. Now that everybody knows central banks are buying, nobody can figure out where they are getting their gold without running up the price, and who they are purchasing from is a closely guarded secret. That's because the gold they are buying was taken out of the marketplace over the last decade and laid up for a rainy day. They are buying from each other.
The reason there haven't been any audits at Ft. Knox for so long isn't because the gold is not there. It could easily be replaced. The reason there can't be audits is there was far too much gold stockpiled there for a healthy fiat system to innocently explain away. However, a smart central banker knowing a dying fiat system would need a lot of gold for itself and its counterparts to make a smooth switch to a new gold referrenced system would stack years ahead of that anticipated crisis.
So people who view these evil men as stupid want us to believe that the kinds of people who created and maintain this intricate Ponzi are so stupid they wouldn't have a plan for another Ponzi up their sleeve and wouldn't enact that plan years in advance to have their way.
How do you avoid a trap you've already fallen in?
Lure as many suckers as possible in behind you and hopefully you can stomp on them to get out.
It's a debt trap, it's a suicide rap -- Debtors like us, baby we were born to run.....
I nearly fell off my chair laughing so much at the headline!
http://confoundedinterest.wordpress.com/
You too can be in tomorrow today!
Printers on Parade!
Jesus... Gettin' the whole bloody world on the print it again all over part 2 cheerleading team.
And Timmah's on his way to Europe to help 'em out.
"See what a good job we did?" "There's still shit left to take."
thank you for sending us Timmah, thank you thank you thank you
you must have great leaders galore to spare us one Timmah! ;-)
gotta print, must print, just one more hit... print, print, print, print!
You asked for it baby!
http://www.youtube.com/watch?v=8Ix7jqxXQ2I&feature=related
Yeah that's what we need. More money and more debt. The S&P hasn't hit 1500 and a few seniors savings accounts haven't been inflated away.
Anyone think that banks may not be lending due to interest rate risk? As soon as short term rates go up, banks are back in crisis, hence rates can't go up. Similar trap with oil. The economy literally can't grow before it collapses. Academics and bankers refuse to accept the inevitable, increasing the consequences when the inveitable happens.
Just frustrating and news comes out daily that shows it will continue until "morale improves."
edit: Come to think of it, as soon as short term rates go up, the US Treasury is in crisis.
http://www.guardian.co.uk/uk/video/2011/dec/05/reading-the-riots-police-video
great point homer....WE CANT RAISE RATES NO MATTER WHAT...fannie and freddie portfolios would be even more underwater....banks mortgages and student loans under water....fed under water....ALL THIS EQUAL NO RATE CHANGES FOR A LONG TIME
Or until a systemic collapse occurs, then rates will not matter because paper will be worthless.
LMFAO, the Fed is a front for the real power behind the curtain...the CIA's "ESF".
See this 5 part series on the ESF.
http://www.youtube.com/watch?v=2ssrcD5GdPQ
http://www.youtube.com/watch?v=ImuVUab6WW0
http://www.youtube.com/watch?v=8Qsll_5-FXc
http://www.youtube.com/watch?v=iK-741ISz94
http://www.youtube.com/watch?v=lQf-u2nCVSw
...........
CHEERS!!!
hey evans! this ropes for you! -O
This Douche Bag's views are increasingly becoming more extreme and hopefully will be as ignored as the few hawks that populate the Fed board
Did Evans read Reinhart and Rogoff or is he trying to star prominently in their upcoming case study of this crisis?
This administration is taking credit for the best quarter in years, for a dramatic increase in jobs, for a turn in the housing market, for the unicorns and butterflies we see in abundance. So which is it? We're so screwed that we can't live another day without more QE or everything is beautiful? I'm thoroughly confused!
Gotta say, I don't get it. All the buzzwords are there....rigorous analytical models...bla bla bla...business cycles... The assumption is that 'here we go again with that darn economy...'. Funny thing is, we've never been here. Great articles and headlines out of Europe toady, one summed the entire thing up very well, something to the effect that the Eurozone countries could not adhear to rules 8 yrs ago, what makes anyone think they can now?? Why is anyone bothering anymore, just stay long because nothing bad ever really happens any more. Can the govt ever possibly undo the fact that they are the biggest player and have the most to lose via Backstops and Special Risk Sharing Mechanisms everywhere you turn? Doubt it.
Time for the European PIIGS to go after a new source of money to suck on. The US federal Reserve bank can just destroy the US dollar traying to save Europe. What a sweet end to the federal Reserve banksters. 1913 to 2013. Rest in prison or at the end of a rope.
After watching the action in the small cap market, one can conclude that the market expects nothing less than a QE3. It is complete lunacy in the small caps.
We could recover and move on if we got robbed once. These assholes keep coming back for more and tell us they are doing it for our own good. It makes me want to do something very violent. But I won't. No doubt they have 100 assholes wating in the wings to fill the opening.
This guy saw America's gold window closing a year before Nixon did it:
http://www.youtube.com/watch?v=jK01aLsKw7w&feature=g-all
Rudy Von Havenstein is all I have to say about this "policy"
It's real simple. The only thing the government can do is to attempt and "inflate away" some of the debt overhang. The main way to do that is to print money, but in gradual, measured doses. That is why Bernanke is waiting for QE3. He knows if he prints again too soon, core inflation will become intolerable.
The Feds are also working to control oil prices via collusion with the Saudis. They simply can't afford to let oil drop in price since it is an input into almost everything. Likewise, they continue to beat down gold and silver to quash any thoughts of returning to a gold standard.
Other commodity markets are, I'm sure manipulated to the extent possible to both not let prices fall but not let speculators ramp up excessively and kill the goose.
Overall, this will go on until the debt load starts to look more sustainable; of course when then viewed with inflated dollars.
It's real simple. The only thing the government can do is to attempt and "inflate away" some of the debt overhang. The main way to do that is to print money, but in gradual, measured doses. That is why Bernanke is waiting for QE3. He knows if he prints again too soon, core inflation will become intolerable.
The Feds are also working to control oil prices via collusion with the Saudis. They simply can't afford to let oil drop in price since it is an input into almost everything. Likewise, they continue to beat down gold and silver to quash any thoughts of returning to a gold standard.
Other commodity markets are, I'm sure manipulated to the extent possible to both not let prices fall but not let speculators ramp up excessively and kill the goose.
Overall, this will go on until the debt load starts to look more sustainable; of course when then viewed with inflated dollars.
You're assuming they even want to pay down any debt whatsoever. Where's the evidence of that?
No. They want to keep the banks, banksters, Wall Street and politicians in the pink by printing money and doling it out through QE and various secret programs. That way the financial markets will hum along as "proof" that everything is fine!
But with the other hand they want to taketh away: fiscal austerity and middle-class taxes will get worse and worse so taht they don't need to raise too much more debt to pay for deficits. Maybe they can eliminate deficits all together by only paying for cops and tax collectors.
How can this guy be wrong? He has a PhD in Economics from a very respectable University./sarc
Thank god for heros like these who have the courage to print unlimited money on an unlimited timeline...just so our savings will someday all be worhtless.
how to eat dove:
12- whole dove breasts
6- jalapenos
12- strips of bacon
1-cup zesty Italian dressing
12- tooth picks
1/4 Tsp. onion powder
1/4 Tsp. Garlic powder
Take the jalapinos cut in half and save the seeds and membrane. Take the seeds and membrane mix with the zesty Italian dressing onion and garlic powder and set aside. Wash dove breast and marinade them in the dressing for 3-4 hours.
Remove from marinade place 1/2 of the jalapino pod seed side to the breast bone side and wrap with a slice of bacon and secure with toothpick..You then are ready to fire up the grill and cook till the bacon starts to become crisp..Dont over cook..
They claim to be "doves". They're really agents of the status quo. It runs on the eternal fountain of youth that the Fed provides.
They are ALREADY in a debt trap.
Will printing even work at this point? I know every bank on the planet is begging for this - but we've already printed two trillion - is anything better?
Gold slipping? China warming up for another buy?
What I'm wondering is how soon before China offers to buy oil with a PM-backed currency. The Fed will be overstamping $1 bills with $1,000,000,000,000 at that point--and it won't matter.
No chance of that until China catches up to the Fed and ECB in gold purchases. If we can believe even a fraction of what we are being told, China is going to need a lot more gold and would be a very big loser if the Ponzi ended anytime soon.
these clowns get together on the weekends and just laugh at how stupid 'mericans are and how much fiscal/monetary bullshit they are able to stuff down everyone's throat
Maybe. Then again, maybe they are preparing for what happens when the poor rise up...
http://endoftheamericandream.com/archives/30-signs-that-the-united-state...
More debt to escape the debt trap.
Muncie? As in Muncie, Indiana? *cough*
bullshit like this make the chairsatan seem almost reasonable, as these fukers well know, btw