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Full Bernanke Speech: Nothing Now, But Wait For Sept 20 FOMC Meeting Which Has Been Extended To "Allow Fuller Discussion Of Tools"

Tyler Durden's picture


Bottom line: nothing now, QE3 now expected to be delivered Sept. 20? or not...


Readers can listen to real time market commentary courtesy of RanSquawk at the following link

August 26, 2011

The Near- and Longer-Term Prospects for the U.S. Economy

Good morning. As always, thanks are due to the Federal Reserve Bank of Kansas City for organizing this conference. This year's topic, long-term economic growth, is indeed pertinent--as has so often been the case at this symposium in past years. In particular, the financial crisis and the subsequent slow recovery have caused some to question whether the United States, notwithstanding its long-term record of vigorous economic growth, might not now be facing a prolonged period of stagnation, regardless of its public policy choices. Might not the very slow pace of economic expansion of the past few years, not only in the United States but also in a number of other advanced economies, morph into something far more long-lasting?

I can certainly appreciate these concerns and am fully aware of the challenges that we face in restoring economic and financial conditions conducive to healthy growth, some of which I will comment on today. With respect to longer-run prospects, however, my own view is more optimistic. As I will discuss, although important problems certainly exist, the growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years. It may take some time, but we can reasonably expect to see a return to growth rates and employment levels consistent with those underlying fundamentals. In the interim, however, the challenges for U.S. economic policymakers are twofold: first, to help our economy further recover from the crisis and the ensuing recession, and second, to do so in a way that will allow the economy to realize its longer-term growth potential. Economic policies should be evaluated in light of both of those objectives.

This morning I will offer some thoughts on why the pace of recovery in the United States has, for the most part, proved disappointing thus far, and I will discuss the Federal Reserve's policy response. I will then turn briefly to the longer-term prospects of our economy and the need for our country's economic policies to be effective from both a shorter-term and longer-term perspective.

Near-Term Prospects for the Economy and Policy
In discussing the prospects for the economy and for policy in the near term, it bears recalling briefly how we got here. The financial crisis that gripped global markets in 2008 and 2009 was more severe than any since the Great Depression. Economic policymakers around the world saw the mounting risks of a global financial meltdown in the fall of 2008 and understood the extraordinarily dire economic consequences that such an event could have. As I have described in previous remarks at this forum, governments and central banks worked forcefully and in close coordination to avert the looming collapse. The actions to stabilize the financial system were accompanied, both in the United States and abroad, by substantial monetary and fiscal stimulus. But notwithstanding these strong and concerted efforts, severe damage to the global economy could not be avoided. The freezing of credit, the sharp drops in asset prices, dysfunction in financial markets, and the resulting blows to confidence sent global production and trade into free fall in late 2008 and early 2009.

We meet here today almost exactly three years since the beginning of the most intense phase of the financial crisis and a bit more than two years since the National Bureau of Economic Research's date for the start of the economic recovery. Where do we stand?

There have been some positive developments over the past few years, particularly when considered in the light of economic prospects as viewed at the depth of the crisis. Overall, the global economy has seen significant growth, led by the emerging-market economies. In the United States, a cyclical recovery, though a modest one by historical standards, is in its ninth quarter. In the financial sphere, the U.S. banking system is generally much healthier now, with banks holding substantially more capital. Credit availability from banks has improved, though it remains tight in categories--such as small business lending--in which the balance sheets of potential borrowers remain impaired. Companies with access to the public bond markets have had no difficulty obtaining credit on favorable terms. Importantly, structural reform is moving forward in the financial sector, with ambitious domestic and international efforts underway to enhance the capital and liquidity of banks, especially the most systemically important banks; to improve risk management and transparency; to strengthen market infrastructure; and to introduce a more systemic, or macroprudential, approach to financial regulation and supervision.

In the broader economy, manufacturing production in the United States has risen nearly 15 percent since its trough, driven substantially by growth in exports. Indeed, the U.S. trade deficit has been notably lower recently than it was before the crisis, reflecting in part the improved competitiveness of U.S. goods and services. Business investment in equipment and software has continued to expand, and productivity gains in some industries have been impressive, though new data have reduced estimates of overall productivity improvement in recent years. Households also have made some progress in repairing their balance sheets--saving more, borrowing less, and reducing their burdens of interest payments and debt. Commodity prices have come off their highs, which will reduce the cost pressures facing businesses and help increase household purchasing power.

Notwithstanding these more positive developments, however, it is clear that the recovery from the crisis has been much less robust than we had hoped. From the latest comprehensive revisions to the national accounts as well as the most recent estimates of growth in the first half of this year, we have learned that the recession was even deeper and the recovery even weaker than we had thought; indeed, aggregate output in the United States still has not returned to the level that it attained before the crisis. Importantly, economic growth has for the most part been at rates insufficient to achieve sustained reductions in unemployment, which has recently been fluctuating a bit above 9 percent. Temporary factors, including the effects of the run-up in commodity prices on consumer and business budgets and the effect of the Japanese disaster on global supply chains and production, were part of the reason for the weak performance of the economy in the first half of 2011; accordingly, growth in the second half looks likely to improve as their influence recedes. However, the incoming data suggest that other, more persistent factors also have been at work.

Why has the recovery from the crisis been so slow and erratic? Historically, recessions have typically sowed the seeds of their own recoveries as reduced spending on investment, housing, and consumer durables generates pent-up demand. As the business cycle bottoms out and confidence returns, this pent-up demand, often augmented by the effects of stimulative monetary and fiscal policies, is met through increased production and hiring. Increased production in turn boosts business revenues and household incomes and provides further impetus to business and household spending. Improving income prospects and balance sheets also make households and businesses more creditworthy, and financial institutions become more willing to lend. Normally, these developments create a virtuous circle of rising incomes and profits, more supportive financial and credit conditions, and lower uncertainty, allowing the process of recovery to develop momentum.

These restorative forces are at work today, and they will continue to promote recovery over time. Unfortunately, the recession, besides being extraordinarily severe as well as global in scope, was also unusual in being associated with both a very deep slump in the housing market and a historic financial crisis. These two features of the downturn, individually and in combination, have acted to slow the natural recovery process.

Notably, the housing sector has been a significant driver of recovery from most recessions in the United States since World War II, but this time--with an overhang of distressed and foreclosed properties, tight credit conditions for builders and potential homebuyers, and ongoing concerns by both potential borrowers and lenders about continued house price declines--the rate of new home construction has remained at less than one-third of its pre-crisis level. The low level of construction has implications not only for builders but for providers of a wide range of goods and services related to housing and homebuilding. Moreover, even as tight credit for some borrowers has been one of the factors restraining housing recovery, the weakness of the housing sector has in turn had adverse effects on financial markets and on the flow of credit. For example, the sharp declines in house prices in some areas have left many homeowners "underwater" on their mortgages, creating financial hardship for households and, through their effects on rates of mortgage delinquency and default, stress for financial institutions as well. Financial pressures on financial institutions and households have contributed, in turn, to greater caution in the extension of credit and to slower growth in consumer spending.

I have already noted the central role of the financial crisis of 2008 and 2009 in sparking the recession. As I also noted, a great deal has been done and is being done to address the causes and effects of the crisis, including a substantial program of financial reform, and conditions in the U.S. banking system and financial markets have improved significantly overall. Nevertheless, financial stress has been and continues to be a significant drag on the recovery, both here and abroad. Bouts of sharp volatility and risk aversion in markets have recently re-emerged in reaction to concerns about both European sovereign debts and developments related to the U.S. fiscal situation, including the recent downgrade of the U.S. long-term credit rating by one of the major rating agencies and the controversy concerning the raising of the U.S. federal debt ceiling. It is difficult to judge by how much these developments have affected economic activity thus far, but there seems little doubt that they have hurt household and business confidence and that they pose ongoing risks to growth. The Federal Reserve continues to monitor developments in financial markets and institutions closely and is in frequent contact with policymakers in Europe and elsewhere.

Monetary policy must be responsive to changes in the economy and, in particular, to the outlook for growth and inflation. As I mentioned earlier, the recent data have indicated that economic growth during the first half of this year was considerably slower than the Federal Open Market Committee had been expecting, and that temporary factors can account for only a portion of the economic weakness that we have observed. Consequently, although we expect a moderate recovery to continue and indeed to strengthen over time, the Committee has marked down its outlook for the likely pace of growth over coming quarters. With commodity prices and other import prices moderating and with longer-term inflation expectations remaining stable, we expect inflation to settle, over coming quarters, at levels at or below the rate of 2 percent, or a bit less, that most Committee participants view as being consistent with our dual mandate.

In light of its current outlook, the Committee recently decided to provide more specific forward guidance about its expectations for the future path of the federal funds rate. In particular, in the statement following our meeting earlier this month, we indicated that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. That is, in what the Committee judges to be the most likely scenarios for resource utilization and inflation in the medium term, the target for the federal funds rate would be held at its current low levels for at least two more years.

In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days (the 20th and the 21st) instead of one to allow a fuller discussion. The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability.

Economic Policy and Longer-Term Growth in the United States
The financial crisis and its aftermath have posed severe challenges around the globe, particularly in the advanced industrial economies. Thus far I have reviewed some of those challenges, offered some diagnoses for the slow economic recovery in the United States, and briefly discussed the policy response by the Federal Reserve. However, this conference is focused on longer-run economic growth, and appropriately so, given the fundamental importance of long-term growth rates in the determination of living standards. In that spirit, let me turn now to a brief discussion of the longer-run prospects for the U.S. economy and the role of economic policy in shaping those prospects.

Notwithstanding the severe difficulties we currently face, I do not expect the long-run growth potential of the U.S. economy to be materially affected by the crisis and the recession if--and I stress if--our country takes the necessary steps to secure that outcome. Over the medium term, housing activity will stabilize and begin to grow again, if for no other reason than that ongoing population growth and household formation will ultimately demand it. Good, proactive housing policies could help speed that process. Financial markets and institutions have already made considerable progress toward normalization, and I anticipate that the financial sector will continue to adapt to ongoing reforms while still performing its vital intermediation functions. Households will continue to strengthen their balance sheets, a process that will be sped up considerably if the recovery accelerates but that will move forward in any case. Businesses will continue to invest in new capital, adopt new technologies, and build on the productivity gains of the past several years. I have confidence that our European colleagues fully appreciate what is at stake in the difficult issues they are now confronting and that, over time, they will take all necessary and appropriate steps to address those issues effectively and comprehensively.

This economic healing will take a while, and there may be setbacks along the way. Moreover, we will need to remain alert to risks to the recovery, including financial risks. However, with one possible exception on which I will elaborate in a moment, the healing process should not leave major scars. Notwithstanding the trauma of the crisis and the recession, the U.S. economy remains the largest in the world, with a highly diverse mix of industries and a degree of international competitiveness that, if anything, has improved in recent years. Our economy retains its traditional advantages of a strong market orientation, a robust entrepreneurial culture, and flexible capital and labor markets. And our country remains a technological leader, with many of the world's leading research universities and the highest spending on research and development of any nation.

Of course, the United States faces many growth challenges. Our population is aging, like those of many other advanced economies, and our society will have to adapt over time to an older workforce. Our K-12 educational system, despite considerable strengths, poorly serves a substantial portion of our population. The costs of health care in the United States are the highest in the world, without fully commensurate results in terms of health outcomes. But all of these long-term issues were well known before the crisis; efforts to address these problems have been ongoing, and these efforts will continue and, I hope, intensify.

The quality of economic policymaking in the United States will heavily influence the nation's longer-term prospects. To allow the economy to grow at its full potential, policymakers must work to promote macroeconomic and financial stability; adopt effective tax, trade, and regulatory policies; foster the development of a skilled workforce; encourage productive investment, both private and public; and provide appropriate support for research and development and for the adoption of new technologies.

The Federal Reserve has a role in promoting the longer-term performance of the economy. Most importantly, monetary policy that ensures that inflation remains low and stable over time contributes to long-run macroeconomic and financial stability. Low and stable inflation improves the functioning of markets, making them more effective at allocating resources; and it allows households and businesses to plan for the future without having to be unduly concerned with unpredictable movements in the general level of prices. The Federal Reserve also fosters macroeconomic and financial stability in its role as a financial regulator, a monitor of overall financial stability, and a liquidity provider of last resort.

Normally, monetary or fiscal policies aimed primarily at promoting a faster pace of economic recovery in the near term would not be expected to significantly affect the longer-term performance of the economy. However, current circumstances may be an exception to that standard view--the exception to which I alluded earlier. Our economy is suffering today from an extraordinarily high level of long-term unemployment, with nearly half of the unemployed having been out of work for more than six months. Under these unusual circumstances, policies that promote a stronger recovery in the near term may serve longer-term objectives as well. In the short term, putting people back to work reduces the hardships inflicted by difficult economic times and helps ensure that our economy is producing at its full potential rather than leaving productive resources fallow. In the longer term, minimizing the duration of unemployment supports a healthy economy by avoiding some of the erosion of skills and loss of attachment to the labor force that is often associated with long-term unemployment.

Notwithstanding this observation, which adds urgency to the need to achieve a cyclical recovery in employment, most of the economic policies that support robust economic growth in the long run are outside the province of the central bank. We have heard a great deal lately about federal fiscal policy in the United States, so I will close with some thoughts on that topic, focusing on the role of fiscal policy in promoting stability and growth.

To achieve economic and financial stability, U.S. fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time. As I have emphasized on previous occasions, without significant policy changes, the finances of the federal government will inevitably spiral out of control, risking severe economic and financial damage.1 The increasing fiscal burden that will be associated with the aging of the population and the ongoing rise in the costs of health care make prompt and decisive action in this area all the more critical.

Although the issue of fiscal sustainability must urgently be addressed, fiscal policymakers should not, as a consequence, disregard the fragility of the current economic recovery. Fortunately, the two goals of achieving fiscal sustainability--which is the result of responsible policies set in place for the longer term--and avoiding the creation of fiscal headwinds for the current recovery are not incompatible. Acting now to put in place a credible plan for reducing future deficits over the longer term, while being attentive to the implications of fiscal choices for the recovery in the near term, can help serve both objectives.

Fiscal policymakers can also promote stronger economic performance through the design of tax policies and spending programs. To the fullest extent possible, our nation's tax and spending policies should increase incentives to work and to save, encourage investments in the skills of our workforce, stimulate private capital formation, promote research and development, and provide necessary public infrastructure. We cannot expect our economy to grow its way out of our fiscal imbalances, but a more productive economy will ease the tradeoffs that we face.

Finally, and perhaps most challenging, the country would be well served by a better process for making fiscal decisions. The negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses. Although details would have to be negotiated, fiscal policymakers could consider developing a more effective process that sets clear and transparent budget goals, together with budget mechanisms to establish the credibility of those goals. Of course, formal budget goals and mechanisms do not replace the need for fiscal policymakers to make the difficult choices that are needed to put the country's fiscal house in order, which means that public understanding of and support for the goals of fiscal policy are crucial.

Economic policymakers face a range of difficult decisions, relating to both the short-run and long-run challenges we face. I have no doubt, however, that those challenges can be met, and that the fundamental strengths of our economy will ultimately reassert themselves. The Federal Reserve will certainly do all that it can to help restore high rates of growth and employment in a context of price stability.


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Fri, 08/26/2011 - 10:02 | 1603785 Dingleberry Jones
Dingleberry Jones's picture

Much ado about nothing.

Fri, 08/26/2011 - 10:12 | 1603889 nope-1004
nope-1004's picture

In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus.

Bullshit!  The FED controls the markets, controls the HFT's, controls and manipulates metals, controls foreign banks, and controls foreign countries by invading and removing their leader under the guise of "humanitarianism" when said leader explores selling oil in another currency.

Call it what it is Benocide, you LIAR.


Fri, 08/26/2011 - 10:26 | 1603946 BaBaBouy
BaBaBouy's picture


Blah Blah Blah Blah Blah Blah Blah...

Bottom Line Bitchez... Financial GAME OVER Bernie & Fedie ???

Fri, 08/26/2011 - 10:30 | 1604034 Thomas
Thomas's picture

Errata: "Full Discussion By Tools"

Fri, 08/26/2011 - 10:39 | 1604099 mkkby
mkkby's picture

I've said it a dozen times on these threads... no QE ANNOUNCEMENT today.

But did it ever stop?  Doubtful.  If a large bank gets in trouble, fed will buy assets and bail them out.  If a treasury auction looks dicey, same thing.  Or if stocks get hammered too much, they'll use the HFTs to move it around.

They're just being quiet about it.  They realize they made a mistake being too open.

Fri, 08/26/2011 - 11:19 | 1604312 redpill
redpill's picture

I don't understand why this market just surged green.  Crappy data, no QE from Bernie, wtf?

Fri, 08/26/2011 - 11:29 | 1604350 Havana White
Havana White's picture

Chairsatan would have listeners believe this is a frank assessment of the US economy and the challenges it must overcome to regain health.  There isn't a word in the speech, however, about the grave effects a crippled European economy will have on the US's tenuous economic climate.  Given the high probability that things will worsen in Europe -- perhaps soon, severely, and without available remedy -- this omission is bizarre.

Fri, 08/26/2011 - 14:07 | 1604925 John Bigboote
John Bigboote's picture

Who wrote this speech? I can guarantee you it was not the Bernank. All of this shit is written by 20 something interns. The key people don't give a shit enough about you to actually spend time writing a speech for you.
This is all a bunch of absolute bullshit.
Of course the morons on CNBC will sped countless hours sifting through this crap. What an incredible waste of time.
Just get your preparations completed. That is all that matters. Look beyond the new normalcy bias. It is easy to see that it's all over and it won't be an orderly transition.

Fri, 08/26/2011 - 12:15 | 1604570 caconhma
caconhma's picture

Regardless of what the scumbag will say, we know what he will do: print more money, bail out his friends, and debase US$.

The rest is just a smokescreen. Consequently, his criminal masters, friends & associates can continue their con game.

Remember, the central planning administration has neither imagination not vision. They are like old Soviet central planners who religiously followed their dogmas regardless of the reality and consequences.

Fri, 08/26/2011 - 10:24 | 1603978 deez nutz
deez nutz's picture

Bernanke has 2 choices: deflation or inflation.  Both lead to really bad times.  Checkmate, bitchez.

Fri, 08/26/2011 - 12:18 | 1604565 TruthInSunshine
TruthInSunshine's picture

John Maynard Keynes on inflation in The Economic Consequences of the Peace (p. 235-6):

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”


The Bernank is a hack with his economic theories whack. How much flak will Main Street take? Patriots have a knack for calling out the Bernank hack.

Inflation, bitches! Even Keynes thought it was EVIL.

Fri, 08/26/2011 - 12:21 | 1604592 caconhma
caconhma's picture

Keynes was a smart and intelligent man. Unfortunately, incompetent fools are trying to implement vision.

Bernanke and the rest of the West financial ologarchy have no idia of what they are doing.

Fri, 08/26/2011 - 10:30 | 1604047 walküre
walküre's picture

Well, he didn't say there will not be further QE in September.

Think "green shoots" and "recovery" and unicorn and skittles. Markets will drive higher now as more suckers are needed to keep the game going.

Technically Bernanke doesn't have to say anything different on September 20th or at their next meeting or EVER.

Behind the scenes he keeps buying treasuries to float the debt, flips it back and forth to himself like an HFT algo and creating nothing of value out of thin air.


Fri, 08/26/2011 - 10:38 | 1604095 Oh regional Indian
Oh regional Indian's picture

Well, there is all the above, as in "what you said". In addition, he of course knows th eplaybook for how things are going to be "managed" through SEptember 20th.

So many key dates between now and them (This month end, September 6th, the Anonymous gathering on the 17th)..... much will change, per design, between now and then.

Rigged game and we have only one "tool" in our bag, non-participation.

Drop Out.


Oh, the howler in the speech, for me was the gem below:

Over the medium term, housing activity will stabilize and begin to grow again, if for no other reason than that ongoing population growth and household formation will ultimately demand it

Fri, 08/26/2011 - 11:35 | 1604386 Herman Strandsc...
Herman Strandschnecke's picture

'Housing activity' = Tent cities and corrugated iron shanty towns, yeah.

Wadda knob

Fri, 08/26/2011 - 11:58 | 1604502 mac768
mac768's picture

they need another day in September to figure out what model of helicopter they will use to

distribute the dollar bills:

Fri, 08/26/2011 - 10:31 | 1604050 HCSKnight
HCSKnight's picture

Uncle Ben said months ago no QE until a 25% pull back from the 1300-1325 level.  During the same time period, in speeches he punted the ball to the politicians.  On the latter... the Federal Constitutional Court of Germany will be issuing a ruling on the Constitutional legitimacy of the German Government's spending of citizens' money to bailout foreign nations.  (John Browne tags the date as 15 September, Reuters says it's the 7th) 

Doubtful the VIX will dampen or Mr. M find a direction to stumble before then.

Fri, 08/26/2011 - 11:10 | 1604270 ElvisDog
ElvisDog's picture

Much ado about nothing.

No kidding. If he gave that speech after lunch, I would be asleep in my chair after the first five minutes. I note that he started off by giving his listeners the history of what happened in 2008 and how the Fed saved us all for the 1000th time or so. He's still blabbing about improved productivity, a metric that was "improved" by exporting all the manufacturing jobs to countries that paid their workers $2 an hour. That will certainly improve the dollars-per-good productivity metric, but how do we improve productivity going forward?

Fri, 08/26/2011 - 11:17 | 1604293 Cult_of_Reason
Cult_of_Reason's picture

I am perplexed as to why these clueless CNBC boneheads and bald Liesman keep repeating "no QE3".

I read between the lines of Bernanke speech as QE3 is on the way -- financial heroin pump is on.

Sun, 08/28/2011 - 06:19 | 1609096 tunckar
tunckar's picture

"fomc meeting has been extended means you can't go anywhere before voting QE3, that's it, wait and see!

Fri, 08/26/2011 - 10:03 | 1603787 lolmao500
lolmao500's picture

Doesn't matter what Bernanke says. BAC is going down, the whole world economy is going down, BECAUSE IT'S ALL A PONZI.

Fri, 08/26/2011 - 10:10 | 1603861 centerline
centerline's picture

Yup. It all just depends on how high we fall from.

Fri, 08/26/2011 - 10:14 | 1603903 JSD
JSD's picture

which will depend of course on when 'we' fall...

Fri, 08/26/2011 - 11:16 | 1604303 wandstrasse
wandstrasse's picture

..and for how long we will go on falling.

Tue, 03/20/2012 - 08:58 | 2272756 l.hauri
l.hauri's picture

it is not true... in my opinion it is really important. yacht charter mediterranean

Fri, 08/26/2011 - 10:03 | 1603788 Archimedes
Archimedes's picture


Fri, 08/26/2011 - 10:21 | 1603956 Sancho Ponzi
Sancho Ponzi's picture

"allow fuller discussion of tools" 

Why are the economists talking about themselves?

Fri, 08/26/2011 - 10:35 | 1604077 SheepDog-One
SheepDog-One's picture

'Tools' my ass, the FED has ONE tool and that is 'print', and nothing else!

Fri, 08/26/2011 - 10:46 | 1604145 data_monkey
data_monkey's picture

Sorry, there are two tools. One is the printing, the other is the printer himself.

Fri, 08/26/2011 - 11:10 | 1604278 DosZap
DosZap's picture

dat_monkey, @ 10:46,

There is NO paper dollars are being printed.There is a shortage of them worldwide.

They are simply adding entires electronically into a computer when they create Benny Bux.

If they had been printing real paper dollars, and putting them into circulation, we would be in HYPER_INFLATION now.

Fri, 08/26/2011 - 10:47 | 1604151 Zedge Hero
Zedge Hero's picture

Tools, you know like the 16 trillion tools that he funneled to the banks around the world- those kinda of tools.

Here is a video about the recent Federal Reserve audit that the main stream media has not reported on.


Fri, 08/26/2011 - 14:41 | 1605079 malikai
malikai's picture

I'd like to offer you my congradulations Sheepdog. Your call was spot on!

Fri, 08/26/2011 - 12:26 | 1604621 DavidAKZ
DavidAKZ's picture


Fri, 08/26/2011 - 10:03 | 1603790 RaymondKHessel
RaymondKHessel's picture


Fri, 08/26/2011 - 10:09 | 1603844 fuu
fuu's picture

A bunch just changed hands.

Fri, 08/26/2011 - 10:04 | 1603791 dwdollar
dwdollar's picture

while True:  sell()

Fri, 08/26/2011 - 10:03 | 1603792 Archimedes
Archimedes's picture

I waited all week for this?

Fri, 08/26/2011 - 10:16 | 1603908 Sudden Debt
Sudden Debt's picture

What did you expect?

Obama is on vacation and without him nothing will happen. I was very predictable.


Fri, 08/26/2011 - 10:19 | 1603939 Raymond Reason
Raymond Reason's picture

So, how do we fund the deficit now?  We find ways to herd existing money to the Euro collapse?

Fri, 08/26/2011 - 10:03 | 1603793 treemagnet
treemagnet's picture

Wasn't it Einstein that said "If you can't explain it simply, you don't understand it well enough."

Fri, 08/26/2011 - 10:04 | 1603795 Endstrategy
Endstrategy's picture

With gold selling at such a premium to world prices, in Vietnam, what is stopping someone from shipping 100 ounces over there and buying a gigantic estate and mansion?

Fri, 08/26/2011 - 10:10 | 1603859 Baptiste Say
Baptiste Say's picture

Various Money Laundering and 'Terrorism' Financing laws will stop you from carrying that much gold across the ocean.


Besides, if you were to take 100oz, sell it for a $200 margin you'd have $20,000. Not enough to buy a mansion anywhere other than say Zimbabwe, Iraq or liberated (read plundered) Libya.

Fri, 08/26/2011 - 10:36 | 1604086 markar
markar's picture

you might want to check your math on that

Fri, 08/26/2011 - 10:12 | 1603882 LowProfile
LowProfile's picture


Vietnam? Yeah, that's a country I trust to insure property rights.  Especially for foreigners.  Who invaded and unsuccessfully tried to take over the country a few decades ago.  Yeah, that's the ticket! 


Fri, 08/26/2011 - 10:26 | 1604000 FurQ
FurQ's picture

Whatever you do be careful of the prostitutes, some of them have suspiciously large clitorises........and big hairy balls

Fri, 08/26/2011 - 10:17 | 1603799 vast-dom
vast-dom's picture



....And Fuck You Bernank!


........And to the VAST MAJORITY of NO QE3 voters of yesterday: WE WERE is the CRASH?

Fri, 08/26/2011 - 10:37 | 1604091 SheepDog-One
SheepDog-One's picture

Right now Wille E Coyote is churning his legs furiously in mid air, next he'll snap his head towards us with a big "?" over his head...then he'll look down and see 3,000 feet of empty air.

Fri, 08/26/2011 - 10:56 | 1604194 CrimsonAvenger
CrimsonAvenger's picture

I think more about Marvin the Martian. "Where's the kaboom? There was supposed to be an Earth-shattering kaboom!"

Fri, 08/26/2011 - 10:04 | 1603800 HUGE_Gamma
HUGE_Gamma's picture


Fri, 08/26/2011 - 10:04 | 1603801 EscapeKey
EscapeKey's picture

Well, it's a good thing QE3 wasn't priced in already (although we all know it was, otherwise explain the 300 pt rally on Monday).

Fri, 08/26/2011 - 10:04 | 1603802 oogs66
oogs66's picture

c'mon guys, i've tried all i can, don't ask for more from me

Fri, 08/26/2011 - 10:04 | 1603804 the not so migh...
the not so mighty maximiza's picture

We are saved!!!!

Fri, 08/26/2011 - 10:05 | 1603805 bankonzhongguo
bankonzhongguo's picture

End the Fed.

Fri, 08/26/2011 - 10:05 | 1603806 Archimedes
Archimedes's picture

Looks like he is saying it is now up to the US Policy makers to get their fiscal house in order. Has the Bernank realized he is now powerless?

Fri, 08/26/2011 - 10:05 | 1603807 Spitzer
Spitzer's picture

what a joke

Fri, 08/26/2011 - 10:05 | 1603808 MonkeySmoke
MonkeySmoke's picture

Good call. Tyler, on the "non-event". Not allowing any of the "tools" to be seen, as of today.

Fri, 08/26/2011 - 10:29 | 1604026 Bring the Gold
Bring the Gold's picture

I'm sure much to their chagrin, working girls in Jackson Hole have seen far too many "tools" during this event.

Fri, 08/26/2011 - 10:05 | 1603809 Bastiat
Bastiat's picture

Bernanke sez: Let the mutha burn.

Fri, 08/26/2011 - 10:05 | 1603810 sudzee
sudzee's picture

Absolutely terrible but much better than expected.

Fri, 08/26/2011 - 10:06 | 1603813 Quintus
Quintus's picture

Well that all sounds very positive.  Rally time for stocks!

Although the accepted reasoning behind the rally over the past few days was expectations of more QE today, the fact that nothing of the sort materialised shouldn't prevent another rally, should it?


Fri, 08/26/2011 - 10:06 | 1603815 Irish66
Irish66's picture

No support

Fri, 08/26/2011 - 10:06 | 1603816 Marcuz Aurelius
Marcuz Aurelius's picture

Uh-oh ! this definatly sounds bad.

Fri, 08/26/2011 - 10:07 | 1603817 Flakmeister
Flakmeister's picture

What's left of his "Tool Box" probably resembles what you might find in Erector Set picked up at a garage sale....For $0.50

Fri, 08/26/2011 - 10:11 | 1603880 Vergeltung
Vergeltung's picture

yep. one nut, and a useless angled piece. 

Fri, 08/26/2011 - 10:32 | 1604058 Oh regional Indian
Oh regional Indian's picture

Brilliant, both above and you!


Fri, 08/26/2011 - 10:06 | 1603818 UTICA CLUB XX PURE

What about all my Physical Silver Ben?

Are you going to make me wait a little while longer?

Jackson Hole My Ass...


Fri, 08/26/2011 - 10:06 | 1603819 slaughterer
slaughterer's picture

"In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus."

"The Federal Reserve will certainly do all that it can to help restore high rates of growth..."

Fri, 08/26/2011 - 13:06 | 1604739 NotApplicable
NotApplicable's picture

" the financial sector."

Fri, 08/26/2011 - 10:06 | 1603820 digitlman
digitlman's picture

No QE3!   Good.

Fri, 08/26/2011 - 10:06 | 1603821 Dr. Engali
Dr. Engali's picture

Fed has limited ability to insure long term growth......Fed has a "range of tools to stimulate growth. Does that make any sense?

Fri, 08/26/2011 - 10:08 | 1603839 dwdollar
dwdollar's picture

And people wonder why the market seems bipolar...

Fri, 08/26/2011 - 10:09 | 1603848 snowball777
snowball777's picture

Sure..."I've got band-aids...y'all motherfuckers need a tourniquette."

Fri, 08/26/2011 - 10:16 | 1603907 Confused
Confused's picture

I had to read both those parts again, thought I missed something.

Fri, 08/26/2011 - 10:18 | 1603929 GeneH3
GeneH3's picture

The apparent inconsistency can be explained thus: The range has some breadth but little or no depth. Einstein was right. The man is a verbose idiot.

Fri, 08/26/2011 - 10:31 | 1604048 Smiddywesson
Smiddywesson's picture

Fed has limited ability to insure long term growth......Fed has a "range of tools to stimulate growth. Does that make any sense?

It makes complete sense to me.  Kicking the can means being all things to all people in order to buy time (to acquire cheap gold).

Fri, 08/26/2011 - 11:46 | 1604456 Herman Strandsc...
Herman Strandschnecke's picture

Yes it does make sense to me.

Yours, Walter Mitty

Fri, 08/26/2011 - 10:06 | 1603823 Caviar Emptor
Caviar Emptor's picture

He's Punting to the Politicians: You Guys Need To Do Fiscal Stimulus, I did my part!

Fri, 08/26/2011 - 10:25 | 1603985 Bob
Bob's picture

To leave them holding the bag o' blame, now that the taxpayers can be drained of little more and TSHTF is coming.  It doesn't matter much what .gov does at this point, short of seizing criminal gains and actually investing them in jobs . . . which sure as hell won't happen in this Dot Gov, Inc. 

Fri, 08/26/2011 - 10:39 | 1604101 Assetman
Assetman's picture

You are most correct, sir.

It's good to see some recognition between short term and long term solutions to solve economic problems, as well as the admission that the Fed can only due so much to promote growth during normal economic times.  And for today, monetary policy is about a stimulative as it could possbily be-- save for taking away interest payments on bank reserves.  But who wants to light a match in a pool of gasoline?

Make no mistake, though-- Bernanke will pull out a QE3 or other creative policy tools to deal with another finanical crisis.  And that is likely to be inevitable, given the events unfolding in Europe.  And they (again) will likely be the wrong prescriptions for long run growth.


Fri, 08/26/2011 - 10:07 | 1603824 youngman
youngman's picture


He just passed the ball to Obama....and like the football player running the wrong way in the old will Obama...

Fri, 08/26/2011 - 11:23 | 1604324 VisualCSharp
VisualCSharp's picture

That would be Jim Marshall of the Minnesota Vikings.

Fri, 08/26/2011 - 10:07 | 1603825 DefiantSurf
DefiantSurf's picture

now to watch CNBC try to spin it bullish as the markets slide...


Fri, 08/26/2011 - 10:07 | 1603827 Scisco
Scisco's picture

Gadaffi will be gibbed any moment so BTFD can commence.

Fri, 08/26/2011 - 10:07 | 1603828 caerus
caerus's picture

the fomc members are a range of tools

Fri, 08/26/2011 - 10:11 | 1603874 Misean
Misean's picture

Fools. Although I get you gist.

Fri, 08/26/2011 - 10:08 | 1603829 IrishSamurai
IrishSamurai's picture

JPM/GS: " So we're not getting a pony?"   <Commence tantrum>

And scene ...

Fri, 08/26/2011 - 10:07 | 1603830 Caviar Emptor
Caviar Emptor's picture

Fed is boxed: GDP almost negative, Core PCE above Fed target

Fri, 08/26/2011 - 10:07 | 1603831 Moneyswirth
Moneyswirth's picture

With THREE dissenters at the last policy meeting, did any sane person actually think he was going to open up the QE3 spigot today?  Morons.  

Fri, 08/26/2011 - 10:08 | 1603832 hedgeless_horseman
hedgeless_horseman's picture

"However, with one possible exception on which I will elaborate in a moment, the healing process should not leave major scars."

After recovering from Dr. Bernank's procedure, America will be back and as beautiful..

Fri, 08/26/2011 - 10:09 | 1603845 glenlloyd
glenlloyd's picture

good lord I haven't seen a picture of her in years....and it's not gettin any better.

Fri, 08/26/2011 - 10:09 | 1603853 Moneyswirth
Moneyswirth's picture


Fri, 08/26/2011 - 10:11 | 1603872 cynicalskeptic
cynicalskeptic's picture

pass the eye bleach........

Fri, 08/26/2011 - 11:18 | 1604308 Sgt.Sausage
Fri, 08/26/2011 - 10:14 | 1603894 Dr. Engali
Dr. Engali's picture

Damn that scared the shit out of me. Who is that?

Fri, 08/26/2011 - 10:19 | 1603942 GoinFawr
GoinFawr's picture

Michael Jackson's corpse.

Fri, 08/26/2011 - 12:33 | 1604644 DavidAKZ
DavidAKZ's picture

it's a Thriller

Fri, 08/26/2011 - 10:20 | 1603948 YesWeKahn
YesWeKahn's picture

She still look like a person. When Bernanke finishes his final touch, she will look like a monkey

Fri, 08/26/2011 - 10:21 | 1603958 Worker Bee
Worker Bee's picture

I knew he was married!

Fri, 08/26/2011 - 10:25 | 1603987 Hulk
Hulk's picture

Shut up and kiss me you fool! The only thing that will help that face is the compost pile...

Fri, 08/26/2011 - 13:02 | 1604635 TruthInSunshine
TruthInSunshine's picture



That photo is a perfect metaphor for the Frankenstein that America has been turned into.

How far we have strayed...

Fri, 08/26/2011 - 10:07 | 1603833 slaughterer
slaughterer's picture

Sell-off right now, rally later in the day.  Just like last year. 

Fri, 08/26/2011 - 10:08 | 1603835 scatterbrains
scatterbrains's picture

but but I can't find the part where he steps in and starts buying stocks and reits...  where is it!!  where is it ????

Fri, 08/26/2011 - 10:08 | 1603836 Yellow Tang
Yellow Tang's picture

So will gold plummet?  Waiting for that 15% correction, heh.

Fri, 08/26/2011 - 10:08 | 1603838 Cone of Uncertainty
Cone of Uncertainty's picture

S&P down -2% and falling.

At this rate, he might have to move up that 20th date a little.

Economic shock testing bitches!

Fri, 08/26/2011 - 10:08 | 1603840 Joshua Falken
Joshua Falken's picture

Remember who Bernanke's master are


His first duty of care is to the shareholders of the 12 member banks of the Federal Reserve System and not the American People


He will keep his "Range of tools" to bail out the banks

Fri, 08/26/2011 - 10:29 | 1603841 tawdzilla
tawdzilla's picture


Um diddle diddle diddle um diddle ay Um diddle diddle diddle um diddle ay Supercalifragilisticexpialidocious! Even though the sound of it Is something quite atrocious If you say it loud enough You'll always sound precocious Supercalifragilisticexpialidocious! Um diddle diddle diddle um diddle ay Um diddle diddle diddle um diddle ay So when the cat has got your tongue There's no need for dismay Just summon up this word And then you've got a lot to say Supercalifragilisticexpialidocious! Supercalifragilisticexpialidocious Supercalifragilisticexpialidocious Supercalifragilisticexpialidocious!
Fri, 08/26/2011 - 10:08 | 1603842 rgd
rgd's picture

Toolbox empty, bithchez!!!!!

Fri, 08/26/2011 - 10:33 | 1604062 MoneyWise
MoneyWise's picture

Not really, conditions not met..

Nobody expects QE3 at this time anyways..

Fri, 08/26/2011 - 10:42 | 1604121 SheepDog-One
SheepDog-One's picture

What? Up till today, you were considered nuts if you said Bernank would not be delivering any QE gift today.

Fri, 08/26/2011 - 10:08 | 1603843 I am a ..
I am a ..'s picture


It's not his job and therefore he's not responsible ??????

Where's the press and the Q&A ??????

Fri, 08/26/2011 - 10:09 | 1603846 Russiamerica
Russiamerica's picture

and soooo?

Fri, 08/26/2011 - 10:09 | 1603847 Bastiat
Bastiat's picture

Obama will force Bernanke to resign and appoint Buffet! 

Fri, 08/26/2011 - 10:29 | 1604033 tarsubil
tarsubil's picture

Really, we're not that far from having someone's favorite horse serve in the Senate.

Fri, 08/26/2011 - 10:43 | 1604127 mkkby
mkkby's picture

Except you've got it backwards... Obama reports to the bankers.

Fri, 08/26/2011 - 10:09 | 1603849 Careless Whisper
Careless Whisper's picture

...without significant policy changes, the finances of the federal government will inevitably spiral out of control, risking severe economic and financial damage...

thanks for telling us what we already know


Fri, 08/26/2011 - 10:38 | 1604096 Smiddywesson
Smiddywesson's picture

...without significant policy changes, the finances of the federal government will inevitably spiral out of control, risking severe economic and financial damage...

Too late.  That's like standing in the ruins of Hiroshima pleading for an air defense system.  It is too late for policy changes to avoid bankruptcy. 

Insolvency is an established fact long before it is acknowledged.

Fri, 08/26/2011 - 10:09 | 1603850 mtremus
mtremus's picture

looks like no QE3

Fri, 08/26/2011 - 10:57 | 1604211 DosZap
DosZap's picture

 mtremus   @ 10:09,

Dudeski, we tol ya yestidy, NO QE 3, the public would eat him alive, and so would the GOP/Tea Party folks.

Right now people are sick and tired of seeing them spend Trillions, and getting nothing for it........

If they really want to stimulate the Econ and make themselves hero's, send every American a check for a $100k tax free, and watch the morons buy all the toys and flat screens on the planet.New cars, trucks, etc..........then the sugar high goes away, and we are back to square one.

Except for once, WALL STREET wouldn't get it.

Fri, 08/26/2011 - 10:09 | 1603856 -Michelle-
-Michelle-'s picture

I'm trying to get throught this, but each paragraph seems to contradict the last.

Fri, 08/26/2011 - 10:12 | 1603890 mtremus
mtremus's picture

forget it. they have no clue

Fri, 08/26/2011 - 10:16 | 1603910 docj
docj's picture

Forget it, Jake. It's BernankeTown.

Fri, 08/26/2011 - 10:55 | 1604190 Bring the Gold
Bring the Gold's picture

LOL, pretty much! +1

Fri, 08/26/2011 - 10:09 | 1603857 docj
docj's picture

Ah, so that explains the S&P selling-off 15-handles almost instantly. BOO-YEAH!

Fri, 08/26/2011 - 10:10 | 1603858 Misean
Misean's picture

Range of tools???? That doesn't even make sense. WTF is a range of tools? And if I understand that to mean options, it hardly seems a binary option is a range...I mean it's Print-On or Print-Off....


Fri, 08/26/2011 - 10:12 | 1603878 66Sexy
66Sexy's picture

They have to let deflation come in for a while is what I am reading, artificial dollar strengthening until the next meeting..


not enough blood for 'em.

Fri, 08/26/2011 - 10:10 | 1603862 66Sexy
66Sexy's picture

"We're outta bullets!" SHTF time!

Fri, 08/26/2011 - 10:10 | 1603863 SqueekyFromm
SqueekyFromm's picture

Reader's Digest Condensed Version of Bernanke Speech:

"Blah blah blah blah blah. Blah. Blah blah. Blah."

Squeeky Fromm, Girl Reporter


Fri, 08/26/2011 - 10:10 | 1603864 digalert
digalert's picture

Economy has erectile dysfunction!

Stimulation efforts have failed!

Fri, 08/26/2011 - 10:32 | 1604054 bbaez
bbaez's picture

Where is Spitzer

I am sure he has some suggestions

Fri, 08/26/2011 - 10:10 | 1603865 glenlloyd
glenlloyd's picture

No no no...what he really said was that on Financial Stress Day he'll be in drag.

Fri, 08/26/2011 - 10:10 | 1603866 FoieGras
FoieGras's picture

Well nobody in their mind expcted them to announce QE3 anytime soon did they?

Fri, 08/26/2011 - 10:10 | 1603867 Quintus
Quintus's picture

Sep 20th?

So, now they're even kicking the can about announcing their latest can-kicking measures?

Where does this all end?

Fri, 08/26/2011 - 10:12 | 1603868 B-rock
B-rock's picture


Fri, 08/26/2011 - 10:10 | 1603869 SqueekyFromm
SqueekyFromm's picture

Reader's Digest Condensed Version of Bernanke Speech:

"Blah blah blah blah blah. Blah. Blah blah. Blah."

Squeeky Fromm, Girl Reporter


Fri, 08/26/2011 - 10:10 | 1603870 somethingelse
somethingelse's picture

hmmm  is Bernanke's magical mystery "tool box" anything like Al Gore's "lock box" for social'd that turn out?

Fri, 08/26/2011 - 10:10 | 1603871 trillion_dollar...
trillion_dollar_deficit's picture


Fri, 08/26/2011 - 10:11 | 1603875 steve from virginia
steve from virginia's picture


Companies with access to the public bond markets have had no difficulty obtaining credit on favorable terms. Importantly, structural reform is moving forward in the financial sector, with ambitious domestic and international efforts underway to enhance the capital and liquidity of banks, especially the most systemically important banks; to improve risk management and transparency; to strengthen market infrastructure; and to introduce a more systemic, or macroprudential, approach to financial regulation and supervision.


He mentions this financial industry reform and I'm looking around trying to see what finance industry on which planet?

I guess having Warren Buffett make an under-the-table deal with the Treasury over BAC counts as   "a more systemic ... macroprudential, approach to financial regulation and supervision".

Which means, screwing the taxpayer is reform.

Fri, 08/26/2011 - 10:33 | 1604060 hedgeless_horseman
hedgeless_horseman's picture

Same as it ever was;
Same as it ever was.

Fri, 08/26/2011 - 13:01 | 1604721 TruthInSunshine
TruthInSunshine's picture

Steve, actually, unless a company (including a financial company) is perceived as impaired (many financials are, but not all or even a majority), it's never been easier or cheaper to sell bonds for many corporations right now, due to the pathetic yield on treasuries (not just U.S. treasury debt, either).

Many Fortune 500 Companies have rushed to sell massive amounts of debt in the form of bonds over the past 20 months or so, and this is still ongoing.

I think that the last time I checked, publicly traded corporations have a NET of just over 12 trillion in debt, which is an all time record, and a significant chunk of that exists in the form of debt issued through corporate bonds sold.

Fri, 08/26/2011 - 10:11 | 1603879 Baptiste Say
Baptiste Say's picture

As Dingleberry Jones said, much ado about nothing.


Buys him more time to act and gives the world something with absolutely no clear directives or indicators to feast upon for the weekend.

Fri, 08/26/2011 - 10:11 | 1603881 lizzy36
lizzy36's picture

So this comes down to Bernanke bragging about his tools, and how many he has, but how he ain't using them right now.


Fri, 08/26/2011 - 10:25 | 1603996 Raymond Reason
Raymond Reason's picture

Exactly lizzy!  He's playing poker, he can't fold, so he must bluff. 

Fri, 08/26/2011 - 10:44 | 1604135 Smiddywesson
Smiddywesson's picture

Yes Lizzy, right on the money. 

It is obvious he had the same tools over the last four years, plus a whole lot more, and failed miserably.

The USG is now broke, despite his tools.

The Fed's balance sheet is ruined

The economy has three years of shadow housing and unemployed that have built up.

Interest rates are at zero.

He has spent his political and economic credibility, and the public's trust in the markets is zero.

Need I go on?

Going forward, he has nowhere near as much manuevering room or tools as he did when he failed.

Fri, 08/26/2011 - 13:37 | 1604834 EhKnowKneeMass
EhKnowKneeMass's picture

Well, then, you don't know most men, do you. All will claim to have 8 inches in the tool box and then they deflate faster than a punctured balloon.

Bobbitized Ben!

Fri, 08/26/2011 - 10:12 | 1603883 Eireann go Brach
Eireann go Brach's picture

I hope there is still time for a bear to come out of the woods at Jackson Hole and rip Bernnankes head off, eat it and then shit down his throat!

Fri, 08/26/2011 - 10:12 | 1603886 marcusfenix
marcusfenix's picture

looks like the crack dealer is going to hold out a little longer, let the addicts wallow in the DT's, bring them more pain before the sweet relief of the next QE dose comes rushing in. brilliant in an evil, satanic sort of way. 

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