Archive for Ben Bernanke
Occupy Education
Posted by: | CommentsOn his blog today, William Anderson an economics professor at Frostburg State University nailed the source of the country’s ills. As Anderson points out, one academic department in the United States has been the host for the inflationist mad Keynesian disease. The Princeton University Economics Department has incubated and spread the current strain of interventionist bacteria through the lies of Ben Bernanke, Paul Krugman, Alan Blinder, and Alan Krueger. Anderson states that if the people want to occupy something, then it should be Princeton University.
I feel Anderson could go farther and say that most of the academic culture in this country not only needs to be occupied, but thrown out with the garbage. In a recent email exchange with a known economics professor and historical writer, I posed the question about an individual with years of business experience and some time spent teaching college having a chance to teach economics full time at a college or university without a Ph.D. He relayed a story at a prior university where the faculty threw a fit over the hiring of a renowned and respected individual simply because the person did not hold a doctorate. A few colleges still exist that place experience and teaching ability over phony credentials. And thus ignorant students are bombarded from people like Bernanke and Krugman with law defying theories and misrepresented history. Read More→
Bernanke and Natural Economic Forces
Posted by: | CommentsIn a prelude to QE3 or some version of money printing, Ben Bernanke in Minneapolis today conceded that the economy is suffering from more than transitory problems. Bernanke cited the severe recession on a global scope plus the deep slump in the housing and financial sector have acted to slow the natural recovery process.
When the Federal Reserve Chairman uses terms like “the natural recovery process” is he referring to an economy free from monetary manipulation and government intervention into every aspect of economic exchange. As the Depression of 1921 and the economic panics of the 19th century demonstrated, the corrective forces of the free market will make quick work of downturns in the economy.
As the Austrian Business Cycle Theory has pointed out, the natural recovery process that Ben Bernanke refers to is exactly what ails us. It is his natural process of rigging interest rates through monetary expansion combined with the government’s meddling into private transactions.
Bernanke has always championed himself as a scholar on the Great Depression. He obviously learned his lessons well.
Have the Swiss Gone Mad
Posted by: | CommentsThe financial news this morning left me dumbfounded as one of the last bastions of monetary sanity folded. The Swiss National Bank announced today the pegging of the exchange rate with the Euro at 1.2 Swiss Francs to 1 Euro. The policy involves the purchase of foreign currencies including the Euro, US Dollars, and Japanese Yen. As the main players in the currency arena travel down the failed road of inflation, the move by the Swiss almost ensures the same for the Franc. It is akin to a ship tying a line to the Titanic.
In a move mimicking Ben Bernanke and company, the European Central Bank in early August began purchasing Spanish and Italian bonds at rates lower than offered by the market. With a no confidence vote looming in Germany, banks in Deutschland may no longer finance European debt, which means increased easing by the ECB. Eurozone decimation results in further Euro printing that eventually drags the Swiss Franc down in the whirlpool of a sinking ship. The history of monetary intervention never ends well.
But like all economic actions, currency transactions are not a static equation. A rapid appreciation in the Yen may force the Japanese Central Bank to take steps toward further easing. In addition, a spike in the dollar may cause Bernanke to accelerate QE3 or whatever the Federal Reserve wishes to call it. What we may be witnessing is the beginning of a currency war.
Where does one put their money since the Swiss removed the Franc from the safe-haven list? Countries rich in resources will likely gain the most from a monetary tit-for-tat. Over the last couple of months I have been moving money into the Aussie Dollar and buying Australian Certificates of Deposits. The Canadian Dollar still remains a harbor of safety.
As some of the world’s major currencies swirl down the toilet, gold and silver are gaining as an alternative to debasing monetary units. Gold and silver are also the currency of liberty.
The True Nature of Federal Reserve Policy
Posted by: | CommentsIf any doubt existed about the true mission of the Federal Reserve, then a recent interview with hedge-fund manager David Tepper should erase any questions. Ever since the central bank started lowering targeted interest rates toward zero, I stated that the real purpose was not the promotion of economic activity, but to herd money into a falling stock market. The reason is Ben Bernanke’s belief and that of other Keynesian economists in the “wealth effect”.
A financial decision like other choices one makes in life does operate in a vacuum. The calculation on whether to park idle money into a savings account, certificate of deposit, bonds, real estate or stocks depends on various parameters that include rate of return and risk of principle. By manipulating interest rates near zero on traditional safe instruments like savings accounts, certificate of deposits, or US Treasuries, the Federal Reserve has set forth a policy of steering the commoner into riskier investments.
For most the largest holdings of assets are concentrated in their 401 k plans and a house (though a home in reality is a liability). Though not easily transferrable into useable cash or without a tax consequence, an individual’s supposed house value or retirement plan gives a person a sense of real wealth. The growth in wealth for many, therefore, lies in others pouring cash into stocks and real estate.
In order to get people to continue spending in the face of burdening debt, then policies need to be directed towards increasing personal wealth. Theoretically, lowering interest rates through increasing the money supply and central bank buying of US debt (one in the same) would corral cash into stocks and real estate, and thus, increase prices of homes and stocks causing people to spend or debt more. Read More→
Sweet Little Lies
Posted by: | CommentsIf I could turn the page
In time then I’d rearrangeJust a day or two
Close my, close my, close my eyes
But I couldn’t find a way
So I’ll settle for one day
To belive in you
Tell me, tell me, tell me lies
Tell me lies, tell me sweet little lies
(Tell me lies, tell me, tell me lies)
Oh, no, no you can’t disguise
(You can’t disguise, no you can’t disguise)
Tell me lies, tell me sweet little lies
Unless the unemployment statistics apply to Iceland, I find it totally illogical to state that a gain of 36000 jobs in the economy leads to a 40 basis point decline in the jobless rate as the Bureau of Labor Statistics reported today. According to the government record keepers the national unemployment rate dropped to 9% from the previous month’s reading of 9.4%.
Furthermore, participation in the labor force dropped to its lowest level in 26 years while those not in the labor force has grown by over 2 million in the last year. Still scratching your head over how the percentage of unemployed dropped so dramatically, or are you still pondering the hypothesis that global warming can cause temperatures of -25 degrees?
Of course the lame stream pundits would not dare give pause to the logic. In the following clip, Rick Santelli takes on the bird brains and liars.
Santelli and Liesman (appropriate name)
As much of a whopper that the BLS unemployment report is, Ben Bernanke may be the master of the tall tale. The Federal Reserve Chief and scholar extraordinaire on the Great Depression still claims that signs of inflation do not exist. According to Bernanke the rate of inflation stands around 1.5%. But conveniently the gauge on rising prices does not include such necessities like gasoline and food. I have often wondered whether Bernanke is a a pathetic liar or a just another Keynesian fool.
Marc Faber helps set the record straight:
The fact that government officials lie is no surprise. It is , however, disappointing that few in the press have the intellectual honesty to call them out on such fabrications. Perhaps the author of the Black Swan was correct when he said that those who read or watch the news know less than those who do not.
You Lyin’ Thieves
Posted by: | CommentsThe calls by those in government and its parroting press corps for civil debate miss an important factor in the equation. Civility is a derivative of intellectual honesty. In the modern political state where the Constitution no longer defines the boundaries of government, policy is a result of special interest agendas that redistribute wealth to those connected to power.
No one would expect a cordial discussion between a con man and the victim after the scheme has been exposed. So why do we think such talks are possible where government at all levels steals more wealth and freedom from individuals in what has become a giant shell game.
Unwilling to make an honest living through the remnants of a free market, many have used government either through bureaucratic employment or a good for the country flim-flam to increase their wealth and power.
If you want civil debate, then for starters let’s begin with some intellectual honesty on afew of the following topics.
1. Unless you do not drive a car or buy groceries, it should be obvious that the rate of inflation is not near zero as the Bureau of Labor Statistics and the Federal Reserve claim. Besides the obvious rise in cost for food and gasoline, the price of cotton stands at all time highs.
2. Ben Bernanke and the Treasury department have claimed on occasion that the central bank is not monetizing the debt. While at the same time they have bought corporate debt, foreign debt, and Us Treasuries. We learned this week to no surprise that the New York Federal Reserve bank has been active in the secondary Treasury market.
3. Global warming is not settled science, but an elaborate fraud that funnels large sums of wealth into the pockets of scientist and Al Gore. As the infamous emails between several global warming “experts” demonstrated, the distinguished earth warmers manipulated data to fit their models. If the science is so sound, then why did the lead warming cheerleader at NASA switch temperature data several years ago from September to October and claim the latter to be the warmest on record. Why did some warming scientist in an email exchange that they had to get rid of the Medieval Warm Period.
4. The Department of Energy was designed to help the country’s dependency on foreign oil, which at the time accounted for 30% of oil consumption. Today that figures is about 70%. After 30 years and some, do you really believe that government can solve our energy issues.
5. Even longer in existence, the Department of Education was created to raise our education quality in science and math. Our students today are not only falling behind the developed countries in math and science, but an increasing number cannot read or write.
6. Does anyone truly believe that Obama care will reduce medical costs while at the same improving care?
7. On the laws of economics, do you really believe that you can spend your way to wealth? Or printing money like a hyperactive counterfeiter will not have the same result as experienced by Germany, Zimbabwe, or Yugoslavia.
8. Blaming the free markets where non-exist for the country’s ill is akin to a five year-old blaming an imaginary friend for the spilled milk on the floor.
When Congressman Joe Wilson shouted “you lie” during Obama’a healthcare talk before Congress last year, politicians and pundits were aghast at such an outburst. But the comment was probably the only truthful thing said that night in the halls of Congress.
Civility begins with honesty, which is a trait very few in government possess.
Knight to c2
Posted by: | CommentsIn chess a fork occurs when a piece moves into a position where it can simultaneously attack two or more opposing pieces. The knight, which can move in an “L” shaped pattern and four different directions, is the piece most commonly used to execute this type of attack. A fork usually results in the opposing player losing a major piece. High caliber players often take care to avoid moves that could leave an opening for two quality pieces like a Queen and a Bishop to be attacked at the same time.
In his aggression to flood the economy with fiat money and lower key interest rates to zero, Ben Bernanke may have moved his monetary pieces and the economy into a vulnerable position. The Federal Reserve faces two problems. While lower rates did little to boost an economy already flooded in debt, they did help chase money toward the stock market where indices have bounced approximately 60% from the lows made almost a year ago.
A dramatically inflated money supply creates the very real danger of rapid price increases across the economic landscape. At its very worse, inflation can destroy the currency as illustrated historically by the experience of the Weimar Republic. The Producer Price Index, which showed an annualized rise of 16%, sounded an alarm to put the brakes on the monetary printing presses.
The likely result of pulling back on the monetary reins will be much higher interest rates and siphoning money out of the stock market. On the other hand, if the Federal Reserve continues on its present course, then the odds of a currency crisis increase with each passing day.
It looks like Bernake is sure to lose a piece. He has to be careful not to put the country into “checkmate”.