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Friday, November 26, 2010

Wednesday, November 24, 2010

The Flawed Failing Fed

Items of Interest:

James A. Bacon / boomergeddon.us / Washington Times:
Bernanke's raid on the middle class -- Fed action will reward the profligate and punish the prudent

Here's one fact that is indisputable: The intent of Quantitative Easing 2 (QE2), as Fed Chairman Ben Bernanke's initiative is known, is to push intermediate- and long-term interest rates even lower than they already are. Here is a conclusion that can be stated with certainty: Lower interest rates will bail out the profligate and punish the prudent.

The ranks of the profligate include the world's largest debtor, the U.S. government, and the irresponsible risk-takers, namely the big banks and investment houses, that helped finance trillions of dollars of residential and commercial real-estate projects that either have gone bad or soon will. Lower interest rates will reduce the United States' borrowing costs by billions of dollars a year, masking the dangers of an ever-escalating debt, and will pump up the profitability of the very same banks that plunged the world economy into a recession.

Who pays for QE2? The middle-class stiffs who have worked all their lives, played by the rules, refrained from borrowing money they could not repay and socked away money for retirement...

-----
Stephen Roach / Financial Times:
Time to Recast the Fed's Flawed Mandate -- The Federal Reserve’s grand experiment is a flop. Not only has the second round of quantitative easing roiled markets, but it has become a lightning rod for debate in Washington, academia, and in policy and political circles around the world. The US central bank’s uncharacteristic defensiveness has only deepened the suspicion – putting over 30 years of hard-won credibility and independence at risk. Sadly, this backlash is well founded. The Fed is running a real risk of destabilising a still precarious post-crisis world...
-----
Lawrence A. Hunter / Forbes:
Save The Dollar, Not The Fed -- Remove all the Federal Reserve's discretion, not just half of it...

the Fed has actually feathered the nest of the banking cartel it created and produced a century of monetary instability and ancillary economic problems.

The real challenge is to remove both the Fed's mandates and its discretionary monetary authority along with them, and replace them all with a simple statutory directive to calibrate dollar liquidity so as to maintain the dollar price of gold within a narrow band around a statutory gold price that defines the dollar. Any other legislative "solution" simply exonerates the Fed from responsibility and gives them more cover to fail. Indeed, diverting attention from the real problem and the real solution is a classic instance of playing the useful idiot on behalf of the real culprit.

The objective is simple and straightforward: Save the dollar, not the Fed. Remove all its discretion, not just half of it.
-----
John Carney / CNBC:
Why the Fed Plan Is Failing: We’re All Austrians Now -- It’s no accident that Austrian economics is newly popular. It provides the best explanation for the business cycle we just lived through... I think that we may have entered a new era.

We may all be Austrians now... If I’m right about this, it could mean that Ben Bernanke’s plans to push along the recovery through further easing could be stymied—or at least delayed. I’m not sure how long business will be able to hold out against the lure of low interest rates—especially as investors push banks and businesses to put the money on their balance sheets to work. But the downturn could last much longer than history would suggest...
----
Naked Capitalism:
The Question Isn’t Whether the Fed Should Be Stripped of Its Mandate to Maximize Employment … The Question Is Whether the Fed Has Too Much Power -- So the problem isn’t the Fed’s dual mandate … the problem is that the Fed has too much power. And the Fed has wielded that power to save its shareholders (the big banks), at the expense of Main Street and the real economy...
----
John Hussman / Hussman Funds:
Outside the Oval / The Case Against the Fed -- Bernanke offered a defense of QE2 last week in Europe that was reported as "coming out swinging," but what he swung before the world was ignorance. Bernanke correctly observed that quantitative easing was capable of "moving asset prices significantly." But he incorrectly said that "we don't know what effect this will have on the real economy." In fact, we do know. The elasticity of GDP growth to stock market changes can be easily estimated to be on the order of 0.05% or less, and transitory at that. In other words, a boost to the stock market isn't interpreted by consumers as "permanent income" or stable wealth that should be consumed. Since QE2 doesn't operate on any constraint in the credit markets that is binding, it is simply a way to blow asset bubbles, and nothing more...
----
Barron's:
Bernanke Turns His Game to Defense -- The Fed chief shoots back at critics of his policy. Will the bond market be convinced? ...
----
Paul Krugman / NY Times:
Ride, Bernanke, Ride
----
Bud Conrad / SafeHaven:
Bernanke Is Making the Crisis Worse -- The Fed is a corrupt and powerful institution, and Chairman Bernanke is making the global crisis worse. His new speech given last week in Europe was terribly misguided and will upset markets as the Chinese and Germans won't ignore his challenges. Bernanke's interpretations of the markets have been wrong since before he was appointed to head the Fed, and his actions are doing nothing but aggravating the situation...

Monday, November 22, 2010

Tuesday, November 16, 2010

Stopping Bernanke's QE 2 Toxic Sludge

The world does not like the Ben Bernanke, Federal Reserve Quantitative Easing scheme. It's like a toxic sludge of greenbacks that will leak out out of the US economy spreading inflation around the world. People here in the US and abroad are taking steps to stop the Fed from doing more damage.

Bloomberg:
Senate's Corker Favors Ending Fed `Dual Mandate' to Focus on Stable Prices -- A Republican member of the Senate Banking Committee called for the Federal Reserve to focus solely on price stability rather than its “dual mandate” to fight inflation and maintain full employment.

Tennessee Senator Bob Corker released his statement a day after House Republican Mike Pence introduced legislation to restrict the Fed’s activities to inflation fighting.

The central bank has embarked on a program of purchasing $600 billion in Treasuries to inject more money into the economy and promote job growth.

“It is time that we work to clarify the mandate of the Federal Reserve,” Corker said in a statement issued a day after he met with Fed Chairman Ben Bernanke. “Providing our central bank with a clear and explicit focus on keeping inflation low will serve America better than the broader mandate approach we have today.”

Corker’s statement said he questioned Bernanke “on recent actions by the Fed.”...

----
Corker says the Fed's dual mandate makes it "bipolar". That is exactly what Ben Bernanke is suffering from: bipolar disorder.  One symptom of a manic episode per Wikipedia:
sufferers may go on spending sprees...
----
discussion:

ZeroHedge.com:
Bob Corker Joins Chorus Seeking End To Fed's Mandate Seeking Maximum Employment -- Bob Corker has just come out with a statement urging a change to the Fed's mandate, removing the entire "maximum employment" clause. This is possibly the biggest news for the Fed since 1977, and would effectively end the Fed's supreme reign over the US economy, as Bernanke will no longer have the fall back of keeping rates at zero just to get unemployment back to some imaginary number...
----
David Goldman / Inner Workings:
Deflation As the World Rebuffs the Fed -- 
In forty years of watching financing markets, I have seen nothing like the global jeer at the Fed’s proposed quantitative easing–not, in any case, since the US de-linked the dollar from gold in 1971. Even in 1980, when then Fed chairman Paul Volcker returned from the October IMF meeting in Belgrade and pushed the fed funds rate into double digits, criticism of the Fed were muted, and made behind closed doors. Now the German finance minister is calling the Fed “clueless” in the newspapers and the Asians are threatening exchange controls.

In any number of ways, the market is telling the Obama administration that it can’t keep expanding US debt indefinitely. That was the message from the president’s bi-partisan Deficit Commission last week, which called the debt expansion a “cancer.” That was the message from China’s leading rating agencies, which downgraded US debt to A+. That was the message from Moody’s, which threatened to put Treasuries on negative watch and possibly remove their AAA rating. And that was the message from the G20, which threatened to erect exchange controls to keep unwanted dollars out.

QE2 has turned into Titanic One. The Obama administration and the Fed have run into an iceberg. Quantitative easing did no good for the US economy–which means the rest of the world would obtain no benefit from additional exports to the US–but it played hob with markets around the world.

Governments are out of capacity to spend...
----
Bloomberg:
Bernanke's `Cheap Money' Spurs Corporate Investment Outside U.S. -- Southern Copper Corp., a Phoenix- based mining company that boasts some of the industry’s largest copper reserves, plans to invest $800 million this year in projects such as a new smelter and a more efficient natural-gas furnace.

Such spending sounds like just what the Federal Reserve had in mind in 2008 when it cut interest rates to near zero and started buying $1.7 trillion in securities to spur job growth. Yet Southern Copper, which raised $1.5 billion in an April debt offering, will use that money at its mines in Mexico and Peru, not the U.S...

Monday, November 15, 2010

Earth to Bernanke: Please Stop Quantitative Easing (QE 2)

The ground swell of people opposing Ben Bernanke's crazy Quantitative Easing (QE 2) program grows. Today 23 high profile economic and financial leaders wrote an open letter to Bernanke in the Wall Street Journal. They don't want QE 2. The Federal Reserve in responding said, they are "confident that it has the tools to unwind these policies at the appropriate time." Trusting that Ben Bernanke can put the currency debasement/inflation genie back in bottle is not a risk the country can afford to take.

Wall Street Journal:
Open Letter to Ben Bernanke --

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in the Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.” In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.

Cliff Asness
AQR Capital

Michael J. Boskin
Stanford University
Former Chairman, President’s Council of Economic Advisors (George H.W. Bush Administration)

Richard X. Bove
Rochdale Securities

Charles W. Calomiris
Columbia University Graduate School of Business

Jim Chanos
Kynikos Associates

John F. Cogan
Stanford University
Former Associate Director, U.S. Office of Management and Budget (Reagan Administration)

Niall Ferguson
Harvard University
Author, The Ascent of Money: A Financial History of the World

Nicole Gelinas
Manhattan Institute & e21
Author, After the Fall: Saving Capitalism from Wall Street—and Washington

James Grant
Grant’s Interest Rate Observer

Kevin A. Hassett
American Enterprise Institute
Former Senior Economist, Board of Governors of the Federal Reserve

Roger Hertog
The Hertog Foundation

Gregory Hess
Claremont McKenna College

Douglas Holtz-Eakin
Former Director, Congressional Budget Office

Seth Klarman
Baupost Group

William Kristol
Editor, The Weekly Standard

David Malpass
GroPac
Former Deputy Assistant Treasury Secretary (Reagan Administration)

Ronald I. McKinnon
Stanford University

Dan Senor
Council on Foreign Relations
Co-Author, Start-Up Nation: The Story of Israel’s Economic Miracle

Amity Shlaes
Council on Foreign Relations
Author, The Forgotten Man: A New History of the Great Depression

Paul E. Singer
Elliott Associates

John B. Taylor
Stanford University
Former Undersecretary of Treasury for International Affairs (George W. Bush Administration)

Peter J. Wallison
American Enterprise Institute
Former Treasury and White House Counsel (Reagan Administration)

Geoffrey Wood
Cass Business School at City University London

A spokeswoman for the Fed responded:

“As the Chairman has said, the Federal Reserve has Congressionally-mandated objectives to help promote both increased employment and price stability. In light of persistently weak job creation and declining inflation, the Federal Open Market Committee’s recent actions reflect those mandates. The Federal Reserve will regularly review its program in light of incoming information and is prepared to make adjustments as necessary. The Federal Reserve is committed to both parts of its dual mandate and will take all measures to keep inflation low and stable as well as promote growth in employment. In particular, the Fed has made all necessary preparations and is confident that it has the tools to unwind these policies at the appropriate time. The Chairman has also noted that the Federal Reserve does not believe it can solve the economy’s problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators, and the private sector.”
-----
Reuters:
Lacker says Fed's new easing push too risky -- Richmond Federal Reserve President Jeffrey Lacker indicated on Sunday he opposed the central bank's new round of monetary easing, saying he believed the policy was potentially dangerous and likely ineffective...
----
Wall Street Journal:
Fresh Attack on Fed Move -- The Federal Reserve's latest attempt to boost the U.S. economy is coming under fire from Republican economists and politicians, threatening to yank the central bank deeper into partisan politics.

A group of prominent Republican-leaning economists, coordinating with Republican lawmakers and political strategists, is launching a campaign this week calling on Fed Chairman Ben Bernanke to drop his plan to buy $600 billion in additional U.S. Treasury bonds...
discussion:
Jennifer Rubin / Commentary:   RE: A Significant Letter
Jon Talton / Seattle Times:   Checking out the Fed bashers
Doug Brady / Conservatives4Palin.com:  More Evidence Governor Palin Is Correct About Rising Food Prices …
Myglesias / Yglesias:  Monetary Mysteries  —  A bunch of conservative economists …
Lew Rockwell / LewRockwell.com Blog:   Mises-Hayek-Hazlitt-Rothbard- Ron Paul
Economics Policies for the 21st Century:   An Open Letter to Ben Bernanke
John McCormack / Weekly Standard:   Conservatives vs. the Fed
Jessica Pressler / New York Magazine:   Republicans Plan Defeat of Successful Stimulus Plan
Kevin Drum / Mother Jones:   “Outspoken and Unified" 
ZeroHedge: 22 Luminaries (And Dick Bove) Sign Open Letter To Fed Demanding End Of QE2
James Pethokoukis:  Bernanke probably agrees with the anti-QE2 letter
----
Inflation is not coming, it's already here!

CNBC.com:
Secret Walmart Survey Shows Inflation Already Here -- There might not have been a second round of quantitative easing, if Federal Reserve Chairman Ben Bernanke shopped at Walmart.

A new pricing survey of products sold at the world’s largest retailer showed a 0.6 percent price increase in just the last two months, according to MKM Partners. At that rate, prices would be close to four percent higher a year from now, double the Fed’s mandate...
----
BusinessWire.com:
DHL Express U.S. Announces 2011 Rate Increases -- DHL, the world’s leading logistics company, today announced a general average price increase of 5.9% for its U.S. export and import services...

DHL Express U.S. adjusts its prices annually, taking into account inflation and the rising network costs of providing air express services. The general average price increase applies to all customer accounts where contracts allow...

Saturday, November 13, 2010

The Quantitative Easing Explained

The Ben Ber-nank will blow us all up.



via Washington's Blog

discussion
:

YouTube.com
Quantitative Easing Explained -- highest rated comment by Manofbegging:
The federal reserve is a crime syndicate. RISE UP!
----
ZeroHedge:
Quatitative Easing Explained --

----
Dealbreaker.com:
Quantitative Easing Explained By Furry Animals --  
How come MSM can't understand this?
related:
xtranormal.com:  Local Trader
----
Rants and Reason blog:
Quantitative Easing Explained, or in other words: “The Fed is f**king awful!!”
----
Truth is Treason blog:
Quantitative Easing Explained & the Ben Ber-Nank --
... This is a must-watch. Period.
----
Inside the mind of the currency debaser Ber-nank.

FederalReserve.gov
Ben Bernanke's "Printing Press" Speech November 21, 2002 -- Deflation: Making Sure "It" Doesn't Happen Here
... the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior)...

Friday, November 12, 2010

Screwing America: Ben Bernanke, Federal Reserve and Rocket Dockets

Nassim "Black Swan" Taleb slaps down pointed headed academics like Bernanke, who is determined to blow up the US dollar and bring down the US economy.



Zero Hedge:
Taleb's thoughts on Bernanke and the Fed:

"It seems to me, from what I see, that these people [Bernanke] do not understand risk.”“Did [Bernanke] see the crisis? Did he see the accumulation of hidden risk in the system? No. He was flying the plane and he crashed the plane…"

"[Bernanke] underestimated risk. He is sort of risk-blind from his analysis of the situation before the crisis when he deemed it was the right moderation."

"[Bernanke] reminds me of LTCM people. They had brilliant people with great academic records and they blew up the fund and almost blew up Wall Street….So here we have a symptom that you notice in economic academia of the use of the wrong tools that underestimate risk. I don’t mind someone saying this is a policy, these are the risks, these are the returns, let’s see how it works. Bernanke does not seem to be taking that approach. He is someone who talks about returns without talking about risk. It’s identical to a pilot who is talking about speed -- not talking about safety. The measures he is using, this quantitative easing, may work but should it fail the risks are humongous.”

Taleb on what he believes the Fed should be doing instead:

"It’s not a Fed problem, it’s a deficit problem."

"People want a free lunch. It reminds me of people who lose money in the market and when I was an option trader, people would call me up and ask for a magic way to make their money back. That’s what the Obama team is doing. Instead of accepting that we have a risk problem, we have lost money, and you don’t double up with future generation’s money either by increasing deficits and or debasing the currency. You have to face the saying that there is no free lunch."

“The main problem was risk in the system. You cannot solve a risk problem by risky methods. You have to accept…We’re forcing the Greeks to reduce; ok you spent money you didn’t have; now you’re going to cut down. We're going to have to face the same thing. And you’re going to take pain, it’s painful, but that's life."

"The Fed's business should be price stability; unfortunately their business seems to be price instability."
related:
Chris Martenson / TheStreet:
QE2 Has Lit the Fuse -- QE2 has been described by several major trading partners as "clueless," "abusive," "absurd," and even resulted in a lecture from Greece on the subject of printing. By the time you are getting lectured by Greece on monetary actions it might be time for a bit of self-reflection...

CNN:
Bernanke's worst nightmare: Ron Paul -- His harshest critic on Capitol Hill, Rep. Ron Paul of Texas, is about to become one of his overseers...

Bloomberg Businessweek:
Why Oil Could Top $100 a Barrel -- The weakening dollar could trigger a steady rise in the price of crude, sending it over $100 next year
----
The Fed is allowing the big banks to game their system of buying Treasury bonds as part of its Quantitative Easing (QE 2) policy. This lets the Wall Street insiders reap billions in profits at the taxpayers expense.
Zero Hedge:
Is QE2 A Stealthy $90 Billion Gifting Scheme To The Primary Dealers? -- the Fed is effectively allowing PDs [Primary Dealers] to pocket a huge bid/offer spread, which assuming a total size of ~$800 billion (low estimate) of all USTs bought over the (initial) life of QE2, aka QE2.5 and higher pre-extensions, amounts to $50 billion over the next 8 months. Since the money paid out is certainly not that of Brian Sack, but of the US taxpayers, to which the FRBNY [Federal Reserve Bank of NY] has repeatedly demonstrated it has no fiduciary obligation, one can see why it is prudent to ask just how much leakage is occurring as the Fed is monetizing. Surely the Chairman can see why at a time when Wall Street is about to pocket $150 billion in bonuses, America can be a little concerned with the possibility that QE2 in addition to being a blatant debt monetization scheme, is also a direct taxpayer funding mechanism to the Primary Dealers. We hope Congressman Paul will demand an answer to the these questions at first opportunity...
----
Rocket Dockets are the fast track to covering up massive bank fraud.

Matt Taibbi / Rolling Stone:
Courts Helping Banks Screw Over Homeowners -- Retired judges are rushing through complex cases to speed foreclosures in Florida

The rocket docket wasn't created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed. One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 cases per hour. Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes...

Tuesday, November 9, 2010

Knock, Knock, Knocking on Ben Bernanke

Items of Interest:

Larry Kudlow / Real Clear Markets:
The World Revolts Against Bernanke's QEII -- The great Bernanke QE2 debate continues to heat up. In the run-up to the G-20 meetings, China, Russia, Germany, and others are all coming out against the Federal Reserve's quantitative-easing agenda. They don't want hot-money excess dollars to flow into their higher-yielding currencies.

The assault against Bernanke's easy money has reached such fever that President Obama felt it necessary to defend the $600 billion in new-money printing in a news conference in India.

Meanwhile, World Bank president Robert Zoellick has actually called for putting gold back into global money...

And then there's Kevin Warsh's opus op-ed in Monday's Wall Street Journal. I have written about Warsh in the past, and his sound-thinking views. Taking a bit of a shot at Bernanke's QE2, the Fed board member basically says: Look, you want better growth, reform the tax code and stop regulating. "The Federal Reserve is not a repair shop for broken fiscal, trade, or regulatory policies," he writes.

But in the key part of his op-ed, Warsh calls for a strictly limited QE2, not an open-ended commitment...

related:
CBN.com:
Fed's $600 Billion Move Sparks Global Backlash
ZeroHedge:
Mark Fisher Slams Bernanke: "QE Is Going To End Bad...This Is Going To Be The Bubble Of All Bubbles"
ZeroHedge:
Betting On An Infinite Bernanke Put? Not So Fast, Says Fed Governor Kevin Warsh
----
David Goldman / Inner Workings:
Volcker Says QE2 Won’t Help (Make Him Economic Czar!) -- A couple of weeks ago, Larry Kudlow asked me on his TV show whom I would pick to replace Larry Summer. It took a millisecond to respond, “Paul Volcker!” And I was pleased to see the AP report that he doesn’t believe that Fed bond purchases will help the economy...
-----
Alan Meltzer / WSJ Editorial:
Milton Friedman vs. the Fed -- The Nobel laureate would never have endorsed increasing inflation to stimulate the economy...

John Taylor [Stanford Univ. / Hoover Institute] / Economics One blog::
Empirical Questions About the Anticipation Effects of QE2 -- No doubt there will be many empirical studies evaluating the impact of the Fed’s November 3 decision to begin another dose of quantitative easing (QE2). Ben Bernanke gave his first assessment of the impact of QE2 in an op-ed yesterday in the Washington Post. He argued that QE2 started working even before the decision on November 3...

In any case these interest rate and stock price data raise doubts about the narrative that long-term interest rates fell and stock prices rose in anticipation of QE2.

----
via John Tayor / Grant's Interest Rate Observer
-----
Robert Costa / National Review:
Palin to Bernanke: ‘Cease and Desist’  -- On Monday, in a keynote address at a trade-association convention in Phoenix, Palin will urge Fed chairman Ben Bernanke to “cease and desist” his “pump priming.” The United States, she says, “shouldn’t be playing around with inflation.”

Here are snippets from Palin’s prepared remarks obtained by National Review Online:
I’m deeply concerned about the Federal Reserve’s plans to buy up anywhere from $600 billion to as much as $1 trillion of government securities. The technical term for it is “quantitative easing.” It means our government is pumping money into the banking system by buying up treasury bonds. And where, you may ask, are we getting the money to pay for all this? We’re printing it out of thin air...
----
discussion:
Sudeep Reddy / Real Time Economics:   Sarah Palin's QE2 Criticism Includes Inflation Hyperbole
New York Sun:   Palin v. Bernanke
Andy Barr / The Politico:   Sarah Palin knocks Fed move
Doug Brady / Conservatives4Palin.com:   QE2: That 70s Show Redux? …
Jared A. Favole / Washington Wire:   Palin Takes on Bernanke
Alexander Mooney / CNN:   Palin's new target: Bernanke
First Read / msnbc.com:   GOP watch: A ‘missed opportunity’
----
Huffington Post:
'Ben Bashing' Begins As Sarah Palin, Newt Gingrich Take On Bernanke -- Ben Bashing has begun, and this time it's not a fringe issue, but a central focus of our frightened, blame-spreading Great Recession politics.

At this point in America, you can tell when a new Enemy of the People has arrived: when Sarah Palin and Newt Gingrich race onto Twitter to denounce him.

They've now done that to Ben Bernanke, and the whole flock of Republican presidential wannabes is sure to follow...
----- 
Crazy:
"One person who can create $600 billion with the stroke of a pen... Inflation is taxation without representation..."-- Ron Paul

Friday, November 5, 2010

Celebrating 100 Years of Federal Reserve Power and Dollar Devaluation

Items of Interest:

The 100 year anniversary of the founding of the Federal Reserve is being celebrated at Jekyll Island, Georgia this weekend. The first Fed meeting in 1910 was a secret gathering of bankster conspirators and Washington insiders. They formulated a conspiracy to grab the financial cojones of the United States. Their evil conspiracy came to fruition in 1913, when Congress passed the Federal Reserve Act. It's been downhill for the dollar ever since then.

The dollar has dropped in value so it is now worth 4 cents and dropping in 2010, compared to 1913. In other words, the 1913 dollar was worth more than $25 in current dollars. Thank you very much.

old grocery prices, 1940s, Lincoln Nebraska
Grand Grocery Company. Lincoln, Nebraska, 1942.
----
International Business Times:
Fed returns to Jekyll Island -- Federal Reserve officials, including chairman Ben Bernanke, are going to Jekyll Island in Georgia this weekend to commemorate the 100th birthday of the Federal Reserve. This event, called "A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve," is hosted by the Federal Reserve of Atlanta...

Contrastingly, the November 1910 Jekyll Island meeting that gave birth to the Federal Reserve was shrouded in secrecy. According to author Edward Griffin, Forbes founder Bertie Charles Forbes said the event was so secret that the full names of the attendees were not mentioned once. Attendees of this "most secret expedition in the history of American finance" reportedly included the powerful Senator Nelson Aldrich and several leading bankers of the time...
----
Not just crackpot bloggers are calling the Fed names. The German finance minister calls Bernanke's QE 2 policy "clueless".

Irish Times:
US Federal Reserve's $600bn stimulus doomed to failure, says German minister -- The US Federal Reserve’s $600 billion injection is “dismal”, “clueless” and doomed to failure, according to German finance minister Wolfgang Schäuble.

In unusually sharp language, Mr Schäuble said Washington was mistaken to pump further billions into the US economy in the hope that it would encourage growth.

“With all due respect, my impression is that the US is at a loss as to what to do,” said Mr Schäuble.

“This isn’t about a liquidity shortage, so to say ‘we’ll throw $600 billion at it’, won’t solve the problem.” He found sharp words, too, over the ongoing currency unrest between the US and China.

Washington has accused Beijing of keeping the value of its yuan artificially low to help exports, but Mr Schäuble accused Washington of “pursuing the same goal with different instruments”...
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NY Times:
Fed Chief Defends Action in Face of Criticism -- The Federal Reserve chairman, Ben S. Bernanke, on Friday defended the central bank’s decision to inject $600 billion into the American economy, in the face of objections from European and Asian officials about the weakening of the dollar that is likely to result from the action...
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more discussion:
Robert Kuttner / Boston Globe:
Cheap Money Will Not Save the Economy

ZeroHedge:
How Ben Bernanke Sentenced The Poorest 20% Of The Population To A Cold, Hungry Winter

Jeremy Warner / Daily Telegraph:
The Age of the Dollar Drawing to a Close

Campbell Harvey /  TheStreet:
Why the Fed's QE2 Won't - and Can't - Work

Colin Barr, Fortune:
Bernanke Is Soft-Pedaling Quantitative Easing Risks

Editorial / Los Angeles Times:
Don't Blame Ben Bernanke, Blame Congress 

Sewell Chan / New York Time:
Bernanke Fearing Fate of Japan, Not Greece
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Timeout for Amazing!

Wednesday, November 3, 2010

Glenn Beck Slams the Fed's Quantitative Easing

Ben Bernanke's announcement today of $600 billion of QE 2 (money printing) sparks criticism from many people. Experts from Joseph Stiglitz, the Nobel-winning economist, to Bill Gross, head of the bond-management giant, Pimco, have already predicted it will be either ineffectual or dangerous.

The dollar is in danger of losing 20 percent of its value over the next few years if the Federal Reserve continues unconventional monetary easing, Bill Gross, the manager of the world's largest mutual fund, said on Monday... Reuters
Glenn Beck takes this swipe at the Fed's Ponzi scheme:



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More thoughts about QE 2:

David Goldman / Inner Workings:
Dave’s Top 10 Reasons Why QE Won’t Help the Economy' --
[...]
3. Inflation, as even the Fed will admit, helps some people and hurts others. The idea is that it will help more people than it hurts by forcing investors to buy real assets. The kind of inflation that QE is likely to cause will have an almost entirely damaging impacta on the US. In fact, the devaluation of the dollar and the rise in raw materials prices will hurt every American household and most American businesses; it will benefit Middle East oil producers, Vladimir Putin, Aussie mining companies, and all sorts of people who don’t live in the United States.
[...]
1. It undermines the dollar’s world reserve currency role. That’s why gold keeps going up. If the US were Greece or Ireland, we’d be in front of the International Monetary Fund in sackcloth and ashes right now. But we’re the world’s only superpower, and the central banks of the rest of the world have to hold their reserves in dollars. Why? Because there isn’t enough of anything else (unless the price of gold were to go to $10,000 an ounce, which I doubt) and because they hate each other more than they hate us — at least for the moment. With Obama shrinking America’s strategic footprint and the Fed behaving like the neighbor whose septic tank overflows onto everyone else’s lawn, Washington is testing the world’s patience. It will have consequences.
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Brad DeLong / Grasping Reality with Both Hands:
The Mountain Labored, and Gave Birth to a Mouse  —  The Federal Reserve says: … Greg Robb: … The five-year note carries an interest rate of 1.17% per year.  The Federal Reserve is thus changing the supply of assets by taking onto its own balance sheet... wait for it... wait for it …
discussion:
Paul Krugman:   QE2 Meh ...
Board of Governors of the Federal Reserve System:
For immediate release  — Press Release 
discussion:

Sudeep Reddy / Real Time Economics:   Q&A on QE2: What a Fed Move Would Mean
Ira Stoll / The Future of Capitalism:   The Fed Buys TIPS
Elizabeth Shell / Online NewsHour:   Fed to Engage in Second Round of Quantitative Easing
Daniel Indiviglio / The Atlantic Online:   Fed To Purchase $600 Billion in Treasuries
Pete Davis / Capital Gains and Games blogs:   QE2, Good Or Bad?  —  No, it's not the ocean liner.
Calculated Risk:   Comments on FOMC statement
New York Times:
Fed to Spend $600 Billion to Speed Up Recovery
discussion:
Wall Street Journal:
Fed to Buy $600 Billion of Treasurys
discussion:
Jeff Dunetz / YID With LID:   The Fed's $600 Billion Dollar Plan For Economic Suicide

Monday, November 1, 2010

Future of US Debt Problems

Item of Interest:

Citizens Against Government Waste / cagw.org:
CAGW Launches New Nationwide Ad Campaign -- On October 21, 2010, Citizens Against Government Waste (CAGW) unveiled a national ad addressing our country’s spending addiction, the dangers of relentless deficits, and the corrosive nature of our national debt.

This new ad, which features a chilling look at one potential future scenario if America continues on its current destructive fiscal trajectory, is a 2010 homage to “The Deficit Trials,” a 1986 ad that was produced by W.R. Grace & Co. For those who were able to view it, the ad caused a sensation; it was considered so controversial at the time that the networks refused to run it...

The new ad is part of an ongoing communications program in CAGW’s decades-long fight against wasteful government spending, increased taxes, out-of-control deficit spending, and a crippling national debt that threatens the future and survival of our country.


discussion:
James Fallows / The Atlantic Online: 
The Phenomenal ‘Chinese Professor’ Ad  —  Via Ben Smith of Politico, this amazing ad from “Citizens Against Government Waste,” which is the first spot from this campaign season you can imagine people actually remembering a decade from now.  “I'm not a witch” might be remembered as a novelty …

more:
Ben Smith / Ben Smith's Blog:   Behind the ‘Chinese Professor’
Dan Amira / New York Magazine:   Is This Really the Best Political Ad This Year?
Andrew Zarowny / Right Pundits:   New TV Ad - China Owns America! (Video)
Warner Todd Huston / Publius Forum:   As The Chinese Laugh at America, the Failed Nation...
Emi Kolawole / Washington Post:   Ad: China's going to take us over (Updated)
ZeroHedge: CHINA’S CREATIVE ACCOUNTING: USING DEBT AS A TOOL FOR ECONOMIC DEVELOPMENT

Calculated Risk

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Paul Krugman - NY Times

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