Do the Opposite of Ben Bernanke
Fed Chairman Ben Bernanke gave testimony to the U.S. House Budget Committee a couple of days ago. His preposterous statements seemed to go unquestioned by the Committee. So, I am going to tackle the highlights, ask a few questions and make several statements of my own that I think should have been made by our Congressmen.
First up, this statement, “On the inflation front, recent data continue to show a subdued rate of increase in consumer prices. For the three months ended in April, the price index for personal consumption expenditures rose at an annual rate of just 1/2 percent, as energy prices declined and the index excluding food and energy rose at an annual rate of about 1 percent.” One percent inflation is a joke! The government computes inflation using gimmicks that make it look lower than what we in the real world experience. According to Shadowstats.com, if inflation was computed the way the government did it in 1980, the “real” inflation would be about 9.5 %.
Bernanke spoke on the outrageous bonuses and pay packages of the bailed out bankers. Here’s what he said, “We will be pushing the banks to move as quickly as possible to restructure their compensation packages so that they will not be engendering excessive risk-taking. So we will be doing that very quickly.” Quickly? What the hell have you been doing Mr. Bernanke? The financial meltdown was caused by greedy incompetent bankers two years ago! Last year, this group of weasels paid themselves nearly $20 billion in bonuses! At the time, Obama called it “shameful.” Now you are going to crack down on compensation? It’s about time!
Here’s something that shocked me coming from the man who is in charge of the nation’s more than 8,000 ton gold supply. Bernanke said, “Gold is out there doing something different from the rest of the commodity group. I don’t fully understand the movements in the gold price, but I do think that there’s a great deal of uncertainty and anxiety in financial markets right now. Some people believe that holding gold will be a hedge against the fact that they view many other investments as being risky and hard to predict at this point.” Gold is money! Every dollar you print to bail out your banking buddies around the globe makes gold shine that much brighter.
Bernanke is the cheerleader in chief when it comes to the recovery story. The Fed Chief said, “It appears to us that the recovery has made an important transition from being supported primarily by inventory dynamics and by fiscal policy toward recovery being led now more by private final demand, including consumer spending. That is encouraging in terms of the sustainability.” This from the guy that said housing was not in a bubble. When housing started to crack, he said it would be “contained.” Bernanke did not see the financial meltdown coming either and fought against regulation of toxic derivatives. He should be fired for missing any one of these, but he missed them all and still got to keep his job. Bernanke is the ultimate contrary indicator. Do exactly opposite of what he says. Earlier this week, fund manager Peter Schiff said, “Back in 1931, two full years after the Crash of 1929, there were still very few people who thought that the recession then underway would one day be called the Great Depression. Increased spending, financed by unprecedented borrowing, will prove to be just as temporary as a US census job (unless, in the name of stimulus, Obama decides to make “people counting” a permanent function of the US government.). When the bills come due, the next leg down will be even more severe than the last.” (Click here to read the rest of Schiff’s comments.)
Bernanke thinks the European debt crisis is just about over. He said, “The actions taken by European leaders represent a firm commitment to resolve the prevailing stresses and restore market confidence and stability. If markets continue to stabilize, then the effects of the crisis on economic growth in the United States seem likely to be modest.” Renowned investor George Soros sees just the opposite. This past week, he said, Europe’s financial troubles have “just entered Act II”of the crisis. Soros also said, “The collapse of the financial system as we know it is real, and the crisis is far from over.” (Click here to read the Soros story.)
Finally, the Fed Chairman took time to warn that America must get its financial house in order. He said, “Achieving long-term fiscal sustainability will be difficult. But unless we as a nation make a strong commitment to fiscal responsibility, in the longer run, we will have neither financial stability nor healthy economic growth.” It really takes enormous balls to tell Congress to be responsible! The Fed has been saving failed banks with trillions of dollars printed out of thin air. Both foreign and domestic financial institutions have benefited from the secret bailouts. The country is totally in the dark about what banks got bailed out and how much we gave them. The Fed has not been audited since it was started in 1913. Ben Bernanke thinks America is supposed to get its financial house in order when taxpayers can’t even peek though the window to see what the Fed is doing in its house. This was some rich testimony delivered by Ben Bernanke. (Click here for the complete testimony.)
Greg, Great article. Thanks for shinning the bright light of TRUTH in the wicked corrupt darkness of our FED chairman.
What scares me is Bernanke’s Dollar Swaps with the ECB and other foreign Central Banks and the Fed being the buyer of last resort for US Treasuries through proxies. Basically, the US taxpayer through Bernanke’s Fed is swapping dollars for other central banks currency because of a shortage. A shortage in dollars would normally cause the dollar to rise against the other currencies but the Fed is printing massive amounts of dollars and loaning it or giving it to institutions that may not be able to pay it back.
In an article from Jan 2009 in the WSJ, the amount was HALF a TRILLION DOLLARS then.
Greg, can you advise why we are propping up the euro? Keynesian economic models spending your way out of a depression but if you look at 1929 to the start of WWII, it doesn’t look like it works. Not to mention that the US Government had a budget surplus at the start of the depression. Why is Bernanke raping the US taxpayer and transferring wealth out of the middle class to foreigners?
Does anyone really believe that US households are buying all the US Treasuries that the Fed reports under “Other”? In short, the Fed is manipulating the price of gold, destroying the wealth of our citizens and government and paying out its buddies. No wonder Bernanke got reappointed.
TIME magazine man of the year?? What a joke..Thats why I subscribe to sites such as this one to stay informed instead of TIME. Thanks Greg
Hey Greg …. I’ll go you one better …. take what Bernanke says and divide it by 17 … then do the opposite. He is a joke, but because of his position, he is not funny. Keep up the good work.
Great article as usual. Too bad that most of the citizenry of this country are blind and deaf to these facts!
I could be wrong of course, but in reference to a question above by another poster (“Why is Bernanke raping the U.S. Taxpayer and transferring wealth out of the middle class to foreigners”)? This seems to be in lock-step with Obamas statement to Joe the Plumber about “spreading the wealth around”. Obama didn’t say he was going to spread it around to only U.S. citizens. Furthermore, I believe it to be right in line with Communism, i.e., you have the ‘elite’ party members, and the ‘serfs’ at the bottom, all taxed out, supporting the party. No middle class allowed!
Ben Bernanke is in a job where you have to be a professional lier. His predecessor lied for years. ALL the policies of Greenspan were followed by Bernanke. He and Larry Summers and Tim Geithner have the”Working
Group on Financial Markets”, in the markets everyday since 1988. The Working Group on Financial Markets was signed by R. Reagan on March 18, 1988, Executive Order 12631. Under their stewardship today, The Working Group on Financial Markets also called the Plunge Protection Team are rigging the markets everyday! The markets are rigged , they do anything they please. Ben Bernanke is a lier. The markets are manipulated 24/7. Please go to Executive Order 12631 and read the document!
I’ve looked at alot of graphs and charts about the economy and economic trends lately, and a few things stand out.
The traditional fiscal tools that have historically been used to stimulate the economy have become dull like an overused chisel. The “bang for the buck” of tools like tax cuts and deficit spending seem to be bound by the law of diminishing returns. Every time they are used, they have less of an effect for a shorter period of time. For example, the Bush tax cuts did nothing to alter the downward trend of workers’ wages; check out the BLS monthly report on median real wages. Along the way, you can detect a truly insane trend, the change in the concentration of wealth after each recession. Compare the Gini Coefficient, a century old measure of wealth concentration, before and after recent recessions; it puts the U.S. in the same league with Brazil, Mexico, and China. The fifty years following the onset of the Great Depression saw a downward trend in the Gini Coefficient of the U.S., i.e. a decline in the concentration of the nation’s wealth. That trend has reversed in the last three decades, and the current coefficient is higher than in 1929. Is it coincidence that the lowest reported coefficient, i.e. lowest concentration of wealth, occured in 1968, just four years before the BLS wage reports that American workers achieved their highest median real wages? The bottom line here is that the wage trend is moving in the opposite direction of the wealth concentration trend. The rising tide doesn’t lift all boats.
Our economy is addicted to stimulus programs. The Bush tax cuts are 10 years old. The Greenspan interest rate cuts are likewise a decade old. The last time we had a (nominally) balanced budget was at the end of the last century. We’ve been somewhat at war for almost a decade. All of those are supposed to be incredibly stimulative, but the economy has sputtered while begging for more incentives. One can’t help but notice a growing number of business are in the business of extorting government hand outs at all levels, from property tax waivers and sales tax kick backs to special tax breaks written into the tax code under cover of unrelated legislation. Check out what the Constitution says about bills of attainder.
We no longer honor our promises. The FDIC is virtually broke, so just how good is the insurance on our deposits? The PBGC is way under water; will those people thrust into its clutches by such events as the United Airlines bankruptcy filing really get their meager payouts? We raised the Social Security withholding rates on baby boomers under Reagan, claiming the boomers had to prepay their own benefits, becaue there are so many of them; now a few people are actually talking about finding ways to reduce those benefits. Why was the last significant effort to keep this program solvent undertaken over 25 years ago? Out of sight, out of mind doesn’t work. It takes constant monitoring and tweaking to keep these institutions that people were promised would be there up and working. Social Security requires some work, not a total overhaul; the same cannot be said of Medicare. Medicare is the battleground in the showdown between the medical-industrial complex and the average American’s fiscal sustainability.
We are, or at least were, addicted to debt. I view credit and debt as useful but dangerous tools to be used sparingly and with great caution. My parents grew up during the Depression and passed that ethic down to me, thank God. Anyone who considers debt to be an acceptable permanent condition is a fool, and there are alot of fools around. Even as wages trended down from their peak in 1972 (again, check out the BLS median real wages), we continued to increase our spending by making up the difference with credit. Every time two trends that should be coincident diverge, you have a bubble environment. We have experienced a series of bubbles over the last three or four decades, in part because the watchers/managers were off busily devouring costs/jobs that restrained their profits. Inevitably, we want to point the finger at someone to blame; the truth is the blame is as pervasive as the oily sludge that will pollute beaches of the gulf coast for the next several decades. Remember, it takes two to dance, the lender AND the borrower. Even Oddyseus had to be tied up lest he succumb to the Sirens’ song. Eventually the spending trend line will return a level where it is nearly coincident with the wages trend line; we aren’t there yet, so the pain is not yet over.
Economic Forecasts from Federal Reserve Chairman Ben Bernanke 2007 & 2008
May 17, 2007: “The effects of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy, or to the financial system.”
July 18, 2007: “If energy prices level off as currently anticipated, overall inflation should slow to a pace close to that of core inflation in coming quarters.”
October 15, 2007: “The banking system is healthy… Rather than becoming more crisis-prone, the financial system is likely to emerge from this episode healthier and more stable than before.”
November 8, 2007: “We have not calculated the probability of a recession. Our assessment is for slower growth, but positive growth going into next year. We think that by the spring, early next year, that, as these credit problems resolve and as, we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.”
January 10, 2008: “Thus, notwithstanding the effects of multi-billion dollar write-downs on the earnings and share prices of some large institutions, the banking system remains sound… The Federal Reserve is not currently forecasting a recession.”
February 27, 2008: “The central tendency of the projections is for the real GDP to grow between 1.3 percent and 2.0 percent in 2008.”
April 2, 2008: “Monetary and fiscal politics are in train that should support a return to growth in the second half of this year and next year.”
June 3, 2008: “We may see somewhat better economic conditions during the second half of 2008, reflecting the effects of monetary and fiscal stimulus, reduced drag from residential construction, further progress in the repair of financial and credit markets, and still solid demand from abroad. This baseline forecast is consistent with our recently released projections, which also see growth picking up further in 2009. Futures markets continue to predict that commodity prices will level out.”
July 15, 2008: “Growth is projected to pick up gradually over the next two years as residential construction bottoms out and begins a slow recovery and as credit conditions gradually improve.”
September 24, 2008: “Over time, a number of factors should promote the return of our economy to higher levels of employment and sustainable growth with price stability, including the stimulus being provided by monetary policy, lower oil and commodity prices, increasing stability in the mortgage and housing markets, and the natural recuperative powers of our economy.”
I think it is hilarious, well not funny that the Fed head says he doesn’t understand the rise in the price of gold. He does know, but can’t say because the fear it would create, and the power him and his cronies would lose controlling our money. It is amazing how dumbed down our society is and how manipulated we are. I know there games will not stop until forced too. After all they have unlimited power to create money until people take it away from them. Talk about modern day Serdom! Lets talk about that on any of the news networks. NOT!!!!!
Thanks for the read,
Concerned Patriot Chris
I would like ten minutes alone in a room with that smug SOB to wipe that smirk off of his face.
Last weekend I got into a dispute with a friend of mine over Bernanke and the Fed. He (my friend) is very successful in his profession and I thought well informed until this conversation. He said Bernanke was doing a great job and should be applauded. I nearly spit my drink out right there and asked him if he even knew what the Fed was. He clearly did not so I presented only facts and he laughed me off calling me a “conspiracy theorist”. I nearly fell over at this accusation as I make it a point to only present facts in my argument but he was not interested in hearing the truth.
My point is that even the most intelligent people you know have been trained to think the Fed is necessary and even a good part of our economic system. What is it going to take for these sheeple to wake up?