Bernanke Lies: The Fed IS Printing Money
by ilene - December 13th, 2010 8:25 pm
Courtesy of Jr. Deputy Accountant who confirms that which we may suspect, semantics aside, "Bernanke Lies: The Fed IS Printing Money." – Ilene
In March of 2009 when Ben Bernanke first appeared on 60 Minutes, he was bold enough to admit that the Fed was effectively printing money. Those balls are long gone (maybe they got caught in the printing press) and he’s back to lying through his beard in the hopes that we’re all too stupid to notice.
"One myth that’s out there is that what we’re doing is printing money. We’re not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way. What we’re doing is lowing interest rates by buying Treasury securities. And by lowering interest rates, we hope to stimulate the economy to grow faster. So, the trick is to find the appropriate moment when to begin to unwind this policy. And that’s what we’re gonna do."
Oh yeah? Is that your final answer?
I beg to differ, Mr Chairman. Please consult the Fed’s latest balance sheet for more details:
Perhaps ole JDA is losing it and has lost the ability to add zeroes correctly but if I’m reading that right, our friends at the Fed printed $3,738,000,000 in a week and has printed $55,134,000,000 in new money since December 2, 2009.
I remind dear reader that footnote 16 which follows "Currency in circulation" disclaims that number as "estimated". So it could be more, it could be less. Knowing those lying rat b*st**ds at the Fed, that number is way undershot but hey, what do I know?
Is that right? Maybe we should go back a few more balance sheets just to make sure. Let’s see how much they’ve been printing, shall we?
November 18th, 2010: $2,575,000,000
November 12, 2010: $6,209,000,000 (wow, busy week for Zimbabwe Ben!)
November 4, 2010: $3,385,000,000
Oh look! Finally! A week with fewer dollars! Good for them!
October 28, 2010: -$378,000,000
If that’s not printing money, I don’t know what is. Go, Zimbabwe Ben, go!!
Facebook
Twitter
LinkedIn 
del.icio.us
DiggGIVING NEW MEANING TO “HERDING INVESTORS”
by ilene - November 2nd, 2010 2:55 pm
GIVING NEW MEANING TO “HERDING INVESTORS”
Courtesy of The Pragmatic Capitalist
We all know the Federal Reserve is trying to herd
“A former hedge-fund manager who made a fortune shorting stocks has switched to the long side, and is raking in money in the process.
William von Mueffling surprised clients and competitors last June by announcing he would close his hedge funds and return $3.5 billion to investors. His firm, Cantillon Capital Management of New York, kept managing $1 billion in long-only assets, typically considered the unsexy piece of the business.
Now, the 42-year-old stock picker controls more money than he did before he closed his hedge funds. Cantillon has raised billions of dollars from pension funds in the U.S. and abroad, and from sovereign-wealth investors, according to clients and other people familiar with the matter.”
Von Mueffling couldn’t justify running the short end of the book as the Fed was priming the pump:
“After years of “long-short” investing, Mr. von Mueffling and his analysts and traders no longer short, or bet against, stocks at all. Instead, like a typical stock mutual fund, they stick to buying company shares they expect will rise. Mr. von Mueffling said the strategy is “the right long-term decision.”
“I’m not saying there aren’t overvalued stocks out there,” he said in an interview. “There are, but trying to short them when the government is printing money is a very, very challenging game,” he said, referring to, among other things, Federal Reserve programs to buy government bonds, which the Fed is widely expected to announce this week.”
That gives new meaning to “herding investors”. I think sellers play an important role in the price discovery process. After all, when the fundamentals of an asset are consistently in disequilibrium with its current valuation it makes the system that much more unstable. Selling, and thus lower prices, can actually make the system more stable in the long-term. This is just one more sign that nothing has really changed since the Greenspan Fed ended. And that was a Fed run by a man who admitted that his model was flawed….
QE2 Won’t Save Our Sinking Ship
by ilene - October 18th, 2010 4:03 pm
Randall’s portrayal of Ben Bernanke’s thinking reminds me of a professor I knew who was trying to prove his own version of the Krebs Cycle. He designed experiments that would theoretically prove he was correct, but – strangely – the students in his lab kept failing to achieve the proper results. Rather than changing his theory, he realized that something must have gone wrong in the experiment, and he would have the students do it over, and over, until the right results were obtained. A lot of rats were killed in the process, but no matter--no one really cared about the rats. – Ilene
QE2 Won’t Save Our Sinking Ship
By L. Randall Wray, courtesy of New Deal 2.0
The Fed is between a rock and a hard economic outlook.
Fed Chairman Bernanke is signaling that a second round of quantitative easing will soon begin. In the first round, the Fed’s balance sheet nearly tripled to nearly $2.3 trillion as it bought $1.7 trillion in Treasury securities and mortgage-related securities. Since the Fed appears to want to unwind its position in mortgages, QE2 will probably target federal government debt.
During Japan’s long stagnation, Bernanke was famous for arguing that the Bank of Japan could have done far more to fight deflation. Since the BOJ’s overnight interest rate target was effectively at zero, the conventional policy of lowering its interest rate target was not an option. Hence, Bernanke advocated quantitative, rather than price, activity — the BOJ would purchase assets from banks, driving up their excess reserves, until they would finally make loans to stimulate spending that would reverse the trend of prices.
So when he had the opportunity, he put theory into practice in the US, driving short-term interest rates effectively to zero and filling bank balance sheets with excess reserves by purchasing their assets. So far, the impact has not been significantly different than Japan’s experience. Indeed, Bernanke has been publicly warning of the dangers of a Japanese-style deflation, as US inflation has dropped nearly to zero, well below the Fed’s informal target of two percent.
And so we are now set for round two of QE — more of the same old, same old.
In truth, the Fed has done only two helpful things. First, during the liquidity crisis of 2007 and 2008, it lent reserves to financial institutions that faced a liquidity crisis.…
Has the Fed Painted Itself Into a Corner?
by ilene - October 17th, 2010 5:48 pm
Has the Fed Painted Itself Into a Corner?
Courtesy of Yves Smith
![[unclescrooge.jpg]](http://2.bp.blogspot.com/_azimCSzqNnc/SeGxAUpFFCI/AAAAAAAAA-Q/pthz4rvMbSI/s1600/unclescrooge.jpg)
A couple of articles in the Wall Street Journal, reporting on a conference at the Boston Fed, indicates that some people at the Fed may recognize that the central bank has boxed itself in more than a tad.
The first is on the question of whether the Fed is in a liquidity trap. A lot of people, based on the experience of Japan, argued that resolving and restructuring bad loans was a necessary to avoid a protracted economic malaise after a severe financial crisis. But the Fed has consistently clung to the myth that the financial meltdown of 2007-2008 was a liquidity, not a solvency crisis. So rather than throw its weight behind real financial reform and cleaning up bank balance sheets (which would require admitting the obvious, that its policies prior to the crisis were badly flawed), it instead has treated liquidity as the solution to any and every problem.
Some commentators were concerned when the Fed lowered policy rates below 2%, but there we so many other experiments implemented during the acute phases that this particular shift has been pretty much overlooked. But overly low rates leaves the Fed nowhere to go if demand continues to be slack, as it is now.
Note that the remarks by Chicago Fed president John Evans still hew to conventional forms: the Fed needs to create inflation expectations, and needs to be prepared to overshoot.
This seems to ignore some pretty basic considerations. First, the US is suffering from a great deal of unemployment and excess productive capacity. The idea that inflation fears are going to lead to a resumption of spending (ie anticipatory spending because the value of money will fall in the future) isn’t terribly convincing. Labor didn’t have much bargaining power before the crisis, and it has much less now. Some might content the Fed is already doing a more than adequate job of feeding commodities inflation (although record wheat prices are driven by largely by fundamentals).
From the Wall Street Journal, “Fed’s Evans: U.S. in ‘Bona Fide Liquidity Trap’”:
The Federal Reserve may have to let inflation overshoot levels consistent with price stability as part of a broader attempt to help stimulate the economy, a U.S. central bank official said Saturday.
“The U.S. economy is best described as being in a bona
…
Economic Nonsense from Ezra Klein at the Washington Post
by ilene - October 9th, 2010 12:38 pm
Economic Nonsense from Ezra Klein at the Washington Post
Courtesy of Mish
The only genuinely good news in Friday’s jobs report was the much needed shedding of 159,000 government workers of which only 77,000 were temporary census workers.
Shed another million government workers and you have a small start as to what needs to happen. Some don’t see it that way, including Erza Klein at the Washington Post.
Assuming you are able to stomach still more Keynesian claptrap please consider Welcome to the anti-stimulus
The good news: The private sector gained 64,000 jobs in September. The bad news? The public sector lost 159,000.
The government is now impeding an economic recovery. But it’s not for the reasons you often hear. It’s not because of debt or because of taxes. Nor has it scared the private sector into timidity. It’s because, at the state and local level, it’s firing people. There are more than 14 million Americans looking for work right now — to say nothing of the 9.5 million who have been forced into part-time jobs when they want, and need, full-time work — and the government just added 159,000 more to the pool. Consider this: If we only counted private-sector jobs, we’d have had positive jobs reports for the last nine months. As it is, public-sector losses have wiped out private-sector gains for the past four months.
Because the federal government has decided against backing up state and local governments, the bleeding continues, and that scares businesses away from investing in recovery. We create the stimulus that helped the economy survive 2008 and 2009, and we’ve created the anti-stimulus that’s keeping it from recovering in 2010.
Keynesian Claptrap At Its Finest
Gee, if only the government would hire everyone, there would be no unemployment.
Then again, countless cities, counties, municipalities and states are bankrupt because of absurd levels of spending.
Isn’t that what wrecked Greece?
Non-Solution #1- Raising taxes
Raising taxes burdens ordinary taxpayers for the sole benefit of government bureaucrats who like most of the rest of the population ought to be thankful they have a job at all.
Non-Solution #2 – Printing money and giving it away
Ezra is clearly a fan of printing money and giving it away to government bureaucrats so the unemployment rate does not drop.
However, printing money and giving it away cheapens the US dollar, making goods and services…
FOMC Update: Well I Guess the Fed IS That Stupid After All…
by ilene - August 11th, 2010 5:17 am
FOMC Update: Well I Guess the Fed IS That Stupid After All…
Courtesy of Jr. Deputy Accountant
Last night, I guessed that the FOMC wouldn’t have the guts to do much of anything this time around simply because there is not an agreement on just how bad things are out there. Apparently I was wrong:
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.
My guess is that a lone voice shot down a brand new round of Treasury buying with freshly-printed money (sorry, freshly-printed blips) just for kicks and that this was the best they could agree on without starting a shootout at the conference table.
Ahem:
Voting against the policy was Thomas M. Hoenig, who judges that the economy is recovering modestly, as projected. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and limits the Committee’s ability to adjust policy when needed. In addition, given economic and financial conditions, Mr. Hoenig did not believe that keeping constant the size of the Federal Reserve’s holdings of longer-term securities at their current level was required to support a return to the Committee’s policy objectives.
Hahahaha I’m all for dissent as you all know but not sure where this modest recovery is hiding out, must be cowering under the FOMC table where only they can see it.
Anyway, that’s that.
Gerald Celente on Global Trends – Interview by Bill Meyer
by ilene - April 30th, 2010 2:42 pm
Gerald Celente on Global Trends – Interview by Bill Meyer
Courtesy of Mish
Here are some Gerald Celente quotes from his interview by Bill Meyer on April 26, 2010.
"Median household income is below 1999 levels. What kind of imbecile is out there saying we have to raise taxes to keep things going more?"
"This is a stimulus recovery. They are printing phantom money out of thin air based on nothing, and producing practically nothing. It’s digital money not worth the paper it’s not printed on."
"It’s not only the US by the way, and that’s why I want to make this clear. It’s China, It’s Japan, It’s Indonesia, It’s Australia. It’s the UK and all of Europe."
I do not care for Celente’s views on hyperinflation or the US breaking up, but the 48 minute long interview is interesting.
Gerald Celente Predicts “Crash of 2010″
by ilene - March 23rd, 2010 12:21 am
Gerald Celente Predicts "Crash of 2010"
Courtesy of Mish
Inquiring minds are watching an interview with Gerald Celente who warns about the pending crash of 2010.
Celente: "The crash of 2010 is going to happen as we are forecasting. All the stimulus money from around the world is drying up and what are they going to do for an encore?
We need a productive capacity. You can’t print your way out of this. So whether it’s China, India, the UK, Japan, at some point the stimulus game runs out and the crash happens.
The Federal Reserve or anybody else in the United States Congress isn’t going to stop it from happening. They have Katrina quality rescue skills."
Redoing the Kitchen While the House Burns Down
by ilene - February 17th, 2010 12:50 pm
Redoing the Kitchen While the House Burns Down
Courtesy of JOHN RUBINO of Dollar Collapse
Wall Street Journal columnist Thomas Frank is by far the most interesting part of that paper’s dull gray Op Ed page. Back in January he suggested that the world’s governments smack down those wing-nut gold bugs by selling all the gold in their central bank vaults — a plan that most gold bugs found hilarious, since they doubt that central banks have much gold left to sell.
And last week he explained that our current troubles were due, get this, to a lack of trust in government’s ability to solve our problems. A few excerpts:
Once in office, the strategic thinking went, Democrats could slowly brighten the antigovernment mood by setting up various transparency and accountability programs. And they could turn that frown upside-down simply by doing what Democrats do, namely, by using government to solve big public problems, beginning with the grotesquely expensive health-care system.
But as the drama played out, these clever flanking maneuvers failed. Now it seems unlikely that Democrats will ever get their chance to change the public’s attitude toward government in this indirect way; the antigovernment animus struck first, bringing the health-care debate to an end with a summer of unanswered town-hall protests and a voter revolt in Massachusetts.
Bruised by the backlash, President Barack Obama came before the nation last month to address the problem. “We face a deficit of trust,” Mr. Obama observed in his State of the Union address, “deep and corrosive doubts about how Washington works that have been growing for years.”
But what will the president do to assuage those doubts? In his speech, he mentioned a crackdown on earmarks, implementing government transparency measures, and banning lobbyists from his administration’s high positions. They are all good and necessary reforms, of course. But one suspects they will do little to allay the grandiose fears of the broader antigovernment set.
A more daring course would be finally to confront the antigovernment catechism directly, to attack his opponents where they are strongest. For decades, conservatives have explained every episode of government failure by shrugging: What do you expect? That’s just the way government is. When government fails to do the job—even when it’s a government presided over by conservatives themselves—it automatically reinforces core assumptions of the right.
Although this explanation is hollow and a
…
GURU OUTLOOK: DAVID EINHORN IS VERY WORRIED ABOUT THE DEBTS
by ilene - December 3rd, 2009 12:02 pm
GURU OUTLOOK: DAVID EINHORN IS VERY WORRIED ABOUT THE DEBTS
Courtesy of The Pragmatic Capitalist
David Einhorn became a household name last year when he attacked Lehman Brothers (among other companies) for their poor financial condition. He very publicly shorted the stock ahead of the firm’s implosion. This didn’t help Einhorn from losing money for the first time in his career, however. His firm’s flagship fund finished the year down 22.7% in 2008. It looks bad at first glance, but this was just half of the losses the S&P
Einhorn is increasingly concerned about the debts in the financial system. Einhorn had some very interesting comments earlier this year regarding gold, which has become one of Greenlight’s favorite positions. He isn’t a goldbug, but Einhorn is growing increasingly concerned about the future of fiat currencies due to irresponsible monetary and fiscal policies. Einhorn has very little faith in the Fed to print us back to prosperity. The following is an excerpt from his 2008 year-end letter:
We never thought we would ever buy gold or gold stocks. David’s grandfather Benjamin was a goldbug. From the time David was ten, Grandpa Ben took every opportunity to tell David about the problems with fiat currencies and the coming inflation and advised that the only sensible thing to do was to buy gold and gold stocks. And, for the last thirty years of his life, that is what Grandpa Ben did. And it was a lousy investment. Being a patient investor is one thing. Being “wrong” for three decades is quite another. To everyone’s dismay, we believe that some of Grandpa Ben’s predictions are playing out. Our current chairman of the Federal Reserve, Ben Bernanke, is an “inflationist.” When times were good, he supported an easy money policy. Even when the Fed raised rates, Bernanke took great pains to give the markets many warnings to insure that the higher rates wouldn’t break up
…
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(
