Ben Bernanke: Someone pay him to go & study the Great Depression or do anything else

Discussion in 'Economics' started by ByLoSellHi, Apr 30, 2008.

  1. I agree the market was expecting .50, then they moved it back to .25, but this CRAP about we see inflation moderating over time due to slower growth, that is the line they used at 5.25 when they decided to pause, and look where we are now, it hasn`t worked and we have slowed all the way to 2 quarters of less than 1% growth, so that argument is rediculus, and they could have put much stronger language regarding the commodities bubble by talking much tougher on inflation, he did this when he first took office, and the commodities SOLD OFF HARD, remember this was that Maria B. party mishap, it goes to show you, this guy is suppossed to be the best academic economist (one of the best) but he doesn`t get that markets are not textbooks, or thesis papers, they are largely psychological.

    He could have done more for the economy, including the banks, by stating that inflation has not moderated as they had expected, so after this rate cut, the fed will pause long enough for the lag effects of the previous rate cuts to take effect.


    That is all it would take to get the specs out of commodities, and the dollar to strengthen. This change would add more economic stimulus to the economy than the stimulus plan, and no taxpayer dollars to boot!
     
    #51     Apr 30, 2008
  2. bradstal

    bradstal

    unbelievable, is bernake insane? this guy talks about moderate inflation and yet he is taking the economy down along with that s.o.b bush and his administration. Greenspan wasn't any better. Enough is enough, too much mafia in the wall street. I'm sick and tired of the jewish mafia or the big boys making all the money and screwing the average investor. Greed is all over the place.
     
    #52     May 1, 2008
  3. True, that seems to be a way out using devalued dollars...

    But that would be for the fixed debt. Sadly the everyday stuff like food, energy, etc goes up too leaving avg Joe in the quicksand pit. And the bigger the proportion of your income you have to pay for those, the worse off you are.

    Nice little corner to be painted into...
     
    #53     May 1, 2008
  4. The US gov't has a trillions in debt!

    Ben is selling off America and making Americans pay for the war with rising prices in oil and food.

    All debts must be paid one way or another and Americans are paying the price in the gas pump and gas stations and they overpaid in houses during the bubble.

    Printing money is same as stealing. When interest rates are low, commodity or dollar falls. The major money managers aren't dumb and won't let the FED steal their hard earned money.
     
    #54     May 1, 2008
  5. Free markets like in 1930? When banks put 'On vacation' signs on their doors and just closed down so people can't withdraw their deposits for months on end?

    We all believe in free markets. In a deflationary collapse there is no market to speak of anymore though :(
     
    #55     May 1, 2008
  6. gnome

    gnome

    Ooooh Rah for you. Not one American in 100 gets this, and the consequences are TRAGIC.

    I've been told that my rants on Gummint evils in this forum have become "tiresome" and have been asked to "knock it off".

    Nobody wants to hear your (our) message, but please KEEP IT UP! America needs a voice* like yours!!!

    * It won't do any good of course, but America still needs it.
     
    #56     May 1, 2008
  7. There were no free markets in 1930s.

    The Fed purposely contracted money supply at a rapid pace.
     
    #57     May 1, 2008
  8. Really? So when people were trying to get at their savings, the Fed made extra-sure they couldn't?

    Why would they do that?
     
    #58     May 1, 2008
  9. You are far too simplistic in your "analysis" of the current banking system crisis. You act as if the inflation rate should be the ONLY priority, and nothing else, as if the economy works in some sort of perfect little theoretical model from ACADEMIA.

    I will ask this question one more time ( since no one seems to be able to answer it on this thread ):

    Given that the savings rate of Americans is the lowest out of any industrialized country ( and was ZERO for the entire 2005 year ), where do you believe CAPITAL FORMATION comes from in the U.S. economy?
     
    #59     May 1, 2008
  10. You don't understand.

    The FED "contracted" the money supply by one-third and wiped-out purchasing power in an unprecedented fashion. A series of cummulative mistakes by the FED literally caused the Great Depression.

    For example, this tightening of policy was followed by falling prices and weaker economic activity:

    "During the two months from the cyclical peak in August 1929 to the crash, production, wholesale prices, and personal income fell at annual rates of 20 per cent, 7-1/2 per cent, and 5 per cent, respectively." Of course, once the crash occurred in October--the result, many students of the period have surmised, of a slowing economy as much as any fundamental overvaluation--the economic decline became even more precipitous.

    Incidentally, the case that money was quite tight as early as the spring of 1928 has been strengthened by the subsequent work of James Hamilton (1987). Hamilton showed that the Fed's desire to slow outflows of U.S. gold to France--which under the leadership of Henri Poincaré had recently stabilized its economy, thereby attracting massive flows of gold from abroad--further tightened U.S. monetary policy."

    Another tightening occurred in September of 1931, following the Sterling crisis.

    In that month, a wave of speculative attacks on the pound forced Great Britain to leave the gold standard. Anticipating that the United States might be the next to leave gold, speculators turned their attention from the pound to the dollar. Central banks and private investors converted a substantial quantity of dollar assets to gold in September and October of 1931. The resulting outflow of gold reserves (an "external drain") also put pressure on the U.S. banking system (an "internal drain"), as foreigners liquidated dollar deposits and domestic depositors withdrew cash in anticipation of additional bank failures. Conventional and long-established central banking practice would have mandated responses to both the external and internal drains, but the Federal Reserve--by this point having forsworn any responsibility for the U.S. banking system, as I will discuss later--decided to respond only to the external drain. As Friedman and Schwarz wrote, "The Federal Reserve System reacted vigorously and promptly to the external drain. . . . On October 9 [1931], the Reserve Bank of New York raised its rediscount rate to 2-1/2 per cent, and on October 16, to 3-1/2 per cent--the sharpest rise within so brief a period in the whole history of the System, before or since (p. 317)." This action stemmed the outflow of gold but contributed to what Friedman and Schwartz called a "spectacular" increase in bank failures and bank runs, with 522 commercial banks closing their doors in October alone. The policy tightening and the ongoing collapse of the banking system caused the money supply to fall precipitously, and the declines in output and prices became even more virulent. Again, the logic is that a monetary policy change related to objectives other than the domestic economy--in this case, defense of the dollar against external attack--were followed by changes in domestic output and prices in the predicted direction."

    http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm

    In other words, the FED's pre-occupation with the Dollar ( and external issues ) and no concern about the U.S. Banking System lead to an incredible series of "tightening" operations that created a spectacular amount of bank failures and bank runs.

    The FED didn't figure out its mistakes until Congress began to put a lot of pressure on the FED to ease monetary policy and stop the rounds of "tightening" . . . This didn't happen until the Spring of 1932, from April to June.
     
    #60     May 1, 2008