Bernanke Admits Printing $1.3 Trillion Out Of Thin Air

Discussion in 'Economics' started by bearice, May 2, 2010.

  1. Fed Chairman Ben Bernanke admitted the central bank created $1.3 trillion out of thin air to buy mortgage backed securities. This shocking admission came from the Joint Economic Committee hearing on Capital Hill last week. I was dumbfounded when I saw Bernanke shake his head in the affirmative as Representative Ron Paul said, “Well, where did you get the money? You created this money. So you did monetize debt, and that went into the banking system.” I was amazed he admitted this. I looked up the original hearing on C-Span to make sure the clip was not edited. It was not.

    What is even more shocking is I could not find a single mainstream news agency that covered this revelation. Congress just finished voting on the bitterly contested Obama health care bill that is supposed to cost nearly a trillion dollars over ten years. (Some contend it will be more than twice that amount.) The mainstream media doesn’t even bat an eye over the Fed creating $1.3 trillion in a little more than a year to buy worthless debt no one else will touch. I do not get it. I guess we could have asked the Fed to print up a trillion dollars to pay for health care and avoided that drawn out battle in Congress.

    Then, Rep. Paul brings up printing another $105 billion to bailout Greece. Bernanke answers by saying, “. . . I think one of the agreements that the G20 leaders came up with was sort of a mutual commitment to put more money into the IMF as a way of addressing the financial crisis around the world. . .” Notice how Bernanke used the term “mutual commitment.” I think what that really means is an agreement between all the G-20 nations of a “mutual debasement of their currencies.” I think this is why gold has been rising in price around the globe. I have been saying for months that we are going to have some very big inflation. (Real inflation is already at 9.5% according to I wrote about this last November in a post called “The Fix Is In.”

    I think Bernanke just opened the Fed playbook and revealed money will be printed to fix all financial problems. I don’t think he’s even trying to hide it anymore. Rep. Paul also brought up the big debt trouble coming soon with many, many bankrupt cities and states such as Los Angeles and California. I think they will all be bailed out one way or another by the printing press.

    New York Fed President William Dudley seems to be on the same page as his boss. Dudley recently said, “The fact that our foreign indebtedness is for the most part denominated in our own currency is a huge advantage in the event the dollar were to come under significant downward pressure.” (Zero Hedge has a complete text of Dudley’s speech, click here) Is Dudley making a not so subtle hint about devaluing the U.S. dollar? Once again, I say yes.

    Anyone with a savings account or money market denominated in dollars should be terrified. You have scrimped and saved only to have the Fed print money and devalue what you have worked so hard for! Inflation has been chosen for you by the Federal Reserve, and we the taxpayers can’t even audit its actions. Below is the video from the Joint Economic Committee Hearing last week. Watch for yourself Bernanke nod yes to printing $1.3 trillion:
  2. Erm, the fact that the Fed printed this money (by creating bank reserves) has been a well-known, well-advertised and utterly obvious fact for more than a year...

    What's more shocking to me is that the author of this article, Greg Hunter, can be so oblivious to what's going on in the world around him that he treats plain facts as these incredible epiphanies. I think his motto should be changed a bit. It should look like this: "Analyzing the News to Give You A Clear Picture of What's Really Going On, With a 1 Year Lag".

    As to the IMF, what does that have to do with the Fed?
  3. Does this mean I have to earn more than 9,5 % through trading in order to observe an appreciation in my real assets ?
  4. There aren't anything surprise, CB always creates money out of thin air. nothing new, I was surprised by OP's ignorance. LOL:D
  5. Worse than that... you have to earn 9.5% NET AFTER TAXES... ON ALL OF YOUR ASSETS... in order to keep pace with inflation and have REAL growth in wealth.
  6. in a year or two that will be 2000percent. you know it's true.
  7. I think the point was that the US is going to "loan"/"give" the IMF $105 billion in spite of the fact that we have huge debts ourselves and that the FedRes will have to print/monetize that $105 billion as well.

  8. achilles28


    More than a year? Most macro textbooks published in the last 50 years, devote at least half a chapter to fractional reserve banking and Central Bank money creation. This is nothing new. Investors and pedestrians alike are simply ignorant of it.
  9. Keep in mind that monetizing the MBS is not the same as monetizing gov't debt. The FED has stated they dont expect to monetize gov't debt. The MBS monetization was just another favor for the banks.
  10. achilles28


    Bernacke says one thing and does another. Tough talk on the deficit is merely intended to jawbone Congress. History has shown he's more than willing to throw taxpayers under the bus to save FED shareholders. That's inflationary.
    #10     May 3, 2010