While I don't believe that the Fed (and Bernanke) has done all the right things all the time (that would be silly) and I certainly disagree with certain steps that have been taken (or not), I certainly don't see any macroeconomic basis to suggest that they're doing it all wrong, as a few people state here. But then again I have said it before.
US is now the world's largest debtor nation, a 360 turn from the past two decades. That fact alone has serious implications in the macroeconomic sense. Bernanke and rest of the dancing clowns in DC don't care despite all the posturing.
The public is not where the blame should go. I know, I know in theory yes you have a point, but in reality you dont have a leg to stand on. Because given the chance the public would do it over and over and over again. You are assuming the public in general give a rats ass. If a person making $2000/ month is able to afford somehow through fantasy lending a $1million home 9.9 out of 10 people will sign the dotted line. How do I know this, well because it actually happened...I may be a little off on the 9.9 out of 10. So now, if a dumb mo-F88k banker knowing very well that there is a likelyhood of close to zilch of getting paid back; who is at fault? I know you are going to spin this with ..."oh it was legal" " oh it was legal" ...yes it was legal, but if the homeonwer cant pay then the bank should lose out,,,,not me, not my logical thinking neighbor...I don't care if the world was about to end. Thats survival of the fittest that you like to talk about. The world is going to end..then bring it on. If you lend money to your crack head cousin and didnt ask for collateral and then dont get paid...do we really need to argue who's the idiot? There's a reason you dont loan money to people with low FICA scores and no skin in the game...cmon meng. Unless of coarse you are making a boatload on commission and know you wont be held accountable.
Rather ironic. Someone whines about a lack of data and facts but writes stream-of-consciousness tripe and can't even get the easy details right. No, CPI manipulation started in the 70s and it's gone through other politically-expedient "revisions" since then. At this point, it's worthlesss. Dubious product substitutions, so-called "hedonics" (reducing price for supposed product quality or satisfaction), and owner's equivalent rent. Not to mention the asinine idea that we take out food & energy due to "volatility." Over the last 11 years, real CPI (which has enough problems, as noted above) has been higher than "core" over 80% of the time. The same was true in the 70s. The alleged volatility is all on the upside. How convenient. MIT's Billion Prices Project shows real inflation in the 8% annualized range. John Williams of ShadowStats computes CPI the old way and he's had it over 10% for awhile. The bottom line: "core" CPI is a joke and deflation was about as much of a threat as an alien invasion. The Fed-as-heroes hogwash is just another sad chapter in comic book U.S. history. Soon enough, it will be in the textbooks along with the "we would've all gone under without bailouts and hundreds of billions in stimulus" drivel.
Yes, agree... Given this as a starting point and the inability/unwillingness of the American public (as expressed by their elected officials) to agree on any meaningful measures that would curb this dynamic, shouldn't one conclude that the Fed's doing the only right thing? Why is a demonstrably effective and probably best-understood solution designed to gain/regain relative competitiveness OK for other countries, but not OK for the US? I really don't see why this is all so complicated. Fed is simply serving as an instrument of a basic inexorable force of fundamental macroeconomic rebalancing. You might not like the process and life might be painful in a country that has to undergo this adjustment, but that's a different story altogether.
Why is it that hedonic adjustments and OER dubious and worthless? Who says you take out food and energy? Both core and headline numbers are published, aren't they? The reason the Fed cares more about the core is simply because experience shows that, most of the time, there's not much a CB can do about prices of food and energy. How do you know the MIT BPP numbers are "real"? Why is Shadow Stats number to be trusted more, when John Williams has consistently refused to participate in any serious dialogue with any academic economist about the merits/flaws of his methodology and refuses to repond to any and all critiques? How do you know for sure that deflation was never a threat? How do you know we wouldn't have all gone down without stimulus and bailouts?
but then again, How do you know we would have not survived? We perhaps would have flushed the excess toxicity out with one flush. I am not an econimist and you have way more knowldge in this matter than me...Im just asking a question.
Asking 101 questions does nothing to prove your point. Why do you sound like such a shill? Anyone who has worked with gov't data (including military), knows how numbers are massaged for the desired results. http://harpers.org/archive/2008/05/0082023 As for the necessity of the stimulus/bailouts, it was a classic appeal to fear. http://www.minyanville.com/business...e-fed-central-banking-wall/3/23/2011/id/33504
One (of many things) ignored is the opportunity cost. Many smaller-to-mid sized banks that had been more responsible could've taken up the slack if we just allowed failures/bankruptcies. They could have brought better fiscal displine and more risk-averse, cost-effective practices. Instead, we just propped the whole broken system up. Shades of 1990s Japan. Neither Dodd-Frank nor anything else has done anything to prevent the moral hazard of more "too big to fail."
How do you know hedonic adjustments aren't just manipulations to make inflation figures smaller than they actually are? How do you know the MIT BPP numbers aren't real? Why do you trust the government on inflation numbers when it is their best interest to keep them as low as possible? Why do you distrust Shadow Stats? How do you know deflation was a threat? How do you know we wouldn't be better off right now if there were no stimulus and bailouts?