It has got to the point where I don't think Bernanke knows what he is doing any more. I think he is just throwing money at the problem and hoping it will go away.
Quite right. On the 60-min's interview he looked like he was going to piss his pants. When asked about his confidence in what he was doing there no hesitation -- "100%." That was a clearly rehearsed answer. His body language demonstrated how uncomfortable he was during that interview. Greenspan, on the other hand, now that fellow had mastered the art of lying through obfuscation and other methods. That's what he was the maestro at -- lying a lot, saying a bunch, and meaning completely nothing at all.
Of course. QE is a backdoor bailout to Wallstreet. Recessions are synonymous with de-leveraging and repayment, which induces credit contraction (deflation), which erodes paper asset values, which reduces the solvency of balance sheets marked to market or model. The FED acting as buyer of last resort creates synthetic demand where there is none, which creates an artificial bottom for paper nobody wants. This shores up Wallstreet's financial position and their ability to make new loans and take on new debt. Of course, QE is always sold as "saving the economy" or "creating jobs". It's never suggested QE could possibly benefit large banks, quite handsomely, apparently. It's all bullshit. Politicians know the public must be sold on agenda's before they can be rammed through. So voters are sold on corporate looting by making it seem corporate looting is in the public's best interest. The bailout "saved the economy". The War on Terror "keeps America safe". Outsourcing "opens foreign markets"..... while US Fortune 100 carry TRILLIONS out the backdoor. People are dumb. They fall for misdirection and propaganda everytime.
I think Bernanke has a handle on what doesn't work based on two things, the Depression and Japan. Currently I think our economy is a guinea pig for untried ideas from the Fed. If in the past the lessons were to little too late, I'd guess the Fed would err on too much, too soon concerning risk as the primary factor rather than the amount of money.
^ In my opinion, this is not the Great Depression or Japan. Japan saw equities quadruple and real estate appreciate over 5000%. The monetary base was throttled by a full 1/3rd in the Great Depression; largely due to the gold standard and the FED's unwillingness to lend out excess gold reserves. The USD is now totally fiat. The specter of a decade-long Great Depression is not possible. And unlike Japan, US consumer discretionary income will soon be freed up. If the economy was left to seed in '08, we'd get a complete collapse of the banking system and stock market, massive private and commercial bankruptcies followed by a swift recapitalization of new banks financed by insolvent ones. Then a sharp stock recovery. And shortly after, growth. This is the way it works. All the homeowners should have gone bankrupt. All the banks holding that paper = bankrupt. Let the system purge itself of the excess malinvestment, allow debts to be wiped through bankruptcy, price levels readjust significantly down, and system resets at the new equilibrium. Instead, we're carrying insolvent borrowers, on insolvent mortgages, for insolvent banks, on the taxpayers dime. Price levels should be significantly lower but aren't, because the FED monetized losses which debased the currency and kept consumer prices unrealistically high. This is the hidden tax that no one talks about - the mechanism through which the true cost of the bailout is passed on to dollar holders - sky high cost of living expenses. The FED has made the problem much worse for political and nepotistic expediency. Losses must be realized. By postponing the inevitable through a slow bleed and nationalization, commercial lenders remain precarious and borrowers remain on the hook for loans that should have been written off a long time ago. Now, it's an agonizing crawl punctuated with semi-annual volleys of QE to stave off another round of deflation for bankers. Each time QE comes in, prices juice up which adds more of a headwind to the economy.
the gov't subsidize farmers in many euro and in many countries. to maintain cheap food supply.and not reliant on foreign imports for food. many countries can import food from the US than farm their own food. US has the cheapest food supplies because of strong dollar making fertilizers cheap and oil. that is the benefit of strong currency a strong and stable currency attracts foreign investment too. why do you think the saudis are so heavily invested i the US economy...there arent' that many stable or trustworthy economies to invest. ie if you have 1 billion of cash would you buy US gov't debt or russian gov't debt or greek debt. or debt in china. that is why the fed policy of weakening diluting the currency is ''disturbing in the long run'''. now with commodity rising from low interest rates it's hyprocrisy.. the subsidy to wall street? if bernanke is settting interest rates below market rates than it is gov't subsidity. food prices are cheap in the US because of high strong dollar and gov't subsidty in many third world counties some people spend 50% of salary on basic food.
MAYBE that's how it would have played out had they not bailed out the banks. But let's get real, neither you nor I can be very certain about that. I tend to think that it would have been freakin disastrous had they done nothing to bail out the banks, Fannie and Freddie, the auto industry, etc. It's not so clear cut. I don't think Bernanke is an idiot and I don't think he's a crook.