...those of us who lived thru that bitch-slap from volker dont look too kindly at the old fool...i still wonder who let him get away with that crap...he shouldnt be out giving speeches, i think bama just sends him out to keep away from him...
Bernanke has warned the country and the legislative branch of the consequences in veiled language. I think he should force their hand, but that would get him removed from office. Either way, he continues to throw gasoline on the fire.
No people have not forgotten what led to the unemployment, namely Iranian oil crisis, precipitating sky-high oil prices. Rampant inflation from late 1970s. He broke the inflation, which led to the boom of the 1980s. It was a risky call, but he was the right man at the right time.
Psychosis does not help. Volcker raising rates for a long time caused the crash. http://www.newdeal20.org/2010/04/21/the-unlearned-lesson-of-the-1987-crash-10017/ They then blamed some computer programs like now they are blaming HFT. Now, if you have somethign to say either be nice or you insults will be properly answered. Psychosis does not help.
I will tell you what will happen : the overhang in USD liquidity will be absorbed by emerging market economies because the US of A is still brutally dependent on imports from China and elsewhere. US products and services are simply TOO EXPENSIVE. Labor productivity is reaching limits. The effect on real unemployment growth will be ZERO. Bernanke and his FED team have totally lost any credibility. While QE I made sense, QE II is simply a way to through MONEY into the hands of Wall Street. The code to write is : long ES, short USD, long all other hard currencies, long gold, long stocks. At the end of day settlment ask Deutsche Bank aor any other NON US bank to convert US Dollar holdings into EURO, JPY, GBP.
QEII won't spur the economy. It will just raise input costs, like commodities, but businesses don't have the power to raise prices. Even the CEO of Starbucks was saying that the cost of coffee was up about 50% but they can't raise the price of a latte. At least Volker prescribed the right medicine. It might have been painful at the time but it was relatively short-lived and resulted in a stronger economy. Benbabwe Bucks will just prolong the pain and make it worse in the long run. Volker was the last Fed chairman to take away the punchbowl. Greenspan and Banana Ben seem to think they can abolish recessions altogether, even though they are a necessary aspect of capitalism.
I would love to discuss the effects of a strong US Dollar policy, both publically stated and implied through market actions. imagine oil at $40 US/bbl again imagine the Euro at par, again imagine the Pound below $1.25, again imagine the Canadian Dollar below $.82, again imagine the vast majority of Chinese goods that Walmart requires (just to stay in business) being 25% less than at present, again
There likely wouldn't even be recessions... if the Fed didn't first force misallocation of capital. All or nearly all recessions since the creation of the Fed have been induced by the Fed to cool the inflation which was caused by the Fed.