“September and October of 2008 was the worst financial crisis in global history, including the Great Depression,” former Fed chair Ben Bernanke is quoted as saying in the document filed with the court, according to WSJ.
Bernanke is quoted making the statement in a document filed on Aug. 22 with the U.S. Court of Federal Claims as part of a lawsuit linked to the 2008 government bailout of insurance giant American International Group Inc.
Former Treasury Secretary Timothy Geithner is quoted in the document stating that from Sept. 6 through Sept. 22, the economy was essentially “in free fall."
In my book, The Fed Flunks, I detail the many failures of the Federal Reserve and devote a chapter detailing my real time warnings in the summer of 2008 as to why a crisis was developing. It was, of course, the result of Federal Reserve stop and go money printing.
For example, as detailed in my book (p. 45), in July 2008, I wrote at EPJ:
I have previously noted that over the last two months money supply has been collapsing. M2NSA has gone from double digit growth to nearly zero growth .That Bernanke did not understand what was going on was his own damn fault. I also write in TFF (p.27) as a follow up comment to my many summer 2008 warnings:
A review of the credit situation appears worse. According to recent Fed data, for the 13 weeks ended June 25, bank credit (securities and loans) contracted at an annual rate of 7.9%.
There has been a minor blip up since June 25 in both credit growth and M2NSA, but the growth rates remain extremely slow.
If a dramatic turnaround in these numbers doesn't happen within the next few weeks, we are going to have to warn of a possible Great Depression style downturn.
Yet, just weeks before these warnings from me, Chairman Bernanke, while the money supply growth was crashing, had a decidedly much more optimistic outlook, In a speech on June 9, 2008, At the Federal Reserve Bank of Boston’s 53rd Annual Economic Conference [7], he said:-RW
I would like to provide a brief update on the outlook for the economy and policy, beginning with the prospects for growth. Despite the unwelcome rise in the unemployment rate that was reported last week, the recent incoming data, taken as a whole, have affected the outlook for economic activity and employment only modestly. Indeed, although activity during the current quarter is likely to be weak, the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so. Over the remainder of 2008, the effects of monetary and fiscal stimulus, a gradual ebbing of the drag from residential construction, further progress in the repair of financial and credit markets, and still-solid demand from abroad should provide some offset to the headwinds that still face the economy.
I believe the Great Recession that followed is still fresh enough in our minds so it is not necessary to recount in detail as to whose forecast, mine or the chairman’s, was more accurate.
It is not the job of the Fed Chairman to be right, to know anything about economics, to achieve any particular monetary goals or even to make any sense. The job of the Fed Chairman is to continue the massive counterfeiting racket and to think up convoluted rhetoric to obscure the obvious purpose, which is to shovel as much wealth to the 1% as possible before the public and their designated brains, the journalists, catch on.
ReplyDeleteBernanke's mission was to protect the wealth of his cronies at the expense of the taxpayers. In that he was eminently successful. Maybe now that his prime directive was accomplished he will go on to fabricate his legacy.
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