This is the same Bernanke, we might add, who stopped printing money all summer, which resulted in the downturn in the economy that began this September.
After crashing the economy, Bernanke has reversed engines and has begun flooding the economy with money that should result in a rebound in price inflation in 2009 to record levels.
On top of this madness, Bernanke has been responsible for creating a number of new "tools" for the Fed whose full impact on the economy are near impossible to determine in advance.
In short, the way to think of Bernanke is as a madman mixing all kinds of potions in his lab, the lab being the economy of the United States.
But CNBC's inflationists think differently:
Bond fund Pimco, Goldman Sachs and private equity firm, BlackRock, all major beneficiaries of inflation, think Bernanke is great. Interesting. The big question: Who picked these inflationists as "CNBC's panel of experts" and why? It looks like a stacked deck to me. Obviously, there is a new Bernie is Great promotion starting. Watch who writes up the pro Bernie stories and you will discover who the tools of the insiders are.
"I think all of those people who have made fun of Ben by calling him 'Helicopter Ben' owe him a big, big apology," said Paul McCulley, managing director at Pimco, the world's largest bond fund.
McCulley called Tuesday's move "a glorious day in the history of central banking" in which the Fed "went all in, in poker terms, in the fight against deflation and depression."...
In the view of BlackRock vice chairman Bob Doll, Bernanke showed astounding composure in the face of a financial crisis the likes of which the nation has never seen.
"The guy's been on the hot seat nonstop," Doll said. "I can't think of a whole lot better people sitting in that chair."...
And Abby Joseph Cohen, chief US investment strategist at Goldman Sachs, said Bernanke did "a fabulous job" this year, while she also said Treasury Secretary Henry Paulson deserves mention as someone "who has shown tremendous energy and creativity" in addressing the crisis...
I don't understand why we can expect huge price inflation in '09. Banks have no reason to lend; they're getting paid interest on reserves and now they can get free money from the Fed and buy and hold T-bills to maturity. Plus, no one knows what's on one another's balance sheets, nor does anyone know what crazy "solution" the government/Fed will propose next. Why act in such an unstable, insecure, and untrustworthy environment?
ReplyDeleteOver-indebted consumers also have no reason to go even further into debt what with rising unemployment and the "savings" from their "investments" in housing disappearing.
So why is price inflation a foregone conclusion? The credit is obviously there, but there's no reason to lend or borrow and the Fed/government can't force either (yet, anyway).
Bernanke is pumping so much money from so many directions that it will seep into the economy. Take a look at the last Fed statement and look at all the assets he is going to be buying.
ReplyDeleteRight now there is a huge demand to hold cash---but to believe that this will continue is just trend watching. Once people realize that inflation is spiking back upward, the flight from cash is going to be something to see.