Friday, August 26, 2011

Breaking Down the Bernanke Speech

Here are the takeaway points from Bernanke's speech. My comments are in italics.
1. ...recovery in the United States has, for the most part, proved disappointing thus far

No kidding. When you have roller coaster monetary policy, what do you expect?

2.The financial crisis that gripped global markets in 2008 and 2009 was more severe than any since the Great Depression.

It should be noted this occurred under the watch of the Federal Reserve. Those who state the economy has been more stable since the Fed, have a lot of explaining to do.

3. ..., it is clear that the recovery from the crisis has been much less robust than we had hoped. From the latest comprehensive revisions to the national accounts as well as the most recent estimates of growth in the first half of this year, we have learned that the recession was even deeper and the recovery even weaker than we had thought; indeed, aggregate output in the United States still has not returned to the level that it attained before the crisis.

Here, Bernanke is basically admitting that he doesn't understand what the hell is going on.

4.Temporary factors, including the effects of the run-up in commodity prices on consumer and business budgets...were part of the reason for the weak performance of the economy in the first half of 2011; accordingly, growth in the second half looks likely to improve as their influence recedes.

He's joking, right? Does Bernanke actually believe that price inflation was a temporary factor and the influence of price inflation is going to recede?

5.The Federal Reserve continues to monitor developments in financial markets and institutions closely and is in frequent contact with policymakers in Europe and elsewhere.

Translation: Bernanke is very concerned about Europe, and is muscling Europe to start printing money.

6.With commodity prices and other import prices moderating and with longer-term inflation expectations remaining stable, we expect inflation to settle, over coming quarters, at levels at or below the rate of 2 percent, or a bit less, that most Committee participants view as being consistent with our dual mandate.

He is really clueless about price inflation or lying through his teeth.

7.In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days (the 20th and the 21st) instead of one to allow a fuller discussion.

Extended September meeting to two days? He's sweating.

8. Our K-12 educational system, despite considerable strengths, poorly serves a substantial portion of our population.

He's dissing the public school system! Go Bennie!---Though this is probably a lead in for Obama's September 5 speech where he will likely call for more spending on public schools.

9.Our economy is suffering today from an extraordinarily high level of long-term unemployment, with nearly half of the unemployed having been out of work for more than six months.

Well, damn it Bennie, you are paying people up to 99 weeks to stay unemployed. What the hell do you expect to happen, the number of unemployed to shrink?

Bottom line: Ben Bernanke may, or may not be, clueless about the exploding money supply (now 9% plus). But he sure wants to keep the focus away from money supply, since he doesn't even mention the topic in his speech. Got that? The one thing the Fed does control is the money supply and Bernanke doesn't mention the accelerating growth in his speech. Bernanke is one tricky dude. Watch the numbers not his lips.

Here is what is really going on. Bernanke is printing money at very aggressive rates. This is going to lead to huge price inflation. Below is the data from the St. Louis Fed  showing  annualized perecentage growth in money supply (m2) since the start of the year:


  1. I agree and can't believe this guy continues to broadcast he does not know what to do. What the markets need less of is uncertainty, and the potential for day to day ad hoc changes in global monetary policy is what's siphoning liquidity. I thought we might get more talk about his "tools", but nada. My bet remains with some band-aid dollar liquidity swaps in the meantime (prob. not the $250B now that QE3 is virtually assured Sep 21).

    If it's Operation Twist 2, that's the Fed's all-in play because it means potentially unlimited balance sheet increase.

  2. Fine analysis, Bob. Thanks!

  3. Taxes and especially Laws have permanently destroyed the USA. Fed counterfeiting is pointless...It just hands money to the parasites so they can boost input prices for the few producers that are left. Nothing the Fed does is going to "Work".

  4. On #6 I am willing to bet he is lying, not only to the hearers/readers of his words, but to himself as well.

    I find it nearly impossible to believe that even with his frame of reference of choice, (Keynesianism and all it entails), that in the quiet recesses of his mind he is clueless about price inflation.

    He may deny its consequences or why he believes it must be so or how it is justifiable on a certain level, but this is different, at least to me, from saying he is clueless.

    Bad Ben. Bad, BAD Ben.

    Audit the Fed now.

  5. Any chance we can see the current graph above along with the older 2008, 2009 or 2010 money acceleration/deceleration curves?

  6. Like a slaveowner bitching about his unproductive slaves.....

  7. Astute observations.

    Notice also the reference to Congress vis. "infrastructure" in the last couple of paragraphs.

    Waren Buffet buys into BOA, The Bernanke mentions infrastructure spending, Roubini slamming gold a pushing an NIB, Obama wants to spend LOADS of cash on infrastructure...

    Yeah, NIB is coming.

  8. "Power corrupts, and absolute power corrupts absolutely."

    Benny, this seems to be the quote most reflective upon you. Your absolute power over our currency has absolutely corrupted it.

  9. @Bob English - You mistakenly surmise that Benny is ignorant of what's happening or what he's doiing....really Bob? I'm willing to stake my life on the fact that NONE of this is accidental and we (and this whole situation) are being played like a fiddle! What say you to that?

  10. To clarify, I think he remains clueless in many regards, but indeed agree that the "plan" has already been in in place for some time. The plan being Operation Frowny-faced Yield Curve. Phase one was accomplished vis a vis the last FOMC statement. Phase two will be implemented on Sep 21 (which, as I will demonstrate, likely violates Section 2A of the Federal Reserve Act). Stay tuned over the weekend. (You won't be disappointed.)

  11. prepare for the riots and looting when people can't afford to eat and marshal law rules

  12. I have to agree... there simply is no other way to view this. Ben is only a 'pawn' in a bigger picture which is invisible to the ordinary citizen (meaning people who don't know squat about economics/policies)

    Thanks Robert for stating it as it is! ;-)

  13. Its all about creating a new world order

  14. This reminds me of the economist I saw on TV who said that the 30% increase in the price of oil had nothing to do with the 30% decrease in the value of the dollar, oil being priced in dollars! Bernanke must be either as out of reality as this man, or incredibly self deceptive, in denial of reality.

  15. I see quantatitive easing as analagous to a drug.Once the econoomy gets it,it needs more,or it goes into withdrawal.The more it gets,the worse the withdrawal symptoms are

  16. The USA must make the $ strong enough to see that no one starves or freezes to death in the Greater Depression.

    They need a Deflation now to strengthen the Country. Buffet is in effect telling us that the unused part of Keynes must be used, taxation to prevent the 'internal contradiction in Capitalism' Marx described.

    Sufficient tax on wealth to cause Deflation could be followed by reductions in 'benefits' to match the increased buying power of the $s paid out in benefits. But such reductions should only come after deflation is established.

    The inflation being induced by printing money could collapse the whole system we presently live by.

  17. The real money supply includes credit issued...what does that look like? Is he printing more money because the credit has dried up?

  18. to find the graphs for other periods: go to the URL at the bottom of the above graph. Search for "M2. Click on "levels" underneath the graph, and choose the same level as on the Y-axis of the graph above. choose the date range you desire.

  19. The only time he has told the truth was in that bar in Seward, NE.

  20. The Obama administration is 'Our Gang Comedy" - Spanky Bernanke and Buckwheat Obama.