Wednesday, March 14, 2012

As Clueless Bernanke Prints: Six in a Row for the Dow

The Dow Jones Industrial Average closed today at 13,194.10 up 16.42 points. Yesterday, all 30 Dow Industrial stocks were up.

Bernanke money printing is the driver of this manipulated boom. It will bring major price inflation as the money works its way through the economy. Though there are opposing views.

Bernanke thinks the outlook for prices is stable. Yesterday, the Fed Open Market Committee issued a statement saying:
Inflation has been subdued in recent months, although prices of crude oil and gasoline have increased lately. Longer-term inflation expectations have remained stable.
This as the man prints and prints dollars. Amazing!

Then there is Krugman who thinks we are still in a Depression.

These guys are mainstream goofs, who have no idea how the economy works.

Bernanke also thinks he is going to be able to keep rates low through 2014. From the same FOMC statement quoted above:
....the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
No way, no how. It's more proof  that Bernanke is clueless. He is lucky if he gets out of 2012 without raising rates. NO WAY does he make it through late 2014 without major rate hikes by hundreds of basis points. He will look like a buffoon. The man should be the sports reporter for The Onion and assigned to cover the Washington Generals.


  1. Bob what are your thoughts on the Debt-Deflation theories of Steve Keen?

  2. The whole 2014 business is probably done to give the *impression* that Bernanke has everything under control until then.

    Price inflation will accelerate before then, and all of the imbalances created during this boomlet will be exposed. Place them on top of the twisted pretzel economy that existed before the QE's began and you've got yourself a whopper of a correction ahead.

  3. And of course many People are saying something else will pop up suddenly which they can blame for rising prices,... war most likely, ... or?

    It will be on the TV so it must be true.

  4. Bob, I too would be very interested in your opinions of Steve Keen's debt-deflation theories.

    You, Mish, and Keen all seem to agree on the PROBLEMS the world is currently facing, but Mish and Keen infer a threat of deflation from it (because the impact of deleveraging is larger than the inflationary pressures) . Whereas you and Mish agree on the (free market) solutions to these problems, Keen obviously has more interventionist Keynesian ideas in mind.

    Bob, I really think it would be very popular for you to write an article than attempts to explain or reconcile these sorts of differences.

    I imagine a lot of your readers also read people like Keen and Mish. I truly believe there would be a lot of value added to work if you attempted to explain the differences and reasons for the differences between yourself and other "heterodox" economists like Keen and Mish.

    We all love to read your bashing of Keynesians and elitists, and I'm pretty sure most of us agree with you wholeheartedly. But hey, I think you could do wonders for yourself if you were expand the realm of your critiques to people who are closer to your own beliefs but still significantly different.

  5. Mish and Wenzel are two great reads with opposite conclusions. Both make very persuasive arguments for their cases.

  6. Mish and Wenzel are nothing alike. Mish is a hack. He's probably reading this site right now looking for ideas. I bet he subscribed to the daily alert too. Comparing the 2 is like comparing the tooth fairy to the dentist.

    Debt-deflation threats would be a likely scenario if this world was free of central banks. It's not. The Feds of the world will not allow a debt-deflation scenario to play out. Period. Wenzel realizes this and therefore stands on a sounder foundation than Mish.

    In 2008 when the Fed halted money supply growth there was indeed a debt-deflation scenario playing out. How long did that last before the Fed opened the flood gates, exploding the money supply?

    Want more evidence this scenario will not play out? Look at Europe and the ECB. There should have been massive debt-deflation and indeed it was going that way until Draghi took over Nov. 1, 2011.

    @anon 10:09
    I take offense, and likely many others here, to the idea that readers of EPJ also flock to read Mish. I give him credit for sticking to his guns for so long but I think he fails to recognize the folly of government and its choices. I don't know who this Keen guy is, but seeing Keynes associated with him means I won't waste my time finding out.