Bernanke led economy proving critics clueless

[itfitzme]

The injections of base money from QE ...

I haven't been able to find data that differentiates the monetary base into reserves and cash.

Monetary Data - FRED - St. Louis Fed

There's a whole thing for "Reserves" and it's got two measures of currency, "the currency component of M1" and "currency in circulation". Not sure what the difference is...

QE being an increase someones cash.

... QE is a large expansion of or change in the composition of the central bank's balance sheet. What do you have against reserves?

Thanks. I've got nothing against reserves. But the effect of bond purchases, QE and reserve markups are functionally different. QE is particularly significant because it is "with new electronically created money". And it get into the flow of purchases through a different route than reserves.

Lower interest rates and reserve increases open up funds for borrowing. Open market operations put it out there by putting it into the hands of investors (including banks) that are holding securities. "This is distinguished from the more usual policy of buying or selling government bonds... A central bank implements quantitative easing by purchasing financial assets from banks and other private sector businesses with new electronically created money." Both do, though imply that the money may be contracted at some point, either as borrowers pay of their debt or when the Fed sells the bonds and securities they are holding.

The devil is in the details, as they say.

 

[expat_panama]

...Too bad that chart doesn't tell us how stocks and gold will do over the next 3 months.

LOL --No shortage of people here that "know" that one! Problem is that half "know" it's going to be one thing and the other half "know" it's the other. Meanwhile the adults in the room estimate probabilities based on past performance and plan accordingly.

 

[itfitzme]

*snip*

Economics, physics, engineering and now neuroscience. I'm starting to get jealous.

Nah, you just happened to ask the right question with 'Are you on drugs?' That one I've got figured out. It has relevance. Beyond that little thing, I'm clueless. A doctor knows what drugs he should be on. And there is a big difference between knowing how a frontal lobotomy is done and actually doing a frontal lobotomy. I just know I'd rather have a bottle in front of me than a frontal lobotomy.

 

[itfitzme]

“The criticism about the Fed being inflationary is not fact-based,”...

Yeah that's why Gold is spiking, because there's no inflation and the dollar is gaining value...

Ah, problem of definitions for 'inflation'. Here's what most people mean when they say "inflaton" (from financial definition of Inflation (economics). Inflation (economics) finance term by the Free Online Dictionary.)--

Inflation
The rate at which the general level of prices for goods and services is rising.​

--and that means inflation has nothing to do with either gold or foreign exchange rates.

Inflation has referred to price inflation for over a hundred years. I only noticed it being used to refer to monetary inflation, without adding the "monetary" part recently. In my experience, "not noticing" generally means it hasn't been.

It's just a working hypothesis but I get the sense that some Romney decided to use it so that he could say that there is inflation, which is true if you mean monetary base, without stating that he means "monetary". That way, Romney's constituents can get all upset because "Bernake has over inflated the currency", thinking it means price inflation. If you don't know the difference, you immediately think price inflation. If you do know the different, you know it means monetary. But, being clueless as they are, they don't bother to check to see if the CPI is going as usual, better, or worse. They just know that the price of gas went up. Of course, they never notice when it goes down because that doesn't get their adrenaline all jacked up.

It's the same thing with the use of "entitlements" when referring to SSI and Medicare, lumping it in with food stamps (SNAP) and welfare. "Entitlements" has the connotation of "a teenager feeling entitled". And their constituents can get all in a tither over how these lazy folks think they are "entitled". Still, people are entitled to SSI, they paid into it. So it's not incorrect to call them "entitlements". But really, the federal budget calls them pensions and Social Security Insurance is, well, exactly what it says, insurance. Recently, the Republican candidates have discovered that a large part of their base are on SSI. People tend to be Democrats when they are younger then switch to Republican when they get older. So now the Republican candidates are saying, "Why of course they are entitled, they paid into it." It's a word game. They choose the word that has the literal meaning that fits the object and the connotation that has the feeling that fits their intent. It's not unusual. It's just how marketing works. "Everyone" knows it and does it.

It's just a hypothesis.

 

[expat_panama]

...Romney's constituents can get all upset because "Bernake has over inflated the currency", thinking it means price inflation...

Make that quote: "I think Ben Bernanke has over-inflated the amount of currency that he's created" and I agree that people like to confuse inflation with money supply and exchange rates. They also like to confuse budget deficits with trade deficits. That's ok, I have met the 'people' and they're us. We can learn just fine.

 

[KissMy]

More than a year after Republicans from House Speaker John Boehner of Ohio to presidential candidate Ron Paul of Texas warned that the Fed’s second round of asset purchases risked a sharp acceleration in prices, the surge has failed to materialize. The personal-consumption-expenditures price index rose 2.4 percent for the 12 months ending in December, near the central bank’s 2 percent target.

Don't get too esxcited, numbskulls. it takes time to build. And it is building. Fluff pieces like this that attempt to get people to relax and build confidence, will only have those that followed, in the hot seat when the next round knocks on the door.

That's all i read. The above paragraph. Bernanke is a fucking moron, or he would have known about the housing bubble 5 years before it popped like Ron paul did. Time frame is never offered on these things in the prediction./ it's all about knowing how it works.

The inflation happened at the time all the bad loans were made. Deflation is now when people quit paying for those loans. Papering over it with the printing press permanently fixes us with those inflated prices created by the bad loans. All the newly printed money in the system will some day get levered up & lent out causing a massive inflation bubble that could destroy the US Dollar. The Fed could raise interest rates, reserve requirements & taxes to combat the coming inflation, but they have proven to be irresponsible at the wrong times in the past, so plan for the currency to blow up in the future.

 

[expat_panama]

...The inflation happened at the time all the bad loans were made. Deflation is now when people quit paying for those loans. Papering over it with the printing press permanently fixes us with those inflated prices...

Let's sort out this muddle.

More money than goods makes prices go up and that's what inflation is. Making loans creates money and paying back loans destroys money. Right now we got a level of inflation that's good with a level of borrowing that's not as much as we need.

 

[CF1189]

Without FED intervention, the U.S. economy would have gone into a Deflationary Spiral. Expansive policy has not spurred velocity, but Bernake contends it requires 2 years to take effect. Helicopter Ben warns of Deflation and chooses to use the Printing Press to avoid it at all costs.

The Crisis of Aggregate Demand.

With crippling Debt, the United States is in a precarious situation. The best way to get out of this malaise.

Debt-GDP will eventually exceed 100%. The United States will attempt to inflate its way out of debt.

However, spurring inflation results in oil prices increasing as well. WIth our consumption of roughly 19.0 million barrels per day, our 8.0 million barrel domestic production will not suffice. Unfortunately, the best way to inflate our way out of this debt comes with keeping oil prices stabilized.

The current situation in the Middle East makes that exceedingly difficult.

 

[KissMy]

...The inflation happened at the time all the bad loans were made. Deflation is now when people quit paying for those loans. Papering over it with the printing press permanently fixes us with those inflated prices...

Let's sort out this muddle.

More money than goods makes prices go up and that's what inflation is. Making loans creates money and paying back loans destroys money. Right now we got a level of inflation that's good with a level of borrowing that's not as much as we need.

Printing more money than goods only makes prices go up when it is spent or lent. If people stuff it in their mattress it can deflate prices. Borrowers don't stuff that money in a mattress, they spend it. Once the economy improves demand for loans & interest rates climb that money will come out of the mattress. It will get lent to a spender & prices will skyrocket.

 

[KissMy]

Ben Bernanke Pure Genius​

[ame="http://www.youtube.com/watch?v=9QpD64GUoXw"]Ben Bernanke Pure Genius[/ame]

 

[zonly1]

Bernanke-Led Economy Shows Critics Wrong About Fed - Bloomberg


The numbers are proving Federal Reserve Chairman Ben S. Bernanke’s critics wrong.

More than a year after Republicans from House Speaker John Boehner of Ohio to presidential candidate Ron Paul of Texas warned that the Fed’s second round of asset purchases risked a sharp acceleration in prices, the surge has failed to materialize. The personal-consumption-expenditures price index rose 2.4 percent for the 12 months ending in December, near the central bank’s 2 percent target.

“The statements were politically motivated,” said John Lonski, chief economist at Moody’s Capital Markets Group in New York. With unemployment stalled above 8 percent for three years, “I don’t see how anybody in their right mind could form a strong argument for persistent, rapid inflation in the United States without the participation of the labor market.”

Maybe you can explain for the class why the dollar is chased in a hole.
We are losing market share(the dollar) as far as allowing the dollar to exist in china, russia, brazil, and iran.
What do you think it's effect on the average "head in the sand" family of America?
Answer: I'm too busy communicating on my personnel communicating device because my liberal teachers told me so. I'm special and I'm unique. In the meantime, father and mother are paying your bills.

 

[DSGE]

...The inflation happened at the time all the bad loans were made. Deflation is now when people quit paying for those loans. Papering over it with the printing press permanently fixes us with those inflated prices...

Let's sort out this muddle.

More money than goods makes prices go up and that's what inflation is. Making loans creates money and paying back loans destroys money. Right now we got a level of inflation that's good with a level of borrowing that's not as much as we need.

Printing more money than goods only makes prices go up when it is spent or lent. If people stuff it in their mattress it can deflate prices. Borrowers don't stuff that money in a mattress, they spend it. Once the economy improves demand for loans & interest rates climb that money will come out of the mattress. It will get lent to a spender & prices will skyrocket.

Except as prices start to rise it'll get taken out of the economy. They have a 2% target. They'll adjust the monetary base and the fed funds rate as necessary to keep in near there.

 

[editec]

Oh there's CPI price inflation, alright it's relatively modest (except for some stuff like energy)

What there isn't is WAGE INFLATION.

Falling wages and unemployment is what's keeping inflation in check.

But there's still plenty of money in the upper eschlons of the world of capital so we could have bubbles in investments (that's inflation, ya know) even while most working people are cash poor.

Another benefit of wealth inequity is that we end up with two different economies in one nation.

There's the economy of the working classes, and the economy of the investments class.

 

[KissMy]

Oh there's CPI price inflation, alright it's relatively modest (except for some stuff like energy)

What there isn't is WAGE INFLATION.

Falling wages and unemployment is what's keeping inflation in check.

But there's still plenty of money in the upper eschlons of the world of capital so we could have bubbles in investments (that's inflation, ya know) even while most working people are cash poor.

Another benefit of wealth inequity is that we end up with two different economies in one nation.

There's the economy of the working classes, and the economy of the investments class.

There is now a huge 18% unemployed class.

 

[KissMy]

Let's sort out this muddle.

More money than goods makes prices go up and that's what inflation is. Making loans creates money and paying back loans destroys money. Right now we got a level of inflation that's good with a level of borrowing that's not as much as we need.

Printing more money than goods only makes prices go up when it is spent or lent. If people stuff it in their mattress it can deflate prices. Borrowers don't stuff that money in a mattress, they spend it. Once the economy improves demand for loans & interest rates climb that money will come out of the mattress. It will get lent to a spender & prices will skyrocket.

Except as prices start to rise it'll get taken out of the economy. They have a 2% target. They'll adjust the monetary base and the fed funds rate as necessary to keep in near there.

As I said in a previous post.

The Fed could raise interest rates, reserve requirements & taxes to combat the coming inflation, but they have always proven themselves to be irresponsible at the wrong times in the past, so plan for the currency to blow up in the future.

 

[DSGE]

Printing more money than goods only makes prices go up when it is spent or lent. If people stuff it in their mattress it can deflate prices. Borrowers don't stuff that money in a mattress, they spend it. Once the economy improves demand for loans & interest rates climb that money will come out of the mattress. It will get lent to a spender & prices will skyrocket.

Except as prices start to rise it'll get taken out of the economy. They have a 2% target. They'll adjust the monetary base and the fed funds rate as necessary to keep in near there.

As I said in a previous post.

The Fed could raise interest rates, reserve requirements & taxes to combat the coming inflation, but they have always proven themselves to be irresponsible at the wrong times in the past, so plan for the currency to blow up in the future.

Like when? Since the Fed got its act together - that is, since Paul Volcker - the average rate of PCE inflation over the past 30 years has been 2.6%. Under Bernanke the average has been 2.2% and they recently announced that they're explicitly targeting 2%. I plan for the Fed to do exactly as its been doing for the past 30 years. I hope to god they aren't so hawkish that they immediately tighten if underlying inflation goes above 2% when unemployment and growth are still dismal. But if you look at similar central banks around the world, the ECB and the Bank of Japan, both on two occasions each prematurely tightened money and had to embarrassingly reverse the decision soon after. All this "plan for hyperinflation" nonsense is just garbage.

 

[EdwardBaiamonte]

All this "plan for hyperinflation" nonsense is just garbage.

except that huge inflation has been the norm throughout human history, the Fed's balance sheet is bigger than ever, a Corvette costs 10 times what it did 40 years ago, and we have a near communist in the White House who voted to the left of Bernie Sanders.

 

[EdwardBaiamonte]

As I said in a previous post.

The Fed could raise interest rates, reserve requirements & taxes to combat the coming inflation, but they have always proven themselves to be irresponsible at the wrong times in the past, so plan for the currency to blow up in the future.

Yes, a gold standard is in very very critical right now!!. Imagine if Obama got to appoint the next Fed Chairman?

"Another very important issue is with unemployment so high, how can we strengthen the Fed's full-employment mandate and ensure that it conducts monetary policy to achieve maximum employment? In other words the Fed has a number of mandates and one of them is to control inflation. But one of them also is to pursue policies that lead to full employment. Is the Fed doing that in an adequate way? Well I would argue that by definition when you have 16% of people unemployed and underemployed it really is not." - Bernie Sanders

 

[EdwardBaiamonte]

Like when? Since the Fed got its act together - that is, since Paul Volcker - the average rate of PCE inflation over the past 30 years has been 2.6%. e.

OMG! That is so pathetic, innocent and liberal. The Fed didn't get its act together Reagan and Friedman did. Now we have BO and Krugman.

 

[DSGE]

Like when? Since the Fed got its act together - that is, since Paul Volcker - the average rate of PCE inflation over the past 30 years has been 2.6%. e.

OMG! That is so pathetic, innocent and liberal. The Fed didn't get its act together Reagan and Friedman did. Now we have BO and Krugman.

I think I'm gonna start rationing my responses to your ravings. Replying to every profoundly ignorant thing you say is probably bad for my health.