Ben Bernanke & US Fed 01 (May 08 - Nov 10 )

Re: Ben Bernanke / US Fed

Postby millionairemind » Wed Jun 30, 2010 11:00 am


Time to shut down the US Federal Reserve?

By Ambrose Evans-Pritchard Economics Last updated: June 29th, 2010

Like a mad aunt, the Fed is slowly losing its marbles.

Kartik Athreya, senior economist for the Richmond Fed, has written a paper condemning economic bloggers as chronically stupid and a threat to public order.

Matters of economic policy should be reserved to a priesthood with the correct post-doctoral credentials, which would of course have excluded David Hume, Adam Smith, and arguably John Maynard Keynes (a mathematics graduate, with a tripos foray in moral sciences).

Adam Smith didn't have an economics PhD

Adam Smith didn't have an economics PhD

“Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy.”

Don’t you just love that throw-away line “decent”? Dr Athreya hails from the University of Iowa.

“The response of the untrained to the crisis has been startling. The real issue is that there is an extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new. Moreover, there is a substantial likelihood that it will instead offer something incoherent or misleading.”

You couldn’t make it up, could you?

“Economics is hard. Really hard. You just won’t believe how vastly hugely mind-boggingly hard it is. I mean you may think doing the Sunday Times crossword is difficult, but that’s just peanuts to economics. And because it is so hard, people shouldn’t blithely go shooting their mouths off about it, and pretending like it’s so easy. In fact, we would all be better off if we just ignored these clowns.”

I hold my hand up Dr Athreya and plead guilty. I am grateful to Bruce Krasting’s blog for bringing this stinging rebuke to my attention.

However, Dr Athreya’s assertions cannot be allowed to pass. The current generation of economists have led the world into a catastrophic cul de sac. And if they think we are safely on the road to recovery, they still fail to understand what they did.

Central banks were the ultimate authors of the credit crisis since it is they who set the price of credit too low, throwing the whole incentive structure of the capitalist system out of kilter, and more or less forcing banks to chase yield and engage in destructive behaviour.

They ran ever-lower real interests with each cycle, allowed asset bubbles to run unchecked (Ben Bernanke was the cheerleader of that particular folly), blamed Anglo-Saxon over-consumption on excess Asian savings (half true, but still the silliest cop-out of all time), and believed in the neanderthal doctrine of “inflation targeting”. Have they all forgotten Keynes’s cautionary words on the “tyranny of the general price level” in the early 1930s? Yes they have.

They allowed the M3 money supply to surge at double-digit rates (16pc in the US and 11pc in euroland), and are now allowing it to collapse (minus 5.5pc in the US over the last year). Have they all forgotten the Friedman-Schwartz lessons on the quantity theory of money? Yes, they have. Have they forgotten Irving Fisher’s “Debt Deflation causes of Great Depressions”? Yes, most of them have. And of course, they completely failed to see the 2007-2009 crisis coming, or to respond to it fast enough when it occurred.

The Fed has since made a hash of quantitative easing, largely due to Bernanke’s ideological infatuation with “creditism”. QE has been large enough to horrify everybody (especially the Chinese) by its sheer size – lifting the balance sheet to $2.4 trillion – but it has been carried out in such a way that it does not gain full traction. This is the worst of both worlds. So much geo-political capital wasted to such modest and distorting effect.

The error was for the Fed to buy the bonds from the banking system (and we all hate the banks, don’t we) rather than going straight to the non-bank private sector. How about purchasing a herd of Texas Longhorn cattle? That would do it. The inevitable result of this is a collapse of money velocity as banks allow their useless reserves to swell.

And now the Fed tells us all to shut up. Fie to you sir.

The 20th Century was a horrible litany of absurd experiments and atrocities committed by intellectuals, or by elite groupings that claimed a higher knowledge. Simple folk usually have enough common sense to avoid the worst errors. Sometimes they need to take very stern action to stop intellectuals leading us to ruin.

The root error of the modern academy is to pretend (and perhaps believe, which is even less forgiveable), that economics is a science and answers to Newtonian laws.

In any case, Newton was wrong. He neglected the fourth dimension of time, as Einstein called it, and that is exactly what the new classical school of economics has done by failing to take into account the intertemporal effects of debt – now 360pc of GDP across the OECD bloc, if properly counted.

There has been a cosy self-delusion that rising debt is largely benign because it is merely money that society owes to itself. This is a bad error of judgement, one that the intuitive man in the street can see through immediately.

Debt draws forward prosperity, which leads to powerful overhang effects that are not properly incorporated into Fed models. That is the key reason why Ben Bernanke’s Fed was caught flat-footed when the crisis hit, and kept misjudging it until the events started to spin out of control.

Economics should never be treated as a science. Its claims are not falsifiable, which is why economists can disagree so violently among themselves: a rarer spectacle in science, where disputes are usually resolved one way or another by hard data.

It is a branch of anthropology and psychology, a moral discipline if you like. Anybody who loses sight of this is a public nuisance, starting with Dr Athreya.

As for the Fed, I venture to say that a common jury of 12 American men and women placed on the Federal Open Market Committee would have done a better job of setting monetary policy over the last 20 years than Doctors Bernanke and Greenspan.

Actually, Greenspan never got a Phd. His honourary doctorate was awarded later for political reasons. (He had been a Nixon speech-writer). But never mind.
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Re: Ben Bernanke / US Fed

Postby millionairemind » Thu Jul 15, 2010 5:56 am

Fed Officials Saw No Need for More Stimulus in June (Update5)
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By Craig Torres


July 14 (Bloomberg) -- Federal Reserve officials saw no need to boost stimulus to the economy while trimming their forecasts for growth and noting that risks to the recovery had increased, minutes of their June meeting showed.

“The economic outlook had softened somewhat and a number of members saw the risks to the outlook as having shifted to the downside,” minutes released today in Washington said. “The changes to the outlook were viewed as relatively modest and as not warranting policy accommodation beyond that already in place.”
http://noir.bloomberg.com/apps/news?pid ... zsTU&pos=1
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Re: Ben Bernanke / US Fed

Postby winston » Thu Jul 22, 2010 6:17 am

The Bearded One has spoken and the Market has given him two thumbs down ....

Bernanke's economy comment batters market By Rodrigo Campos

NEW YORK | Wed Jul 21, 2010 5:35pm EDT

NEW YORK (Reuters) - Federal Reserve Chairman Ben Bernanke's dour assessment of the U.S. recovery hit stocks on Wednesday, as his comment that the economy faced "unusually uncertain" prospects rattled investors.

Stocks tumbled after Bernanke acknowledged the labor market's continued weakness while offering few specific options to stimulate lending and investment.

"The market sold off because unfortunately there is no remedy provided in Bernanke's commentary to the rising threat of deflation, the excess capacity in the economy and the malfunctioning of the credit system," said Joe Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.

"We are now giving up on the notion of a standard recovery in the U.S. economy."

Bernanke spoke to the Senate Banking Committee in the first of two days of his semiannual testimony to Congress.

His downbeat remarks sapped most of the buying interest even after a spate of strong earnings reports prior to the market's open.

http://www.reuters.com/article/idUSTRE6 ... Name=usdai
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Re: Ben Bernanke / US Fed

Postby millionairemind » Wed Aug 11, 2010 8:07 am

US Federal Reserve starts 'QE-lite' to placate markets
America's central bank attempted to reinvigorate the country's fading economic recovery by starting what has been dubbed "Quantitative Easing-lite" by one economist.


By James Quinn, US Business Editor
Published: 8:45PM BST 10 Aug 2010
http://www.telegraph.co.uk/finance/econ ... rkets.html
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Re: Ben Bernanke / US Fed

Postby millionairemind » Wed Aug 18, 2010 8:14 am

From ZH :mrgreen:

Image
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Re: Ben Bernanke / US Fed

Postby kennynah » Wed Aug 18, 2010 11:45 am

:lol: :lol: :lol: :lol: fah nay...... :lol: :lol:
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US Recovery - How soon & swift ? 2 (Aug 10 - Dec 10)

Postby kennynah » Fri Aug 27, 2010 10:30 pm

Bernanke: Fed Stands Ready To Support Recovery
8/27/2010 10:20 AM ET



(RTTNews) - The Federal Reserve stands ready to provide further stimulus if the economic situation deteriorates rapidly, the nation's top central banker said Friday.

Soon after government data showed that the US economy grew at a slower pace in the second quarter than initially estimated, Federal Reserve Chairman Ben Bernanke acknowledged that economic activity has been "somewhat less vigorous" than policymakers were expecting.

"The task of economic recovery and repair remains far from complete.... growth during the past year has been too slow and joblessness remains too high," Bernanke told an annual gathering of fellow central bankers and noted economists in Jackson Hole, Wyoming.

Gross domestic product expanded at a 1.6 percent annual rate, the Commerce Department said this morning, lower than its initial forecast of 2.4 percent growth.

Bernanke said the Fed will continue to monitor economic developments closely and evaluate whether additional monetary easing would be beneficial.

While economists have recently suggested the Fed has run out of ways to support the fragile economic recovery, Bernanke insisted that policy makers have additional tools at their disposal, including the purchase of additional longer-term securities and reducing the interest paid on excess reserves.

Bernanke suggested that the Fed's earlier program of purchases helped the economy stabilize after the credit crash of 2008, but cautioned that the benefits of additional stimulus from further expanding the Fed's balance sheet would have to be weighed against potential risks and costs.

by RTT Staff Writer
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Re: Ben Bernanke / US Fed

Postby kennynah » Fri Aug 27, 2010 11:23 pm

so far....market seems to be in love with helicopter's speech....

/ES up 13 points....
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Re: Ben Bernanke / US Fed

Postby eauyong » Fri Aug 27, 2010 11:34 pm

He is more optimistic than many so it is only natural I up my stops for more. :D
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Re: Ben Bernanke / US Fed

Postby iam802 » Sat Aug 28, 2010 12:09 am

kennynah wrote:so far....market seems to be in love with helicopter's speech....

/ES up 13 points....



I think Ben stockpile lots of paper...so market do a V-shape recovery on the 5min chart.

Not a surprise here since the chart still have not shown that the market wants to goes down.

On the Daily chart, we are still range bound.

1063 is the level to watch for.
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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The Ichimoku Thread | Option Strategies Thread | Japanese Candlesticks Thread
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