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Today marks the final day of Bernanke’s testimony to Congress.
Highlights from the first day of testimony and Q&A include:
Q: Are You Printing Money? Bernanke: Not Literally
Amazingly, no one said anything after this comment. But far more importantly was the last statement made by the Fed Chairman,
"If we were to tighten (monetary) policy, the economy would tank."
Tightening monetary policy means if interest rates rise. Interest rates are currently being held at ZERO and have been there four nearly five years.
And Bernanke has just announced that if interest rates rise, at all, then the economy would tank.
Unfortunately for Ben, rates are already rising around the world.
Rates on Portugal’s ten-year are over 7%. Rates on Greece’s ten-year are back over 10%. Japan, the country of zero interest rates has seen a spike in its rates since April.
Even Treasuries are surging higher, despite the Fed buying $45 billion worth of them every month.
Bernanke has told us point blank what will happen if rates rise (economic collapse). But he’s not telling us the whole truth. The fact of the matter is that if rates rise now while the Fed is running QE 3 and QE 4 then it’s game over. The Fed will have officially lost control of the system and a wave of defaults will implode the markets.
This process has already begun. As I noted before we’re seeing rates spiking around the world.
Interest rates are rising and QE can't keep them down and Bernanke can't explain why they are rising.
Bernanke also can't explain why this "recovery" is being led by part time job creation.
Interest rates are rising and QE can't keep them down and Bernanke can't explain why they are rising.
Bernanke also can't explain why this "recovery" is being led by part time job creation.
How is the economy going to tank, exactly? If Zero Hedge is right, we're just going through what has happened to Japan traditionally whenever the rest of the world goes to crap. Jpana keeps having to print a lot of yen because people just keep flooding it all the time. Now its the US dollar's turn. I wouldn't call that economic collapse, I'd call that confidence in the US dollar
BERNANKE ON EFFECTS OF TIGHTENING:
"I don't think the Fed can get interest rates up very much, because the
economy is weak, inflation rates are low. If we were to tighten policy, the
economy would tank."
Tighter monetary policy is of course of sensible action undertaken by the Federal Reserve to constrict spending in an economy that is seen to be growing too quickly, or to curb inflation when it is rising too fast. But that is far from today's reality, where we are teetering with a barely growing economy along with nominal inflation. It would be silly to tighten right now as the possible benefits of continued loose policy are substantial while the risk of tightening high. The low rates created by monetary policy have certainly encouraged growth in the stock markets and in the housing sector, the only 2 relatively robust sectors of today's economy. Eliminate these supports and these sectors may well tank leaving nothing substantial to prevent our general economy from cratering further. Cratering is worse than tank. Recession is worse than crater.
Bernanke is the official spokesperson for the Federal Reserve.
You know he knows what he is saying and you ought to know he knows what is going to be done about it, at least as far as what it is he knows he must say to keep jittery minions of the Fed cooing and bleating. If people lost in emerald cities dedicated to self-absorption happen to think the Gates and Buffett show will protect them, they should move to Medina and stare at the mirror on the wall once they're settled in. Having seen that selfie in the post above I will look elsewhere for edification, thanks.
Would anyone really be surprised at the calculating intellect of those who own such a grandiose corporation? Are lay people so self-absorbed they think that, despite what history has shown us, those with the resources and power will do whatever they please to change things as they see fit, suffering of the serfs be damned?
America should re-think its dedication to false affluence. That is, if most Americans still think idependently of their 401ks and mortgage rates and loan rates and FICO scores...
Well, you get what you pay into and what you profit from, in a small way from, must be worth it at the very least.
Quiz: During the prelude to the financial crisis during the summer of 2007, who said the following about the escalating rate of default of subprime mortgages:
Quiz: During the prelude to the financial crisis during the summer of 2007, who said the following about the escalating rate of default of subprime mortgages:
'It's contained.'
This might be CYA as it's strongly hinted he's leaving at the end of the year.
This way he can turn around and say "Well I did warn you".
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