Bernanke Messaging Fail: Americans Still Haven’t Heard About Recovery

By now it’s well known that Federal Reserve Bank Chairman Ben Bernanke’s ghoulish attempts to be charming just give nightmares to little children. But his bumbling press conference yesterday may also be unsettling adults. 

According to Gallup, as of last week a majority of Americans believed the economy is in either a recession (26 percent) or a depression (29 percent). Another 16 percent are settling for either a decession or a repression – or whatever it is when the economy is “slowing down.” Where could they be getting these ideas? 

Well, the rate of new unemployment claims has stopped going down. New jobless claims came in at 429,000 for the week ending April 23 – the highest they have been since January (the last really good month this country’s had, damn it!). 

Of course, in these stagflationtastic times, you’re not really cool until you exhaust your unemployment benefits and go all the way to “marginal attachment to the workforce.” How many people have done that in the past year? Get off the couch and take a bow, one million Americans

At least we know that this unemployment is following the Phillips Curve (the theory that inflation correlates negatively with unemployment, which was apparently disproven in the 1970s but still clearly guides Fed and Treasury policy). Inflation can’t be happening because Bernanke says it’s transitory and Paul Krugman, The Doctor, ridicules the idea. But wait! Looks like rents have joined gas and food among the items that are not inflating, just going up in price. (Incidentally, for an interesting but technical reconsideration of the Phillips curve, check out this study [pdf] by Robert F. Mulligan in the Cato Journal.) 

The only thing that doesn’t cost more is the one asset where most Americans have most of their money tied up. The Case-Shiller real estate index has taken another nose dive, and if you think house prices don’t still have a few hundred thousand feet left to fall, consider this: Real estate began seriously inflating early in the last decade, if not earlier, and according to Case-Shiller, prices are only about where they were in the early 2009 trough. 

Which means all this money printing is inflating everything except house prices – the one asset the government is trying to prop up. And the money printing is making everybody poorer. The value of the dollar has been dropping like a stone (if a stone were made of paper with nothing to back it up, that is), and a Deutsche Bank study says the greenback, adjusted for inflation, is the weakest it’s been since the end of the gold standard. Things have gotten so bad even Russian Prime Minister Vladimir Putin is showing us mock sympathy:

“We see that everything is not so good for our friends in the States,” Putin told lawmakers Wednesday.

“Look at their trade balance, their debt, and budget. They turn on the printing press and flood the entire dollar zone — in other words, the whole world — with government bonds. There is no way we will act this way anytime soon. We don’t have the luxury of such hooliganism,” he said.

Even as Putin blamed the U.S. for printing money — something for which Russia was criticized during periods of hyperinflation in the 1990s — other Russian officials said there is no alternative to the U.S. dollar and declined to discuss cutting the country’s dollar holdings.

You know who else are not cutting their dollar holdings? Americans. Despite all this inflation, people are more and more reluctant to spend. Wal-Mart, which has seen sales decline for seven straight quarters, is suffering from broke-customer syndrome. "We're seeing core consumers under a lot of pressure," CEO Mike Duke said at a conference yesterday. "There's no doubt that rising fuel prices are having an impact... Purchases are really dropping off by the end of the month even more than last year." 

I hate to be so churlish as to bring this up on the very day that crooked judges have once again awarded Lord Keynes the title, but can anybody provide any evidence that any of this stimulus – be it fiscal policy, monetary policy or "aggregate demand stimulus" – has made any positive difference in the U.S. economy? I know it’s only been four years since the bailouts started, but you know, maybe we could get a measurement somewhat more scientific than repeating a “gazillion times” that spending is keeping the depression from happening? Or more persuasive than Bernanke’s assertion, “I do believe that the second round of securities purchases was effective”? (The Ben Bernank’s very short list of evidence – a stock market rally, easy credit, and “reduced volatility” – was comically unconvincing.) 

These blanket claims that monetary stimulus has been helpful are, in my view, even more repellent than Krugman’s claim that we need more Keynesian patent medicine. At least the hardcore interventionists believe in something, however wrong it is. I’d be happy if they would ever specify what they think enough spending would be, and have made suggestions to that effect. But nobody can honestly look at Bernanke’s stewardship of the Fed and say he’s done a competent job. There’s just something surreal about telling Americans in 2011 that things are getting better. 

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • ||

    "can anybody provide any evidence that any of those stimulus has made any positive difference in the U.S. economy?"

    Depends.

    Are you a bank or GM or Chrysler?

  • ||

    Don't forget about Washington DC.

    They have great wages there and very low unemployment.

  • yonemoto||

    Ashamedly, the stimulus provided me with my current job, and my previous one. Of course they are paying me $20/hr, which is not nearly enough considering I actually spend one and a half times the normal amount of hours a week at work (there's a lot of down time and I put in those extra hours so I don't feel guilty trolling reason) and the cost of living here is redic.

  • Paul||

    Ashamedly, the stimulus provided me with my current job, and my previous one.

    No sweat. H&R commenters are producing a repayment schedule for you.

  • ||

    And it is the one place housing prices are going up.

  • ||

    So, when do we get a gummint panel to investigate the intentional manipulation of housing prices?

  • BrophyWorld||

    I think tax accountants have been doing well.

    I spoke recently to a friend and the amount of tax that she owes to the government depends on the answer to an existential question: “Are you an employee or an independent contractor?”

    Most people think that I’m an extremist kook because my answer is simple: every independent adult is an independent contractor, and can be an employee only if hiring an employee is similar to adopting a child, and the employer fulfills the needs and wants of the employee as a parent would for a child.
    http://brophyworld.com/playing.....overnment/

  • Employer||

    Sure, but then you ask the employee to sit on your knee and all of sudden you get hit with a sexual harassment suit! I'M JUST TRYING TO BE A LOVING FATHER, DAMMIT!!!

  • ||

    I have to admit, life has been pretty good for me during the recession. I work in one chunk of the private-sector that's in boom times: Mobile computing.

    Android, iPhone, etc. has been a boon to code monkey like me past two years. Its all because of Uncle Sugar's Blackberry fetish I'm sure.

  • Prog-O-Matic||

    Just remember, you owe the rest of us for your little island of prosperity. Don't iPhone users drive on roads, Hmm? Don't Android devices use regulated 'lectricity, Hmm? DARPA! Internet!

    That's what I thought. Time to pay your fair share, software boy.

  • ||

    Nah, Al Gore sits on Apple's board. Even the Waxman watches his step around hippie-tech California-icon Uncle Stevie. Al Franken doesn't subpoena him, just writes nice letters. Even his last name is 'Jobs.'

    So I'm good as long as Uncle Stevie doesn't need another liver anytime soon (yours is his BTW, page 55 of iPhone TOU). Plus we've got Exxon to kick around.

  • Paul||

    I survived several rounds of layoffs in my sector: Healthcare IT. While we're stable right now, the organization I work for is currently bleeding.

    But it's a non-profit, so I hear that doesn't matter! Please ignore the layoffs.

  • Bingo||

    Well the stock market is up above 10000 and all of the administration's buddies in the big banks are doing just fine, so things are just peachy keen in Ben's eyes.

  • ||

    Weirdly, the stock market is also beyond insane. Take a company like Amazon. They're affected by a slowdown in consumer spending, same as WalMart. They've missed earnings 6 of the last seven quarters, and were off expectations by a spectacular margin this week.

    Stock exploded to the upside, and is at an all-time high.

    Side effect of QE2 and the Bernanke: market in large caps is as manipulated as the foreclosed housing inventory. The big brokerage firms are reporting things like "we made money every trading day."

    /Of course they did.

  • ||

    If the dollar is worth less than it was, the stock price has to go up just to maintain constant value.

  • Spoonman.||

    I own a lot of stocks for precisely this reason.

  • ||

    That explains a lot of the stock market's epic gains over past thirty years. You adjust it for inflation and all of a sudden it doesn't look so epic.

  • Bingo||

    Tulpa posted a stocks relative to the value of silver... it's surprisingly neutral.

  • Busy Commander Obama||

    In addition to restoring confidence -- in the American dollar -- and creating and saving millions of jobs, I am busy fulfilling my promise to capture Osama Bin Laden. He is still alive. In the mountains of Afghanistan. I will convict him. In a military tribunal at our detention facility in beautiful Guantanamo Bay.

  • CatoTheElder||

    All praise to his holiness.

  • JB||

    Things would have been getting better, but the Obama administration is full of absolute morons.

    1. Obamacare - retardation in action.
    Let's make it difficult for businesses to hire employees because of tremendous uncertainty around compliance and health care costs.

    2. US debt, deficits and ratings.
    Let's laugh off any real solutions and live in fantasy-land. Many countries are realizing they have been spending too much (hello, Europe) and Obama sees this as an opportunity to say: "I too can be a retarded European and bankrupt my country!"

    3. Flight from the dollar.
    Money is running away from the US after we have foisted heaps upon heaps of debt for sale. Supply is starting to far outstrip demand. No one wants a crappy, debt-ridden dollar backed by the full faith and a credit of an empty-suit President.

    Tax cuts for individuals and a clean-up of the corporate tax system would have been a real stimulus. Instead we got hand-outs to cronies and debt heaped upon more debt conjoined with making running a business more difficult and costly.

    The best thing to invest in now? Guns and ammo.

  • CatoTheElder||

    Way too early for guns and ammo. It's still time for gold and silver. Then rural real estate. Then guns and ammo. Well, maybe a little bit of guns and ammo is indicated along the way.

  • ||

    I already have lots of guns and ammo! I'll be rich!

  • mr simple||

    Better fire off a few rounds to avoid inflation.

  • Ben Bernanke||

    Smile when you say that.

  • Spiny Norman||

    The metal content alone makes ammo a good inflation hedge.

  • ||

    About 40% of the country has taken leave of its senses. I know people who defend Obama and his economic record. They claim the stimulus was successful, there is no inflation, and the debt and deficit are not long term problems. In fact, the biggest threat to the country is the "Tea Party". I am not kidding. They really think this. They have convinced themselves that the Tea Party is going to take over the country, deregulate everything, and destroy the economy by cutting government spending. I am not kidding. They really believe this.

    First, if only it were true. But more than that, numbers are nasty things. Congress, the Fed and Obama are destroying the currency and the wealth of the country before their eyes. And these clowns think a bunch of people running around with signs and flags are the biggest threat to the country. You can't even have a rational conversation with people like that.

    Obama and the modern liberal is the ultimate expression of tribal politics. The same people who hated Bush for being a war monger, think bombing Libya is a great idea. And did you know that the people in GUITMO are really bad people who need to be kept locked up? Sure could have fooled me when the same people saying that now were back in 07 claiming GUITMO was another Auschwitz.

    I sometimes wish that Obama would have just walked away from the middle east and closed GUITMO day one. I wish that not because I would have agreed with it. I wouldn't have. But as much as I would have disagreed with it, at least his actions and those of his supporters would have made some internal sense.

  • MJ||

    It does make internal sense. His supporters love Big Brother (D), and despise Big Brother (R). That is the only real principle they have.

  • Restoras||

    A+

  • ||

    I'd say its a family thing. The Elephants love Big Brother. The Jackasses love Big Mother.

  • ||

    And Republicans do their part to prop up the liberal world view by providing a steady supply of bogeymen: warmongers, gay bashers, bible thumping hypocrites, morons, anti-Evolutionists.

  • ||

    Warmongers? You mean like the current administration that is bombing Libya? Gay bashers? You mean liberals who excuse and ignore gay bashing if it is done by a Muslim? Bible thumping hypocrites? You mean like the Reverend Jessee Jackson and his multiple sexual harassment suits? Morons? You mean like Joe Biden? And people committed to science? You mean like all the liberals who bought into vaccinations causing autism?

    Liberals have all of those bogeymen and more on their side. They just ignore them because it is somehow different when their side does it. It is just fucking tribalism. If they were actually liberals I would feel better because I would at least know what they wouldn't do. As it is they will do and support anything as long as someone in their tribe is doing it.

    Being a Democrat and a liberal is nothing but a way for stupid people to brand themselves as smart. The actual ideas are just fashion and can change with the season.

  • JoshINHB||

    +1000000000000000000000000000000000000000000000000000000000000000000000000000000

  • Restoras||

    A+

  • ||

    Being a [insert party affiliation] is nothing but a way for stupid people to brand themselves as smart. The actual ideas are just fashion and can change with the season.

    I like your statement...I would expand it however to any encompass anyone who defines their politics by a party affiliation before principles.

  • ||

    And none of that matters. None of that erased the things Republicans do to help perpetuate liberalism.

  • Middle Age Crazy||

    Yes, the Republican Party has a lot of room for improvement, but I don't think that matters either, Mike.

    Every tribe must have it's Emmanuel Goldstein. Every bogey-man of the Left contains a tiny kernel of truth surrounded by a big squishy mass of fearful fantasy. Look at Bush hatred, Palin hatred, etc., etc. It's completely off-the-hook. I've been in San Francisco 20 years now. John's explanation is right on the money.

  • ||

    John seems to fall somewhere in the middle of the libertarian-to-conservative spectrum. Just want him to acknowledge the bullshit that conservative's engage in and support. I guess I shouldn't have interrupted when he was having fun with an anti-liberal rant.

  • JoJo Zeke||

    Warmongers? You mean like the current administration that is bombing Libya? Gay bashers? You mean liberals who excuse and ignore gay bashing if it is done by a Muslim? Bible thumping hypocrites? You mean like the Reverend Jessee Jackson and his multiple sexual harassment suits? Morons? You mean like Joe Biden? And people committed to science? You mean like all the liberals who bought into vaccinations causing autism?

    This. ThisThisThisThisTHIS.

  • ||

    This is perhaps one of John's best rants to date.

    I have clashed with you a few times but know that I am glad you are here John and this is excellent work.

    +1000000000000000000000000000000000

  • yonemoto||

    I know you have to be tired of me saying this, but I have to keep putting this on the record.

    Wal-Mart, which has seen sales decline for seven straight quarters, is suffering from broke-customer syndrome.

    What happens when the customers go beyond broke? They start defaulting. All this decline in spending could trigger a huge deflationary contraction.

    Private debt rests at $40-50T range, the public debt is in the $10-20T range. I don't doubt that Bernanke could flip the shit and go Mugabe on us, but I don't think he'll do it for at least 3-5 years. without running the printing presses at transwarp velocities, the only way to have hyperinflation is for us to have a deflationary collapse first.

  • Troll||

    'What happens when the customers go beyond broke?'

    Ma, get out the rollin pin. Dem Oreos ain't worth the $7 in gas to drive down to Wallyworld n back...

  • Middle Age Crazy||

    Until recently I was firmly in the deflation camp -- "Age of Deleveraging", "Lost Decade", etc. Now I've flipped. I gave serious consideration to the notion of inflationary collapse.

    The prospect seems silly to most people because it's never happened in the US. But we're doing things now that we've never done before. Consider that "entitlement debt" is 6-10 times the size of the $10T official national debt you mentioned.

    If we're doing many of the same things the Argentines did, it's not extreme to say it's quite possible we'll get the same results.

  • Rrabbit||

    The public debt is way above 20T:
    o the "official" Federal national debt
    o the "official" state debt and city debt
    o pension obligations to more than
    10 million current or former government employees.
    o the whole Social Security/Medicare/Medicaid Ponzi scheme
    o Fannie Mae, Freddie Mac, and other atrocities off the official budget.

  • ¢||

    (the theory that inflation correlates negatively with unemployment, which was apparently disproven in the 1970s but still clearly guides Fed and Treasury policy)

    Whatever JournoList is called now must be pumping the lines full of Phillips Curve talking points. In the past few days there's been a sudden left-wide acceptance of the heretofore denied massiveness of unemployment, because "unemployment = deflation" is the last tank left in the "There's no inflation, Birchers!" armory.
    And simultaneously, the Bush years have suddenly become the perfect exemplar of a dangerously deflationary period (with peculiarly low unemployment and price stability, I guess) that this inflation we got goin' totally rules in comparison to.

    In unrelated news, the Confederate dollar is up vs. USD. Really.

  • ||

    Here is why we are fucked. When Reagan took over in 1981, we had something like an 84 billion dollar deficit and something like a trillion dollar debt. So Reagan was able to allow Volker to jack up interest rates to kill inflation and still be able to service the debt. But now we have a debt service that is comparatively five five times what it was in 1980. So when they raise interest rates to stop inflation, the government won't be able to service the debt, which means they won't ever raise interest rates. They will just let inflation run its course and monetize all of that debt destroying most of the country's wealth with it.

  • ||

    That is the rock and hard place.

    If the government had to kick down 15% to move 10 Year Treasuries at the auction (like in early 80's) it would be tits up.

  • alan||

    In unrelated news, the Confederate dollar is up vs. USD. Really.

    Oh my God. Older family members use to give that stuff away to one another as joke birthday and Christmas presents when I was a wee lad.

  • rather ||

    What? No thread on the royal wedding?

  • ||

    Some live in German son of a Greek racialist is marrying the daughter of a confetti magnet.

  • Les Clew||

    The daughter is a confetti magnet.

  • ||

    I would give anything to see her get to the alter and convert to papism on the spot.

  • ||

    I am actually surprised Ann Althouse isn't doing one. She will do running threads on American Idol and such.

  • rather ||

    I bet you're watching it!

  • rather ||

    Harry said something snide to Willaim when the bride came up the aisle...
    My guess is:

  • ||

    And Henry needs a haircut. Sorry, but the 80s fro is distinctly unmilitary.

  • rather ||

    I wonder is Harry's dad is at the wedding?

  • ||

    LOL.

  • rather ||

    WTF is it with the trees in the abbey? Something to hang on for his side of the family?

  • ||

    I don't know. It is an abbey not an greenhouse. I hate it.

  • rather ||

    I've noticed a lot of dogs in the audience and the bathroom wait was forever....

  • rather ||

    Holy shit! They have fire hydrants in the abbey too

  • ||

    The red hair could have just happened you know. And just because his brother is balding and he has a jew fro is nothing to be suspicious about.

  • ||

    You guys watched that thing? Hahaha!

  • alan||

    And Henry needs a haircut. Sorry, but the 80s fro is distinctly unmilitary

    He's an airjockey. Unmilatary, yes, but it doesn't surprise me he can get away with it. Even a royal is less privileged in certain ways.

  • ||

    And I bet what he said was "you married the wrong sister". This sister is much better looking than the bride.

  • rather ||

    I get the leftovers

  • rather ||

    I'm a feminist, but when it comes to fairy tale weddings, then even I lose my principles.

  • ||

    Of course. They are watching it in my office. I didn't know that one of Andrew's daughters was a member of the Benevolent Order of Elks. It was nice that she decided to wear her antlers to the wedding.

  • rather ||

    LOL, I thought she must be the funny one

  • Old Mexican||

    Re: rather,

    What? No thread on the royal wedding?


    http://www.dailystab.com/blog/.....ueless.jpg

  • Paul||

    What? No thread on the royal wedding?

    Interesting only to bored housewives and gay men.

  • cynical||

    rather and John just went on and on about it.

    I mean, not that there's any relationship between what you said and that. I was just observing.

  • rather||

    Paul, you missed it! There goes your theory!

  • rather ||

    The Queen just checked the program and said who the fucks wedding is this anyway?

  • ||

    No. The Queen is just thinking "Jesus Christ just don't let her be another Diana"

  • William||

    John, are you telling me I don't get to give up this piece of ass for my own horse Camilla?

  • ||

    Show me a beautiful woman. And I will show you a man who is tired of sleeping with her. Perhaps Camilla has skills not immediately obvious.

  • I Hear||

    She's an accomplished skin flutist and works for carrots.

  • NeonCat||

    Something involving a riding crop and spurs. Both Charles and Camilla know the importance of dressage.

  • ||

    Show me a beautiful woman. And I will show you a man who is tired of sleeping with her.

    Show me a beautiful woman and I will show you me trying to sleep with her...lol.

  • ||

    You know who else are not cutting their dollar holdings?

    Hitler?

  • Hilter||

    wedding anniversary yesterday, still in bed baby

  • Hister||

    I'm the Latin name for the Danube River (especially its lower course), or for the people living along my banks.

  • Nostradamus||

    I knew that.

  • ||

    Norman Rockwell is sick, man -- I never get tired of looking at his work.

  • cynical||

    You know what would be awesome? Taking Giger's stuff and redoing it in Rockwell style.

  • Fatty Bolger||

    Come on, Tim, you left out all the good news:


    Oh crap.

  • NotSure||

    Those stock markets really are baffling. And the dollar going down does not make complete sense either, the Euros problems are no better, if not worse.

    Anyone who was burnt by all this turmoil should make the best investment one can make, to invest in oneself.

  • NeonCat||

    At nearly 7 billion, people are inflationary, even if the curve has dropped a bit.

  • Old Mexican||

    Well, the rate of new unemployment claims has stopped going down. New jobless claims came in at 429,000 for the week ending April 23 – the highest they have been since January (the last really good month this country’s had, damn it!).


    But, the recovery! The Recovery!

    http://www.youtube.com/watch?v=q0Amt30_QVQ

  • Paul||

    “Look at their trade balance, their debt, and budget. They turn on the printing press and flood the entire dollar zone — in other words, the whole world — with government bonds.

    Wow, when the former Soviet Union understands concepts such as supply and demand better than we do? We're fucked seven ways from Sunday.

  • han||

    Inflationists, deflationists, monetarists, goldbugs, Keynesians, Friedmanites, Austrians, freshwaterists, saltwaterists, Grid Epsilon Irregulars and others are urged to listen in.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement