Government Spending

Get Checked for Warning Signs of Bernankulosis

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Every year, Bernankulosis claims one trillion dollars.

You and someone you love are at high risk of Bernankulosis. Don't become another victim of the number one killer of economies over 85 percent of global GNP.

You can learn to spot the warning signs of Bernankulosis in today's Washington Post op-ed by Bernankula, Dark Prince of Fractional Reserve Banking. Symptoms include:

Peristent and irrational fear of lower prices:

Inflation that is too low can pose risks to the economy—especially when the economy is struggling. In the most extreme case, very low inflation can morph into deflation (falling prices and wages), which can contribute to long periods of economic stagnation.

Forgetfulness about recent events:

These steps helped end the economic free fall and set the stage for a resumption of economic growth in mid-2009.

Obsessively repeating the same action:

There is scope for monetary policy to support further gains in employment without risking economic overheating.

Dissociative disorder or "fugue state," marked by inability to recognize reality:

This approach eased financial conditions in the past and, so far, looks to be effective again.

Alternating moods of dread and euphoria, unconnected to real-world events:

Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action.

Spending excessive amounts of time in intricate and elaborately articulated fantasy worlds:

Lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

Hostility and defensiveness when questioned:

That is one reason the FOMC has been cautious, balancing the costs and benefits before acting. We will review the purchase program regularly to ensure it is working as intended and to assess whether adjustments are needed as economic conditions change.

Imaginary conversations and delusions of grandeur:

That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector. But the Federal Reserve has a particular obligation to help promote increased employment and sustain price stability.

Confusion of having caught a shark for having caught the shark (scientific name murrayhamiltoma):

Two years have passed since the worst financial crisis since the 1930s dealt a body blow to the world economy.

Bernankulosis can be cured by making Rep. Ron Paul (R-Texas) chairman of the House Financial Services Committee. But early detection is the key. Don't ignore the warning signs of Bernankulosis. Because we don't want to lose you.

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  1. How is this condition related to Krugmania?

    1. Krugmania is the term for the behavioral indicia of Bernankulosis, which is spread via oral-anal contact.

      1. Thanks for the visual.

    2. How is this condition related to Krugmania?

      They both think economics is about money rather than the allocation of scarce resources.

  2. I don’t know why Tim Cavanaugh thinks Ben Bernanke is an idiot for suggesting too low inflation can contribute to serious economic problems.

    In Japan over the past 20 years, very low inflation has accompanied economic stagnation. Many accomplished economists see a connection, and think Japan would have been much better off with average inflation of 2 or 2.5 percent. Maybe they are wrong, but it’s not obvious to the layman they are.

    If Tim Cavanaugh is sure Bernanke is wrong, why doesn’t he explain why, instead of just sneering? Sneering isn’t helpful.

    1. Re: Stan Greer,

      I don’t know why Tim Cavanaugh thinks Ben Bernanke is an idiot for suggesting too low inflation can contribute to serious economic problems.

      Maybe he calls him an idiot because Bernanke believes people will believe such claptrap.

    2. Sneering isn’t helpful.

      Sneering sometimes helps.

    3. Correlation =/= Causation

    4. In Japan over the past 20 years, very low inflation has accompanied economic stagnation.
      Correlation is not causation Many accomplished economists see a connection
      Appeal to douchebag authority , and think Japan would have been much better off with average inflation of 2 or 2.5 percent. Maybe they are wrong Likely , but it’s not obvious to the layman they are. A lot of “laymen” think skyrocketing food, fuel and other prices are a bad thing

      The upside is Japan tried this whole QE thing and they still don’t have any inflation to speak of. A lof of debt though.

    5. Money != Value

      Additionally inflation is NOT more expensive goods — that’s a symptom. Inflation is more money chasing fewer goods. More money dumped on a market flooded with misvalued goods will not create inflation or spark demand. It just further disaggregates money and value. See Tech, Oil, Housing bubbles.

      1. No, no, no. I distinctly heard Steve Liesman, this morning on CNBC, say that inflation is the general rise of prices. So there !!.

    6. This actually isn’t the first time Cavanaugh has written a piece on the economy or our economic woes, its causes, etc.

      He’s been writing on our economic woes day in day out, right here on this Bat-channel, for nigh on four years now. Surely, there’s no need for him to make the same case in every single post.

      My take? Worrying about inflation when the bond market and everything else is telling us to worry about deflation may be a little counter-intuitive, but it certainly seems to be the case that our present woes were due to bubbles caused easy money.

      Furthermore, when our currency was surprisingly strong despite the global meltdown, this kind of policy made more sense–now that the US dollar is taking a beating? Surely, Bernanke’s strategy comes with more risks now.

      It also seems that using a strategy to drive down long term interest rates is pretty darn counter-intuitive when long term treasuries are already so low.

      Throw in the already increasing gap between TIPS and other treasuries, and it seems Bernanke’s taking an awful lot of risk for very little possible gain.

      In other words, when you’re stuck down inside your own five-yard line, and there’s only 3 seconds on the clock before half-time, the smart thing to do is to take a knee. Because the chances of you throwing an interception or fumbling and letting the other team score from your five? Are a lot higher than the chances of you throwing a 95 yard touchdown pass.

      When the risk of doing something is significantly higher than the potential gain? That’s usually something you want to avoid doing.

      In this case, we’re looking at what?

      “Yields on 10-year notes, which have fallen from just under 3% in early August, finished the day at 2.62%.”

      http://online.wsj.com/article/…..74194.html

      The news has been digested, so that’s the stimulative benefit on interest rates…not much of a change. Now, read the next sentence…

      “The value of the dollar has fallen in anticipation of a flood of new American currency hitting global financial markets.”

      That last part may be an upside for UAW workers and others whose jobs depend on manufacturing things for export.* …but that isn’t most of the American people and that’s certainly bad for consumers. The risk of igniting inflation, which then spins out of control for the American consumer, seems very high relative to the potential benefit.

      High risk and low reward?

      That way lies bad policy.

      1. *My caveat had to do with how running the Fed with political considerations in mind couldn’t possibly be related to the Obama Administration’s future being tied to spinning off GM, but there’s no reason to open that can of worms.

        …still, isn’t running monetary policy in a way that’s beneficial to the UAW and to the detriment of the American consumer too much of a coincidence for it just to be a coincidence?

        Especially when you consider Geithner’s comments from two weeks ago about how he wants to realign the world economy so as not to be so dependent on the American consumer.

        “Treasury Secretary Timothy Geithner said he would use weekend meetings of G-20 finance ministers to advance efforts to “rebalance” the world economy so it is less reliant on U.S. consumers…”

        http://online.wsj.com/article/…..05500.html

        I think this kind of move is precisely calibrated with what Geithner was talking about two weeks ago–more American exports and American manufacturing jobs, less purchasing power for American consumers.

      2. Very well stated Ken. I wonder if anyone in the Fed echo chamber presented these thoughts instead of just nodding blankly at Bernanke’s great wisdom.

    7. Japan’s economic problems are primarily due to the same thing we are seeing here in the US – rapid expansion of the money supply followed by the inevitable bust and subsequent government interference which prevents recovery.

      Japan expanded their monetary base by 10% per year from 1986-1990 (back when they were buying all of the US real estate they could get their hands on). Interest rates plummeted and businesses (mal)invested in projects that were tied to low interest rates rather than consumer demand (i.e. real estate). When the monetary expansion stopped in 1990, the economy began to contract, as investments and stock indexes plummeted. Japan then proceeded to spend 6.3 trillion on various public works stimulus packages with little to zero effect. The proper response to a monetary bust is to liquidate malinvestment by letting asset prices deflate until they hit their recession-adjusted market clearing price.

      1. “Japan’s economic problems are primarily due to the same thing we are seeing here in the US – rapid expansion of the money supply followed by the inevitable bust and subsequent government interference which prevents recovery.”

        Japan’s problems go back to the original S&L crisis of the late ’80s, their subsequent bailouts via the old “Japan Inc.” system…

        …but it also had to wrestle with being a mercantilist export economy at a time when China plugged itself into the economy. The “Asian Flu” had some causes in there too…

        So, anyway, I think Japan started out in the shape we’re in, but they’ve had all sorts of other issues to deal with too–suffice it to say that trade with China has been a huge plus for the American economy.

        But, I think what you’re saying about interference in the economy being the problem here in the US is bang on, and as Exhibit A, I’d ask the court to consider the Fed’s other announcement today…

        “Regulators are expected soon issue guidance outlining the standards banks must meet to increase such payments, these people said. The Fed is expected to take a conservative approach to allowing such increases and will look at a banks ability to meet new global capital rules agreed to in Basel, Switzerland, earlier this year and show a strong enough capital base to absorb any additional capital requirements under the U.S. regulatory overhaul.”

        http://online.wsj.com/article/…..19436.html

        It would be thoroughly ridiculous if it took an act of Congress for banks to increase their dividends, but we may need an international renegotiation to ever make banks the agents of creative destruction they used to be in times like these.

        Anybody who didn’t like Kyoto becasue it put too much of America’s economic policy in the hands of international bodies? Should hate everything Bernanke and the Obama Administration has done with international agreements about our banking practices–for the exact same reasons.

      2. The proper response to a monetary bust is to liquidate malinvestment by letting asset prices deflate until they hit their recession-adjusted market clearing price.

        But…but…OMG! Someone might have to take a loss, if that happened! It might even be the financial elite!

    8. 2.5% inflation with 2.1% economic growth is the exact same thing as economic stagnation.

      But Stan Greer would rather feel the illusion of prosperity via bubble-blowing with quantitative easing instead of actual prosperity. Get your money into commodities now before the bubble bursts, Stan. Lots of good ol’ inflation in that sector thanks to Professor Bernanke. Just pray you get out before this bubble bursts just like the last bubble.

    9. Inflation encourages people to spend money instead of saving it.

      Unlike America, Japan actually does suffer from an excessive savings rate.

      Americans on the other hand are already deeply in debt. Getting us to spend more money is going to worsen our underlying financial problems. We don’t need more spending and more consumption right now.

      This is all aside from the question of whether people’s natural risk aversion is really all that irrational or not, and whether the nerutal 0% savings rate is even excessive.

      1. Japan has another problem, an aging population. The U.S. is going there too.

    10. The Japanese have printed billions in dollars, the problem is they were stuck in a liquidity trap. The fact is no one wants to borrow because everyone is neck deep in fucking debt. The only thing this horseshit is doing is undermining the credit of the US Dollar as a reserve currency.

    11. Most of us already understand why Keynesian formulas are a bunch of bullshit. So we are ok with just sneering.

  3. Notwithstanding the progress that has been made, when the Fed’s monetary policymaking committee – the Federal Open Market Committee (FOMC) – met this week to review the economic situation, we could hardly be satisfied.

    We literally could not get this song out of our heads:

    “When I’m drivin’ in my car
    And a man comes on the radio
    He’s telling me more and more
    About some useless information
    Supposed to fire my imagination
    I can’t get no, oh no no no
    Hey hey hey, that’s what I say

    I can’t get no satisfaction
    I can’t get no satisfaction
    ‘Cause I try and I try and I try and I try
    I can’t get no, I can’t get no”

  4. Deflation my big, pale @$$. The only thing that is falling is the price of the house I have equity in. Everything else is more expensive.

  5. In Japan over the past 20 years, very low inflation has accompanied economic stagnation.

    Perhaps economic stagnation, combined with incessant intervention by the BoJ in their to keep it artificially cheap, has resulted in low inflation?

    I’m not sure why the causation arrow points from the underlying economy to the monetary side of things, and I don’t think any analysis could possibly be complete without considering the incessant manipulation by the Japanese government.

  6. Lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

    Wheee!

    Shovel some more money on the fire. Full steam ahead!

    1. This time…this time

  7. I concur with appoiting Ron Paul head of the House Finacial Services Committee.

    Employment numbers will increase only when the demand for goods and services exceeds the current supply of labor to deliver them. Duh!

  8. Also known as the Swine Flu.

    1. Me thinks teh Azians will erect capital restrictions and revisit their own QE policies.

  9. In the most extreme case, very low inflation can morph into deflation (falling prices and wages), which can contribute to long periods of economic stagnation.

    Bernanke is nothing more than a charlatan and a mountebank. Inflation and deflation are MONETARY phenomena, not simply something that occurs by accident, like a disease which the crackpot “doctor” claims he can cure.

  10. in a virtuous circle

    Didn’t he mean “vicious circle”?

    1. I think he meant “circle jerk”

  11. This morning, CNBC’s Senior Fed Apologist was claiming there is no commodity price inflation. Commodity prices just *happen* to be rising. It has nothing to do with value of the dollar, or anything the Fed is doing.

    Coincidence, pure and simple. Definitely not inflation. We’re on the right course.

  12. CNBC’s Senior Fed Apologist [said] Commodity prices just *happen* to be rising.

    Please — Who said what, exactly?

  13. Sneering isn’t helpful.

    Okay, then. No more sneering. From here on in, it’s flaming bags of dog shit, all the way.

  14. Liesman.

    (your spelling my vary)

  15. $5/loaf for bread and $10/gallon for milk is truly the way to economic recovery.

  16. Inflation and deflation are MONETARY phenomena, not simply something that occurs by accident, like a disease which the crackpot “doctor” claims he can cure.

    You have paleosis of the crank.

    Run!

  17. In the most extreme case, very low inflation can morph into deflation (falling prices and wages), which can contribute to long periods of economic stagnation.

    I wonder how he explains the PC market for the last 20 years.

    Despite a horrible deflationary spiral lasting over 20 years there still appears to be a PC market…in fact strangely the market has grown over those 20 years and has even expanded internationally.

    I suspect that Space Aliens are involved….other wise Keynes might be wrong….which we all know could not possibly be true.

  18. making Rep. Ron Paul (R-Texas) chairman of the House Financial Services Committee

    Holy shit?!?!

    Can this really happen???

  19. A remarkably childish crew here in the Reason comment section.

    I have been reading Tim Cavanaugh’s blog posts for months, and I have never heard him seriously address the arguments made by economists such as Scott Sumner that the Fed should attempt to keep growth of nominal GDP at about 5% a year, both in periods of expansion and recession.

    Sumner makes strong arguments that the Bank of Japan, contrary to what you read here and elsewhere, never actually tried to do that.

    Tim Cavanaugh may have responded to such arguments at one time, but a real blogger does repeat his arguments and refine them over time, addressing criticisms from intelligent people who differ, instead of just sneering most days.

    But if sneering is what you guys like, and it makes you feel good about yourselves, fine.

    1. I have never heard him seriously address the arguments made by economists such as Scott Sumner that the Fed should attempt to keep growth of nominal GDP at about 5% a year

      You want a serious argument to this complete stupidity?

      Hey dipshit ever hear of cell phones? the internet? railroads? Fire?

      Limiting the growth of the economy when we know full well adoption of innovation would be harmed by it does not need a serious argument…it needs to be ridiculed and humiliated.

      I don’t even want to look at government trying to prop up GDP during times of economic decline and restructuring. If you don’t know why this is a bad idea then perhaps you should read the business page of a newspaper printed the past 2 years.

    2. Says the guy who ignored all of the rebuttals to his initial post.

    3. The Fed doesn’t have the ability to control nominal GDP the way you are insinuating. Every monetary school is pretty much in agreement that there is a definite time lag between monetary policy changes and GDP growth/contraction, generally being between 6 months and 2 years. There’s no practical way to expand and contract the money supply quickly enough to have a desirable effect on GDP in any given year.

      1. The Fed doesn’t have the ability to control nominal GDP the way you are insinuating.

        I think he is insinuating that the FED does not have the tools needed to control nominal GDP yet.

        Also I am pretty sure he would want to keep giving the FED more and more tools until it does or until our economy is a waste land….which ever comes first.

        1. So true. Either way, they can give the Fed whatever tools they can dream up, but they can’t paper over the fact that the US is insolvent and that QE2 will be even more of a failure than QE1.

    4. the Fed should attempt to keep growth of nominal GDP at about 5% a year, both in periods of expansion and recession.

      Milton Friedman, for many years, advised a moderate growth in the money supply to accommodate economic growth. He eventually came to have second thoughts.

    5. Re: Star Greer,

      I have been reading Tim Cavanaugh’s blog posts for months, and I have never heard him seriously address the arguments made by economists such as Scott Sumner that the Fed should attempt to keep growth of nominal GDP at about 5% a year

      That’s because he can’t take that seriously.

      I mean, do you really think the Fed (the Fed!) expands productivity?

      Sumner makes strong arguments that the Bank of Japan, contrary to what you read here and elsewhere, never actually tried to do that.

      No, of course not – the negative interest rates were simple happenstance, a fluke of nature, something that appeared, like early winter snow.

    6. Thanks for your thoughts, Sam. And for reading. I have not looked at Scott Sumner’s work but will try to do so, weather permitting.

      As for price inflation or deflation (which is distinct from but closely related to monetary inflation, as several folks have noted above), I don’t know that we can argue about whether it’s good or not, because it is never allowed to happen. In the face of a real estate correction that has only reduced a fraction of the value that was inflated over a 20-year period, you have seen an unprecedented level of reaction from the central bank and the Treasury. There was a very minor dip in core CPI last year — for the first time in any of our lifetimes, I believe — and the Fed’s response was to double the size of the monetary base.

      If that’s how they react when there’s even a ghost of deflation, how are we supposed to find out what the effects of price deflation really are?

      So the burden of proof is on the inflationists. If paying less for an item is a hardship, let them prove it. The arguments I have heard all seem to confuse cause and effect (another symptom of Bernankulosis, I’m afraid). To the extent prices are flat (and if you’ve bought gas or groceries lately you’ll know that they are not flat), it’s because there’s no demand. And U.S. savings rates still suck, so it’s not the case that debasing the dollar will cause people to start spending. They can’t spend because they are not seeing any value creation.

      I’m not sure what the magical sum of 5 percent GDP growth means in Sumner’s thinking: Nominal GDP has been growing since the middle of 2009, but every indicator of economic outcomes has been stagnant or worse.

      You can also refer to Reason’s Veronique de Rugy for an indication of how easy it is for the government to game GDP numbers through spending — too much to go into here. Bottom line: You can’t eat GDP and you probably shouldn’t trust it either.

      Just to sneak in a little argumentum ex populo, I’d like to point out that the American people — not to mention the many peoples around the world who peg their currencies to the dollar and get a much harder slam when the greenback loses value internationally — always express strong support for a strong dollar. Most Americans are not economists. (They’d certainly vote differently if they were.) But my sense of fairness says the people who are required by law to use the dollar should have most of the say in how it gets managed. And by a wide margin they want a dollar that buys more stuff, not less.

      1. Nominal GDP has been growing since the middle of 2009, but every indicator of economic outcomes has been stagnant or worse.

        I have little doubt that productivity has gone up.

        But i also suspect it is mostly because businesses laid off the less productive and kept the most productive.

        Still it is a positive indicator…and not all of it is from laying off the less productive.

    7. Pumping money into the economy doesn’t increase gdp. And gdp isn’t the ultimate goal anyways. Stop being dooshcanoe.

    1. Might as well, just to be sure.

  20. I think we should all get over our fear of deflation.

    I’m sure that large rates of deflation are bad for the economy, but I fail to see why a low level of deflation is any worse than a low level of inflation.

    1. At this point I think of it like an elevator accident. I just hope my economy is on the top of the pile when the freefall stops. Its selfish, but my individual optimum in a horrible situation.

  21. Inflation is nothing more and nothing less than a currency of declining value.

    Have I mentioned, lately, how pleased I am with my rather large (in my terms) bet against the US dollar? My bets on commodities and precious metals are paying off nicely, albeit in devalued dollars.

    Thanks, Helicopter Ben! You have created a situation where I have to put large percentages of my net worth at risk just to stay even in real terms!

    Asshole.

    1. Putting net worth at risk to stay even has been the Fed’s job since 1930. It’s not like Bernanke invented it, he’s merely doing what every one of his predecessors has done for 80 years. Same shit, different bureaucrat.

      1. It is also about deliberate wealth redistribution.

        Punish the responsible and reward the irresponsible.

        Transfer the wealth of savers by giving a zero (or less) return on their cash so that irresponsible bankers and borrowers can be bailed out.

        1. Punish the responsible and reward the irresponsible.

          Punish the responsible and reward the well connected.

          FIFY

          1. Yup.

    2. You have created a situation where I have to put large percentages of my net worth at risk just to stay even in real terms!

      Grats RC…my investment in land in the hopes of escaping inflation has not panned out as well as you have….but still it is not as bad as you would think.

      It has done better then holding on to the cash.

  22. I have never heard him seriously address the arguments made by economists such as Scott Sumner that the Fed should attempt to keep growth of nominal GDP at about 5% a year, both in periods of expansion and recession.

    Because it is far beyond the power of any central planner, whether he is ensconced in a bunker in North Korea or in the Fed, to “keep growth of nominal GDP” at fucking anything.

    And attempting to do so, especially with a tool as spectacularly unsuited for the job as the money supply, will not only fail, it will fail spectacularly, with “unintended” consequences that are nothing short of disastrous.

    See, e.g., Japan. For chrissakes, how anybody can praise Bernanke in one breath, and point to Japan as an example to be avoided, is simply mind-blowing. Bernanke is playing the Japan-stagnation tune note for note.

    1. See, e.g., Japan. For chrissakes, how anybody can praise Bernanke in one breath, and point to Japan as an example to be avoided, is simply mind-blowing. Bernanke is playing the Japan-stagnation tune note for note.

      +10

  23. I predict the next big bubble will be in Irish and Icelandic hookers.

    Wait, that’s just my fanatasy. It’ll be something stupid like nanotech floorwax or vat-grown cellphones.

    1. If you need some QA help…

  24. I think Milton Friedman was wrong on a few things, but Bernanke claims to be a scholar of Friedman’s Depression work, yet he didn’t even understand what Friedman was saying!!!

    When Freidman said he would print like crazy, the whole purpose of that was to make the depositors at banks whole instead of just telling them they’re shit outta luck. Inflationary as hell, sure, and mostly just feel good, but it gets the books squared and there’s no race to run on the bank to determine big winners and big losers – everybody loses X% instead of some people losing nothing and others losing almost 100%. Make the depositors nominally whole even though the value of their money is going to decrease, and close the bad bank.

    Friedman may have made large errors in some of his thinking, but he was almost always a champion of the individual. Bernanke is doing the exact opposite – he is trying to make the banks whole because we’re too damned pussified to shut down Citicorp for insolvency. We already have the FDIC with an open line to Treasury to do what Friedman suggested, all Bernanke needs to do is essentially clerical work .

    This is why I hate Bernanke – it’s not that he’s stupid, it’s that he’s a coward. He should be telling Treasury that insolvent banks need to be closed and depositors made nominally whole. Instead he lets Gethener et al kick the can down the road by printing money and not directing its destination – he isn’t controlling where it goes so he doesn’t know where the next bubble is going to be, but there will be a bubble or tow which just makes the job that much more difficult when they inevitably burst.

    The little guy gets fucked so the investor class doesn’t lose their ass. This is the exact opposite of Freidman’s prescription.

    1. … I’m OK with this!

    2. Ummm he is stupid too.

  25. the Fed should attempt to keep growth of nominal GDP at about 5% a year, both in periods of expansion and recession.

    Seriously?

    You think Ben Bernanke (or any human)could accomplish that? Adjust your dosage.*

    *A childish response to a ridiculous suggestion.

    1. Bernanke totally has the power to do that, if only those pesky producers and consumers would respond to the signals correctly.

      1. respond to the signals correctly

        Signals like the government will loan banks money for free then buy it back for a 2% return and then say the banking industry needs to be regulated because they are keeping there money rather then loaning out?

        Signals like a health care bill that we will not know what is in it until it passes?

        Signals like Obama telling us that preserve intensives manufactured by government sponsored entities will now be forever called Wall Street greed?

        Signals like if you run a tight, clean and safe oil rig operation and your competitor fucks up the government will shut you down for 6 months?

        Signals like if your competitor loses money on every car it sells the government will bail it out and then attack your cars in the media as unsafe to drive?

        Signals like Obama calling small business trade groups like the US Chamber of Commerce are the bogymen of foreign special interests?

        Signals like your income taxes will go up Jan 1 2011?

        Signals like employing poeple will cost you more for their health insurance?

        Signals like Obama starting a trade war with China over car tires?

        I think the consumers and producers have read the signals loud and clear.

        1. Hugh Akston

          Note: I am not picking on you Hugh…just your use of the word “signal” really got me going.

          Just for clarity I understand and agree with you and only wanted to point out the real signals the economy was reacting to.

          1. No, that was exactly the point I was making. The Gov’t starts swinging a rope around and then is surprised when everybody ducks.

  26. Can Bernankulousis be cured with Grape Nehi as rumored?

  27. Chairman Ron Paul?
    http://www.lewrockwell.com/blo…..68564.html

    By all rights, he actually SHOULD be chairman, but his own party has blocked him from any authoritative positions for a while

    1. By all rights, he actually SHOULD be chairman

      The sad thing is that if any Republican politician is responsible for Nov 2nd it is Ron Paul. His Money Bombs during the 2008 presidential election and grass roots insurgency paved the way for the tea party.

      He really really deserves to be rewarded.

      Note: Obama, Poloci and Reid had more to do with the Tea Party then anything. Just saying he is the Republican who should get the most credit if any is to be given out to a Republican.

      1. Absolutely. Numerous articles and commentators have discussed how his ideas, formerly considered kooky, are now becoming mainstream

  28. Great idea for a Reason.tv video…

    Have Bernanke singing very slightly modified lyrics to Winehouse’s “Rehab”.

  29. Look everybody. Bernanke knows exactly what he is doing. He is trying to inflate away our debt without crashing the dollar.

    Good luck with that, B-B-Bennie.
    http://faculty.gg.uwyo.edu/due…..prised.jpg

  30. The government doesn’t control the value of assets, but it does control the value of the currency. It can do something that actually fools almost all of the people almost all of the time. The government can devalue the dollar. It can create inflation. What the government can do is it can take that hundred thousand dollar asset, that wants to fall to $20,000 in real terms, and let it fall, but still make it worth $200,000 in nominal terms simply by devaluing what each of those dollars are worth. Which means the homeowners are no longer underwater, and the banks are no longer insolvent.

  31. Bernanke is as much a mountebank as Greenspan; however, Greenspan was able to get away with his claptrap because he used meticulously-crafted cryptic language to obfuscate whatever he was really thinking, whereas Bernanke relies more on plain language (as plain as a trained “economist” uses) to explain things.

    Greenspan was the better charlatan, as most people took his incoherent musings like wisdom handed down by God himself – in the end, we suffered for it, since Greenspan was able to play with the dollar and the US economy for far too long a time.

    1. Fedspeak, much?

    2. That, and the fact that he traded for far too long on his earlier street cred as an Austrian.

      1. Not really Austrian. He was a Chicago School monetarist, like Friedman. Close enough, though.

    3. He also had the good luck to have relatively good times happening during his tenure.

  32. I turned on CNBC, like I try to do at least once a day, to see, of course, if the market has crashed….yet.

    Across the top of the screen I saw that the Dow was up 200, and the S&P and NASDAQ were also up (they were highlighted in bright orange). Then I saw that oil, gas were up. Then I saw gold, silver were up. The first thing that popped into my mind was, the dollar must be down. Sure enough, there it was, the USD was down against every major currency across the board. And, and, and, Treasuries were down, as well.

    This is getting so fucking ridiculous, it’s not even a bad joke anymore.

    **~ 1984**
    **Russian Accent**

    “Next they’ll be telling us the grain crops are good, this year.”

  33. I wish I could claim this as my own, but a friend thought of this as a way to stop Keynesian economics from polluting the minds of the next generation.

    Even though this falls under the “there oughta be a law” rubric I typically despise, I’m would be willing to make a one-time exception.

    This should be item #1 on the new HOR agenda in January.

    Economics professors and politicians will still be allowed to talk about Keynesian economics.

    However, when they do, they must be dressed in full clown gear: face paint, big floppy shoes, accompanied by a small pink poodle wearing a dunce hat with a bell on top.

    In the background, the Barnum & Bailey theme song must be playing at all times and those in the audience with a clear and sound understanding of real-world economics get to honk big bulb horns when the professor or politician says something really dumb about Keynesian economics?which will be about every other sentence.

    For example:

    Econ Prof: Today, I’d like to talk about the efficacy (Toot, WANKA, AAUUGA!!) of Pump Priming (toot, WANKA, WANKA) measures and their positive stimulus effects (AUUGA, WANKA, WANKA. TOOT, TOOT) on the money supply and the velocity of money (Toot, Toot, AAUUGA, WANKA)?.

  34. I was listening to NPR on the drive home today and they had some economist on there who was endorsing Ben’s every move and all the premises they are based on.

    Par for the course for NPR and was to be expected.

    What got me though is when the guy claimed that we didn’t have to worry about inflation – that it was below 1% and declining.

    This on the same day that the Wall Street Journal had a story about rising agriculture commodity prices and the plans of grocery stores and restaurants to start passing their increased costs on to the consumer.

    1. Re: Gilbert Martin,

      I was listening to NPR on the drive home today

      You should be fined for placing your life and the life of others at risk for driving while under the influence of a soporific.

  35. Why’d they use a picture of Danny Devito?

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