35 replies to this topic

[bullshort]

NAV has it right in his remarks above. Of course the Fed is printing money. If one saw the 60 Minutes piece, did you notice how the Bernank's upper lip was quivering during a large part of the interview? This dude is, shall we say, nervous, and not about the interview per se, but about what he is doing.

[SemiBizz]

I don't blame him for being nervous. We don't need the BurningMan and his organization. The government can print it's own currency. And he and his organization can be left holding their bag of worthless assets.

[NAV]

NAV has it right in his remarks above. Of course the Fed is printing money. If one saw the 60 Minutes piece, did you notice how the Bernank's upper lip was quivering during a large part of the interview? This dude is, shall we say, nervous, and not about the interview per se, but about what he is doing.

Bernanke in his interview...

The money supply is not changing in any significant way

He better be nervous !


Money seeks growth, money flows to areas which offers the best potential for returns. It's flowing to emerging economies where the growth is, to the extent that it's overstimulating and causing problems there. Unless the lending and multiplier effect kicks in, all this money printing is not going to stimulate the U.S economy. The bankers are crooks, but not morons. They are not going to lend to the unemployed or those on the verge of getting unemployed or to businesses catering to these vast unemployed pool, who's buying power is getting depleted by the day. Obviously speculating in stocks or commodities is less riskier to these banks than lending and that's what they are gonna do with all this money printed via QE.

THERE IS NO BIGGER SOCIAL AND ECONOMIC PROBLEM THAN UNEMPLOYMENT. You can't reduce unemployment by money printing. If Bernanke has not understood this by now, he deserves to be fired !. It's a global wage arbitrage issue., which unfortunately has no easy solutions. Until there is a massive wage collapse in the U.S, the situation is not going to change. Wages cannot collapse without the concomitant drop in asset prices and a debt collapse i.e a deflationary collapse in the economy. And ironically that's the war the U.S Fed is fighting, which is in odds with the very objective that they are trying to achieve. The end result is more and more distortion or disruption of free markets and a widening of disparity between the clique with bargaining powers with the Fed and the rest of the country. It's a horrible mess !

Edited by NAV, 06 December 2010 - 12:30 AM.

[arbman]

The money supply is not changing in any significant way

Gold is up +10

Edited by arbman, 06 December 2010 - 01:48 AM.

[Nietzschean]

Even if they did print money out of the thin air, don't they just go into reserves rather than the circulation?

[NAV]

Even if they did print money out of the thin air, don't they just go into reserves rather than the circulation?

Since there are no reserve requirements, that money is effectively in the system. It's up to the banks whether to lend it or speculate in Pakistan stocks or Zimbabwe government bonds.

[Om_Namah_Shivay]

Even if they did print money out of the thin air, don't they just go into reserves rather than the circulation?

Since there are no reserve requirements, that money is effectively in the system. It's up to the banks whether to lend it or speculate in Pakistan stocks or Zimbabwe government bonds.

Just to add intellectual dimension to this discussion, what BEN is doing QE-2 is done all the time across the central banks all throughout the world. Quantitative monetary policy is active tool in hands of central banks ( for more technical discussion please look up for MMT theory on money). Ben is effectively replacing a low yielding asset with no yielding asset. Which means he is pushing the holder of low yielding asset further down the risk curve and adjust his portfolio with more allocation to risky asset class.
Only difference is he is assuming that money would be lent out, where as money doesn't need to be lent out to earn yield in todays free floating currency regime. It can chase yield in any number of asset classes available throughout the world.

This is where i think "perma"-bears are missing the point by mixing fundamental "some call it funnymental" to capital flows. Capital is going to flow from public goods like bonds to private goods like stocks, gold etc. This has the potential to even surprise the most optimistic estimates on S&P and can take US markets to new highs after couple of quarters of consolidation and before the real "End" begins.
Watch out for the top in Bonds, or should I say double top in bonds next year, which will mark the watershed event of the future. Benny may buy as much he wants, US govt. is going to match his demand and exceed it, not to mention other investors would take this as a chance of exiting T-bills. One of the best indication that bond top is very near , is GS selling 50 yr bonds and mexico selling 100yr bonds. Unbelievable!!!!!!
This is going to be fun and I m thankful to ******* for have given me the chance to witness this great unraveling.

[Mike McCarthy]

I've read a few arguments about this. Since they are 'buying assets', technically it is true that he is not printing. Buying assets converts the assets into cash. He did not increase total amount of 'value' in the system. Its not like he printed a bunch of money and gave it to people for free.

He thinks by forcing people into cash, it means more money in the pocket and will force people to spend it instead of shoving it into assets that have low rate of return, which has basically been the same as shoving it under a mattress.

Money is all funny. Animals don't need it. The ecology doesn't need it. Trees still grow even if there's no money. Farmers can still grow food, etc. Money is a mechanism for an economy, but not really necessary for one. It is all in our heads about how money and economy works.

We are in a cycle where we 'believe' everything is bad and government is doing harm more than good. Thus everything he tries, we just continue to interpret as bad. Even more so the harder he tries.

Trees can convert light directly into food, thus avoiding the need to grow it.

Animals come with shelter, humans are naked.

"If you wish to make an apple pie from scratch, you must first invent the universe." -- Carl Sagan

(The rest of us rely on cash.)

[andiron]

what BEN etc are doing is facilitating transfer of wealth from have nots to haves...The central bankers like FED are one of the pernicious institutions that have aggravated social inequity..It is something we can all do without.. Gold has been de facto currency for 5000+ yrs...To have fiats is to exploit the masses... as rich will be able to afford more & more of the labor of the masses... The future must be " In Gold We Trust"

[CHAx]

NAV has it right in his remarks above. Of course the Fed is printing money. If one saw the 60 Minutes piece, did you notice how the Bernank's upper lip was quivering during a large part of the interview? This dude is, shall we say, nervous, and not about the interview per se, but about what he is doing.

Bernanke in his interview...

The money supply is not changing in any significant way

He better be nervous !


Money seeks growth, money flows to areas which offers the best potential for returns. It's flowing to emerging economies where the growth is, to the extent that it's overstimulating and causing problems there. Unless the lending and multiplier effect kicks in, all this money printing is not going to stimulate the U.S economy. The bankers are crooks, but not morons. They are not going to lend to the unemployed or those on the verge of getting unemployed or to businesses catering to these vast unemployed pool, who's buying power is getting depleted by the day. Obviously speculating in stocks or commodities is less riskier to these banks than lending and that's what they are gonna do with all this money printed via QE.

THERE IS NO BIGGER SOCIAL AND ECONOMIC PROBLEM THAN UNEMPLOYMENT. You can't reduce unemployment by money printing. If Bernanke has not understood this by now, he deserves to be fired !. It's a global wage arbitrage issue., which unfortunately has no easy solutions. Until there is a massive wage collapse in the U.S, the situation is not going to change. Wages cannot collapse without the concomitant drop in asset prices and a debt collapse i.e a deflationary collapse in the economy. And ironically that's the war the U.S Fed is fighting, which is in odds with the very objective that they are trying to achieve. The end result is more and more distortion or disruption of free markets and a widening of disparity between the clique with bargaining powers with the Fed and the rest of the country. It's a horrible mess !

Hey NAV you are spot on with the global wage arbitrage comment. I think it is important to understand that the US standard of living will fall in line with the rest of the developing world in time. Because economists know that wages are very sticky during deflation (the process of unwinding the mal investments), inflation allows for wages to hold fairly steady while the costs of the goods rise ( a defacto wage deflator). I'm certain that the central bank understands this problem, but politically it would be unnaceptable to say "we are creating inflation to save the banks and destroy the purchasing power of minimum wage". You know?