Category Archives: Federal Reserve Bank

Is Ben Having A ‘Meltdown’?

Debt, Economy, Federal Reserve Bank, Inflation, Political Economy

Or is Mr. Bernanke reading Meltdown? “The Federal Reserve Chairman’s views on asset bubbles,” writes The WSJ, are slowly changing.”

“Earlier this decade, when Mr. Bernanke was a Fed governor, he and other central bank officials said financial bubbles weren’t something the Fed could identify or pre-empt effectively. Its focus was on keeping inflation and unemployment low. [And how well that has been achieved.] Its bubble strategy was to mop up after a bubble burst with lower interest rates to prevent damage to the broader economy.”

In a speech on Sunday at the American Economic Association’s annual meeting, BB repeated the shibboleth about the need for “better regulation” as the first line of defense against future crises. But he also conceded to the need “to ‘remain open’ to using the blunt tool of higher interest rates to avert or pop future asset bubbles … particularly if other approaches aren’t working.”

Why is raising interest rates considered a “blunt tool,” keeping them artificially low is not?

Updated: Time Mag's Mafioso Of The Year

Debt, Federal Reserve Bank, Inflation, Ron Paul

Is The “Fed Head.” The dubious honor Ben Bernanke has earned for counterfeiting more money than any other figure in the “history of the world”; for being more powerful than the president—who “at least has to come before Congress” every now and then when demanding funds—for enjoying complete freedom from any oversight, and for being an instrument of fiat, easy money, inflation and the business bubbles (or cycles).

Still, Ron Paul, that impish giant—also a “student of the Fed” and its most effective critic—remains positive, while insisting that Ben Bernanke is Time’s Man of the Year not because he saved us, but because he afflicted us with ever easier money and lower interest rates; doubled the money supply and has hastened the collapse of the dollar.

Update: Ron Paul again on the work of the Money Mafioso:

Legal tender laws force the people to become subject to this risk for the benefit of the rulers. Artificial demand for currency allows the authorities to create arbitrary amounts of it to pay for wasteful projects, like frivolous wars and an ever-expanding public sector. This saps the private economy of jobs and purchasing power, yet the temptation proves too great for politicians, time and time again. Our government is no different. Although our dollar has taken nearly a century to lose 98f its purchasing power, the fact that we are all obliged to participate in this slow burn of the economy on pain of imprisonment is anathema to the principles of liberty.

I introduced the Free Competition in Currency Act last week to free the people from these governmental threats. HR 4248 would repeal legal tender laws, prohibit taxation on certain coins and bullion, and repeal certain laws related to coinage. The prospect of people turning away from the dollar towards alternate currencies should provide incentive for Congress to regain control of the dollar and halt its downward spiral.

Updated: Time Mag’s Mafioso Of The Year

Debt, Economy, Federal Reserve Bank, Inflation, Ron Paul

Is The “Fed Head.” The dubious honor Ben Bernanke has earned for counterfeiting more money than any other figure in the “history of the world”; for being more powerful than the president—who “at least has to come before Congress” every now and then when demanding funds—for enjoying complete freedom from any oversight, and for being an instrument of fiat, easy money, inflation and the business bubbles (or cycles).

Still, Ron Paul, that impish giant—also a “student of the Fed” and its most effective critic—remains positive, while insisting that Ben Bernanke is Time’s Man of the Year not because he saved us, but because he afflicted us with ever easier money and lower interest rates; doubled the money supply and has hastened the collapse of the dollar.

Update: Ron Paul again on the work of the Money Mafioso:

Legal tender laws force the people to become subject to this risk for the benefit of the rulers. Artificial demand for currency allows the authorities to create arbitrary amounts of it to pay for wasteful projects, like frivolous wars and an ever-expanding public sector. This saps the private economy of jobs and purchasing power, yet the temptation proves too great for politicians, time and time again. Our government is no different. Although our dollar has taken nearly a century to lose 98f its purchasing power, the fact that we are all obliged to participate in this slow burn of the economy on pain of imprisonment is anathema to the principles of liberty.

I introduced the Free Competition in Currency Act last week to free the people from these governmental threats. HR 4248 would repeal legal tender laws, prohibit taxation on certain coins and bullion, and repeal certain laws related to coinage. The prospect of people turning away from the dollar towards alternate currencies should provide incentive for Congress to regain control of the dollar and halt its downward spiral.

Updated: Good Versus Bad Loans

Barack Obama, Business, Debt, Economy, Federal Reserve Bank

Steve Bartlett of the Financial Services Roundtable told Judy Woodruff of PBS: “I have never met a small business man who applies for a loan that doesn’t think that he or she is qualified.”

Bartlett’s group represents most of the banks that met with Obama to field the fool’s demand that banks lend for the sake of lending (the practice that helped bring about the financial collapse).

Bartlett: “The fact is you have to do it one loan at a time and make sure it’s a good loan. And that is what we communicated to the president today. We’re setting out to look for ways to make more loans, to increase business lending, but we’re not going to get back into that old habit of making bad loans.”

AND:

“A loan is not capital. … Capital is your own money. A loan is the money that you have to pay back. … There are 8,000 banks out there and 50,000 other non-bank lenders, so it is a competitive marketplace. If someone has a loan that has full cash flow and full collateral, they will be able to get the loan.”

Peter Schiff, on the other hand, isn’t buying anything the bankers claim: “Major investment and commercial banks are not back on their feet,” he notes, “but remain fundamentally insolvent. Their current business model of risk-free speculation depends upon the maintenance of government backstops, the continued availability of cheap money from the Fed, and the use of accounting gimmicks that allow them to conceal losses behind phony assumptions.”

Amity Shlaes, who knows a thing or two about FDR, informs us that “capital strike” is the label “a petulant Franklin Roosevelt” gave to the banks’ refusal to lend:

“Election cycles also contribute to capital strikes. Banks today know that whatever the White House says, it has to stop pouring out the cash eventually, probably after midterms. Banks in the 1930s held onto cash because they knew Roosevelt would stop spending after the 1936 election, and he did.”

“These bankers had been burned. The wary banks reacted by stashing away yet more cash. The result was an unforeseen tightening and less cash in the economy.”

Update: Ron Paul: “The banks seem to be hoarding liquidity now but once these dollars make their way into the economy, hyperinflation and economic chaos will be a real possibility.”