Ben Freaks Out the Gold Bugs, Says Sun Will Come Out Tomorrow and Pisses Everybody Off with QE3

goldbug.jpgIs Gold money? Apparently not according to Ben. While technically correct, all of those gold bugs hording their physical gold for the impending Global Economic Armageddon, round 3, are jumping at the ready. Gold, jumped $23 in a day and hit record highs although that appears to have more to do with Europe and Contagion.

Federal Reserve Chair Ben Bernanke testified before Congress and he was full of things no one wanted to hear. Congressman Ron Paul questioned Ben and shock of all shocks, uttered a base Keynesian concept, one needs to put Stimulus directly in the hands of the people, or bottom up Stimulus, in the mix:

 

 

Of course Ben set Wall Street abuzz with more fears of quantitative easing. Why policy makers use the nebulous term stimulus for things that don't seem to stimulate, I do not know.

From Bernanke's testimony:

On the one hand, the possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support. Even with the federal funds rate close to zero, we have a number of ways in which we could act to ease financial conditions further. One option would be to provide more explicit guidance about the period over which the federal funds rate and the balance sheet would remain at their current levels. Another approach would be to initiate more securities purchases or to increase the average maturity of our holdings. The Federal Reserve could also reduce the 25 basis point rate of interest it pays to banks on their reserves, thereby putting downward pressure on short-term rates more generally. Of course, our experience with these policies remains relatively limited, and employing them would entail potential risks and costs. However, prudent planning requires that we evaluate the efficacy of these and other potential alternatives for deploying additional stimulus if conditions warrant.

While Bernanke defends QE2, Economist James Hamilton has performed analysis on the effects of quantitative easing and shows it had modest effects on the economy. Regardless, the comments toasted the dollar and caused the beleaguered Euro to surge.

Federal Reserve Chairman Ben Bernanke's warning that the U.S. economy may require additional monetary easing undermined the dollar Wednesday, which set a record low against the Swiss franc and fell sharply versus the euro as fears about Europe's debt crisis were momentarily displaced.

While Bernanke insists inflation is transitory, analysts went nuts on the hint of QE3. Euro Pacific Capital Economist Pento:

Can someone explain how the processes he used to combat deflation—lowering interest rates and expanding the money supply—if those processes are going to be intensified what makes him think inflation is going to be transitory? The gentleman talking about exit strategies a little while ago is now talking about asset purchases and cutting rates on reserves. That sounds schizophrenic to me.

Meanwhile we have a jobs crisis. The Fed? Yes, it's a problem, oh well, what can one do.

Long-term unemployment imposes severe economic hardships on the unemployed and their families, and, by leading to an erosion of skills of those without work, it both impairs their lifetime employment prospects and reduces the productive potential of our economy as a whole.

The still-substantial slack in U.S. labor and product markets, which has made it difficult for workers to obtain wage gains...

Yet does quantitative easing create jobs? Of course, according to the world of Ben:

With respect to employment, our expectations were relatively modest; estimates made in the autumn suggested that the additional purchases could boost employment by about 700,000 jobs over two years, or about 30,000 extra jobs per month.4 Even including the disappointing readings for May and June, which reflected in part the temporary factors discussed earlier, private payroll gains have averaged 160,000 per month in the first half of 2011, compared with average increases of only about 80,000 private jobs per month from May to August 2010. Not all of the step-up in hiring was necessarily the result of the asset purchase program, but the comparison is consistent with our expectations for employment gains. Of course, we will be monitoring developments in the labor market closely.

Considering the massive size of QE2 as well as the size of the U.S. economy, don't these increases seem like the error margin than payroll increases that could be correlated? At what cost elsewhere, such as in the price of commodities, can this jobs program be justified? Can Congress take their medications, become sane and practical for just one minute and enact a direct jobs program with strong Hire America and Buy American requirements? Even Ron Paul's quip about handing every American $17,000 has to be a better idea than this.

One thing is clear from the Q&A, we have a whole slew of bat shit crazies in Congress now.

One of the more despicable dialogs was from Congressman Ed Royce. He's trying to get the Federal Reserve to buy into the only way to fix the deficit is to screw working people, retirees, the sick and the poor. This is pure bunk, but shows just how psycho and economically clueless these idiots are in Congress are and how laser focused they are to decimate what is left of social safety nets. What that says about the ignorance of those who voted for them, we'll leave for another day. What's worse, Bernanke seems to endorse it. Let's see, we can print money, bail out the banks, run wars around the globe, but when it comes to social safety nets which Americans paid into and are promised, all eyes are on destroying that.

 

 

Here is an example of yet another clueless Representative who tries to corner Bernanke on taxes. Amazingly, Sean Duffy doesn't quite get how his question shows his ignorance on basic tax policy. Ya gotta feel for Bernanke getting ridiculous questions like this one. By the way, a good example of new taxes that would create jobs are the ones which close loopholes on tax breaks for multinational corporations who offshore outsource your job. Another would be a penalty tax for those who move manufacturing abroad.

 

 

So there ya have it. The Federal Reserve cannot get Congress to do pretty much anything that would really create jobs, such as a massive jobs program rebuilding key critical infrastructure and instead we have a bunch of wackos for representatives out to destroy the U.S. middle class at all costs.

Oh yeah, Bernanke warned if the debt ceiling isn't raised the United States will have Economic Armageddon. Who could forget those political games.

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The Sun Will Come Out Tomorrow

 

Video project for anyone to put up a video with Bernanke, Fed, FOMC and economic advisers singing this, intermixed with graphs of current economic reports, our new 3rd world nation with it's corresponding poverty and homelessness.

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Angry Bear, spending cuts on GDP effects

Nice call out on this insanity on how if the U.S. defaults all will be fine.

Also, the slam on Thomas, ya know, I've seen economic insanity based on philosophy over there, which is why I don't link to them, but Angry Bear has done this as well.

Screaming bloody murder how E-verify will just crash the system. Very typical when topic "immigration" pops up that all reason flies out the window.

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Opposing E-verify is 'slightly left of center'?

Never checked out Angry Bear before, headlining as 'slightly left of center'.

I suppose Angry Bear is okay giving a junk rating to what I suppose must be the 'slightly right of center' doctrine of the desirability of not raising the debt ceiling ... but I thought that was just common sense not even in need of much of an analysis.

But how is it that opposing E-verify is 'slightly left of center'?

It's like when Michael Collins says the only sure thing is that the Mayan calendar will run out in 2012.

The only meaning I can find for the term 'center' is where I stand, and E-verify is smack dab in the middle of me!

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Angry Bear and EP are "in sync" most of the time

But as I point out, anything dealing with immigration, labor supply, controlling labor supply and so on, that's when things get weird and a lot of it has to do with people's philosophies.

Give me a break, e-verify is simply not a budget buster. Processing 20 million new people assuredly would be though.

But that was the claim, it would bust up the SS budget having to administer, but that's just not true, the pilot program is already in place and works fine.

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Ron Paul and gold standard doctrine

Ron Paul is great on so many issues ... and wacky on others.

He has advocated that the U.S. pull out of the WTO system, but then he wants to eliminate all tariffs?

He understands the commonsense aspects of Keynesian theory, but then he seems to be sticking with the wacky gold standard theories -- which are contradictory to the Constitution (clearly a monetarist document, except for the part about states minting coin). On other issues, Paul is solid on constitutional issues.

I just can't comprehend where Dr. Paul is coming from ... unless it's a bullish position in the gold market.

Do some idols have feet of gold?

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Ron Paul

Philosophy. He gets it right many times but he's operating under some strange philosophy. The gold standard, many believe, kept the system more stable.

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Better yet

That criminal's performance today only reinforced what so many people are now catching on to: There is no better pro jobs, pro growth, pro anything economic policy the United States can pursue that would be more effective than abolishing the Federal Reserve.

It is the very root cause of the boom/bust cycles, and the never ending bubble blowing that has resulted in the trillions of malinvestment that has gotten us into this mess.

And it digs us deeper and deeper with it's endless shell game to try and "extend and pretend" away the insolvency of the tbtf banks. To that end Bernanke doesn't care how many of the working poor he decimates, how many hundreds of billions in savings interest is denied working folks, how high prices go on the things people actually need to buy, just so long as he can lie about banks being solvent and keep the wallets of the bankers and global elite inflated.

The Federal Reserve is not a governmental body and it does not have the people's interests at heart. It is a private banking cartel that has perpetrated the largest transfer of wealth from the bottom to the top in world history, and it should be disbanded immediately.

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If gold is not money, why does Ben care?

If gold is "just another commodity," why bother to scare the gold bugs? If he does a QE3, it should be targeted to reduce the absurd debt burden on the middle class. not to do favors for banks.

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Frank T.

Bernanke didn't scare the gold bugs on purpose

Although the statements of the Fed Chair do move markets, including Gold. Well, QE3 automatically is buying up U.S. Treasuries, so it's an insane "trickle upon" idea in the first place, but does lower the dollar would should help with exports some, but all of this is unbelievably indirect.

I believe it also is to curtail deflation.

The all mighty Fed cannot enact real policy, such as slapping a tariff on Chinese goods for currency manipulation, or enacting laws to curtail offshore outsourcing and any such simply 1 page legislation items that are projected to have a big impact, a positive impact, on U.S. jobs...

So, I have a tendency to give the Fed a break on this "econommic stimulus", for I don't see the real tools being under their charter...i.e. monetary policy really. I mean you can inflate a housing bubble with it, affect credit with it, deal with international exchanges and on and on but you cannot, w/ surgical precision, stop corporations from offshore outsourcing jobs or investing in China instead of the U.S. That's Congress and this administration who are inept this time.

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No QE3 "at this time"

Bloomberg is reporting Bernanke clarified and said there won't be any QE3 "at this time", whatever that means. But he cited inflation as one reason. Ok, yesterday he testified things could change and the financial world went nuts over the idea of QE3.

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re...

The Gold Confiscation of 1933 is the single most draconian economic act in the history of the United States!http://www.moneyteachers.org/gold+confiscation+act.htm

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