Ben Bernanke

Bernanke Jackson Hole Speech Kicks the Can Over to Obama and Congress

bernake say whatFederal Reserve Chair Ben Bernanke gave his long awaited Jackson Hole speech this morning. Now all are reading between the lines on whether more quantitative easing will be done and picking apart every single word as if Bernanke speaks in cryptography.

 

First, here is the speech paragraph that will generate quantitative easing, or QE3 buzz:

In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days (the 20th and the 21st) instead of one to allow a fuller discussion. The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability.

Clearly QE3 is still on the table from this speech.

Is This the End for Quantitative Easing (and Ben Bernanke Too)?

A week ago we outlined here how and why Ben Bernanke lost a significant vote in the recent Fed Open Market Committee meeting. The vote was not so much to launch immediately QE3 when QE2 comes to an end this month; it was to keep Quantitative Easing as a tool in the Fed’s arsenal of monetary weapons. So far, the mainstream media have not yet realized how significant a shift this is in Fed policy, but other bloggers are beginning to notice, and so is the stock market. Yesterday Chairman Bernanke spoke at the International Monetary Conference in Atlanta, at which he made no mention of Quantitative Easing now or down the road sometime. The stock market certainly reacted to this omission; having traded noticeably higher during the day, the Dow Jones industrial average closed down 19 points, losing most of its ground in the last fifteen minutes of the session when Bernanke began speaking.

Here are some perceptive comments about the speech from Cullen Roche on his Pragmatic Capitalism website:

*His speech was certainly market moving and as reports of the speech hit the wires the equity markets began to reverse on fears that QE3 is off the table. But there was a more interesting tone in his speech today than we’ve seen in the past. The Chairman was exceptionally defensive. In fact, the entire speech is basically an explanation as to why QE2 did not hurt the economy (of course it did).

Ben Bernanke Loses Control of the Fed

Originally published on The Agonist

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It took a while, but the financial markets are starting to realize that Quantitative Easing will end next month, possibly once and for all. The unprecedented amount of monetary stimulus being pumped into the global economy by the Federal Reserve will come to a sudden halt. Commodity markets have enjoyed a bubbly expansion since the QE2 program was announced, and they were the first to crumble when the Fed began removing the monetary supports. Stock markets are now slowly beginning to follow suit.

One reason the markets took the news sanguinely was because the Fed engineered it that way. After the May meeting of the Fed Open Market Committee, at which it was decided not to renew QE2 when it expires in June, Ben Bernanke gave a first-ever press conference by a Fed Chairman following an FOMC meeting. The media thought it was a masterful performance – which it was, but not for the reasons cited in the press. Bernanke made it sound as if the end of Quantitative Easing was the most natural thing in the world, and that all the voting members of the FOMC agreed with him. The fact is, the FOMC decision was a defeat for Bernanke and his allies, which included the two other officers of the FOMC, Janet Yellen (Vice Chair of the Fed Board) and William Dudley (NY Fed President). Dudley, just a week before the meeting, had gone public with his desire to have a QE3 program standing by, ready to aid a struggling economy.

Bernanke Say What?

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Federal Reserve Chair Ben Bernanke gave one hell of a speech at the G-20 implying emerging economies are to blame their own inflation and currency manipulation could lead to another global financial crisis.

Firstly, Bernanke's speech, Global Imbalances: Links to Economic and Financial Stability, is reprinted below, in it's entirety. The reason to reprint the speech in total is too many in the press are interpreting his speech, many incorrectly, so I suggest reading what he said directly first.

Bernanke's Intrigue?

By Numerian
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Does Ben Bernanke even know what he is doing? I've certainly wondered about that point, and it is increasingly a topic of conversation among stock market analysts who have come to understand that all the major US stock market indexes are pushing relentlessly upward because of the Bernanke put.

There hasn't been a significant correction in the stock market since early September, when the S&P 500 left the 1040 range to its present very lofty height of 1330. This rally has set a number of records, including days when the stock market moves less than 1%, and number of stocks above their 200 day moving average. While some analysts credit this advance to improving economic conditions, most observers point to the Fed's deliberate policy to keep the stock market "higher than it would otherwise be", fueling it with hundreds of billions of dollars from the quantitative easing program.

Delusions of Normalcy 2011 - Dismal Scientists Cheer Up

Could a recession occur in 2011? Under the current state of the US economy and its heavy reliance on federal spending, we could answer this question quite simply if we knew when the US government credit card will reach its limit. At some point it must; the compelling reality of mathematical compounding alone makes it impossible for any country to continue to rack up new principal and interest obligations.

The consensus is in and there is strong agreement: the US economy is on the path to a sustained recovery. 2011 will be a year of surprises on the upside, and 2012 will be even better. Among a list of the top 25 economists surveyed, not one of them predicts a recession in 2011. There is hardly any investment strategist or economist to be found who sees any risks serious enough to derail the US economy. Here is just a sample of the consensus thinking that is to be found in end-of-the year forecasts:

*Economists in universities and on Wall Street have raised their growth projections for next year. Retail sales, industrial production and factory orders are on the upswing, and new claims for unemployment benefits are trending downward. Despite persistently high unemployment, consumer confidence is improving. Large corporations are reporting healthy profits, and the Dow Jones industrial average reached a two-year high this week. – New York Times

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