Bernanke Consistently Wrong

In his statement from May 5th Bernanke stated that he expects a recovery “later this year”:

We continue to expect economic activity to bottom out, then to turn up later this year. Key elements of this forecast are our assessments that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters. Final demand should also be supported by fiscal and monetary stimulus.

Let’s see what Bernanke had to say about 1 year ago in April 2008

Mr. Bernanke, testifying before the Joint Economic Committee on Capitol Hill, said the economic situation had weakened since the Fed last reported at the end of January but that it could revive later in 2008 because of the $150 billion spending and tax cut package enacted this year.

There is one thing you can trust Bernanke with – the fact that he is wrong, always and everywhere…In one year from now, when condidtions are worse than now, what do you think he will tell us then? Is anybody still listening to this guy? If so … why?

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Bernanke Won’t Shut Up

Once again, Fed officials vow to use all tools to help economy

Fed Chairman Ben Bernanke said the U.S. central bank will continue to use the unorthodox methods it has resorted to since the financial crisis erupted in the summer of 2007 to settle markets and set the stage for a resumption of growth. He did not, however, offer a guess on when a recovery will occur.

“The Federal Reserve will make responsible use of all of its tools to stabilize financial markets and institutions, to promote the extension of credit to creditworthy borrowers, and to help build a foundation for economic recovery,” Bernanke told a conference in Charlotte organized by the Richmond Federal Reserve Bank.

“Relieving disruptions in credit markets and restoring the flow of credit to households and businesses are essential if we are to see, as I expect, the gradual resumption of sustainable economic growth,” he said.

The saga continues. Those responsible for the inevitable results of excessive credit expansion won’t stop to add fuel to the fire. On top of that they keep talking and talking without saying anything … Mr. Bernanke, with all due respect: Shut the hell up.

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Mr. Bernanke, with all due respect: Shut the hell up.

This is an excerpt of Bernanke’s most recent statement from February 18th 2009:

In the United States, the Federal Reserve has done, and will continue to do, everything possible within the limits of its authority to assist in restoring our nation to financial stability and economic prosperity as quickly as possible.

Since October 2007 the public and the politicians have realized that the US economy is in a tailspin. The effects of the long term recession that had already been visible for much longer to those who had been following True GDP had finally reached even the most clueless people amongst us.

Since then the Dow Jones has dropped by about 50%. GDP has been declining constantly. Unemployment has risen constantly.

Below please find a list of part of the countless pledges and shallow platitutes that FED Chairman Ben Bernanke has uttered during this economic decline.

December 1st 2007:

Bernanke, addressing business leaders in Austin, Texas, said the Fed will continue to use the tools it has been given to fight the financial crisis. (…) “Although conventional interest rate policy is constrained … the second arrow in the Federal Reserve’s quiver — the provision of liquidity — remains effective,” he said.

February 6th 2008:

Federal Reserve chief Ben Bernanke reaffirmed his willingness to use all tools available to aid the economy, according to Sen. Chris Dodd, chairman of the Senate Banking Committee.

August 21st 2008:

A US senator said Tuesday that Federal Reserve chairman Ben Bernanke pledged to use “all tools available” to avert a worsening of the housing and credit problems roiling financial markets.

October 7th 2008:

Fed’s Bernanke: All tools will be utilized to help stability, will consider whether current monetary policy is appropriate

– Remarks that commodity prices show extraordinary volatility, inflation outlook has improved somewhat.
– Notes that market turmoil and weak data will exhibit US growth outlook worsening, and downside risks are increasing.
– Fed will begin using reserve interest powers this week.

October 15th 2008:

Federal Reserve Board Chairman Ben Bernanke said today that passage of the Wall Street bailout bill earlier this month gave the government a full set of tools it can use to tackle the credit crisis, although he added that more traditional tools, like lowering interest rates, may well be used again as the crisis unfolds.

‘The problems now evident in the markets and in the economy are large and complex, but, in my judgment, our government now has the tools it needs to confront and solve them,’ Bernanke said in a speech to the Economic Club of New York today.

December 16th 2008:

The Fed added it will employ all available tools to stoke growth and preserve “price stability.”

January 14th 2009:

“The Federal Reserve retains powerful policy tools and will use them aggressively to help achieve this objective,” Bernanke said. “Fiscal policy can stimulate economic activity, but a sustained recovery will also require a comprehensive plan to stabilize the financial system and restore normal flows of credit.”

January 28th 2009:

…the Fed said it is now ‘prepared’ to buy longer-term Treasury securities if the circumstances warrant such action.

February 10th 2009:

Bernanke continued to emphasize that the central bank has additional tools available at its disposal now that its key lending rate is now at its “effective floor.”

Now let’s see what Ben Bernanke is up to this week:

Federal Reserve Chairman Ben Bernanke this week will offer assurance that help is on the way for the troubled U.S. economy and may offer clues on additional steps that could be taken to halt an ever-steepening dive.

With U.S. stocks closing at 6-1/2-year lows on Friday on fears big banks will be nationalized, Bernanke will likely be pressed on government plans to clean up the financial sector when he delivers the Fed’s semiannual monetary policy report to Congress in two days of testimony on Tuesday and Wednesday.

In addition, the Fed chief will face the challenge of making the case that the U.S. central bank, which has chopped interest rates to near zero and flooded markets with hundreds of billions of dollars, still has the ammunition to pull the economy out of its worst downturn since the early 1980s.

“He’s going to talk about the Fed still having tools in its tool kit and that it will do whatever it can to get the economy going,” said Joseph LaVorgna, an economist for Deutsche Bank Securities in New York.

…ah yes, awesome. Haven’t heard that one before. Anyone still listening to this guy?

Mr. Bernanke, we have had enough of your clueless nonsense. You have no idea what you are talking about. Spare us more tools, “innovative” ideas, platitudes, and mindless blather. Pack your toolbox, go home and read up on The Great Depression, Credit Expansion, and The Business Cycle. Until you are done, please do us all a huge favor: Shut the hell up.

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Bernanke Digs Deeper

It was deja vu time when Federal Reserve Chairman Ben Bernanke spoke today. To all those who remember his helicopter speech, but thought he was kidding: He was obviously not. He is ready to destroy the currency whose stability he is supposed to overlook, prolong the agony of this depression, and then plunge the nation into a hyperinflation of unprecedented proportions. Reuters writes:

Federal Reserve Chairman Ben Bernanke on Monday urged decisive action to protect the economy and said the central bank had alternative tools it could employ to help as interest rates approach zero.

“Our nation’s economic policy must vigorously address the substantial risks to financial stability and economic growth,” Bernanke told the Greater Austin Chamber of Commerce.

Yes, we must address the substantial risks that a reckless monetary and fiscal policy of credit expansion has created.

On a day when the arbiter of U.S. business cycles said the United States fell into recession last December, Bernanke said the economy was still under “considerable stress” and had slipped further since markets crumbled anew in September.

“Households have continued to retrench, putting consumer spending on a pace to post another sharp decline in the fourth quarter,” the Fed chief warned.

Yes, they have cut down on consumption in order to begin generating savings again. Something that the US has forgotten about over the past 30 years. Something that the US direly needs lest it keep moving toward national bankruptcy.

Bernanke said further cuts in overnight interest rates beneath the Fed’s current target of 1 percent were “certainly feasible,” but he suggested the U.S. central bank would also use other unconventional measures to spur growth.

“Although conventional interest rate policy is constrained by the fact that nominal interest rates cannot fall below zero, the second arrow in the Federal Reserve’s quiver — the provision of liquidity — remains effective,” he said.

He said the Fed could directly purchase “substantial quantities” of longer-term securities issued by the U.S. Treasury or government-sponsored agencies to lower yields and stimulate demand.

As a response, 10 yr Treasuries surged again as today and they will certainly keep going down the path I suggested. That this will do nothing but encourage more government borrowing and spending and will plunge us deeper into financial Armageddon goes without saying.

Bernanke also said the Fed could side-step institutions that are reluctant to lend and pump money directly into specific markets. The Fed has already done this in the market for commercial paper, short-term debt companies use to finance day-to-day operations, and last week it announced a program to push funds into markets for consumer-related debt as well.

Yes, the Fed is, in fact, not leaving out a single opportunity to aggravate its credit expansion.

The Fed is widely expected to lower benchmark U.S. interest rates by a half-percentage point to 0.5 percent at its next scheduled meeting on December 15-16. It is also expected to discuss what other policy tools could be used, and Bernanke’s speech was seen as a game plan for likely next steps.

Of course the Fed is well aware that reducing the Fed funds rate to .5% will have no result whatsoever since short term interest rates on the open market are already near 0.

In calling for vigorous action to support the economy, Bernanke said the economy was likely to be sluggish for some time. “The likely duration of the financial turmoil is difficult to judge, and thus the uncertainty surrounding the economic outlook is unusually large. But even if the functioning of financial markets continues to improve, economic conditions will probably remain weak for a time,” he said.

Bernanke’s prophetic predictions in the midst of this crisis are not very impressive, really. Just last year he called the economy sound. He has absolutely no understanding of what is going on.

But he said there was no comparison between the current downturn — already the third-longest since the 1930s — and the Great Depression, when the U.S. economy contracted for over a decade, one in four U.S. workers was unemployed and bank failures were rampant.

“Let’s put that out of our minds. There is no comparison in terms of severity.”

…and I guess this is true because he says so? If anything, this crisis will be much worse than what happened in 1930. Bernanke’s poor judgment is simply deplorable. He truly believes he can fix this thing. Even if he doesn’t solely share the blame for the causes of the recent credit expansions, he has surely done everything he needed to do in order to prolong and aggravate it.

Bernanke drew a distinction between the aggressive actions he and his colleagues have taken and blunders by the 1930s-era Fed, including excessively tight monetary policy and inaction as the financial system collapsed. He said he was being guided in part by his reading of history.

“I made my own mistakes, but I don’t want to make someone else’s mistakes,” he said.

Excessively tight monetary policy? If anything the monetary policy of the 20s was excessively lavish. And the Federal Reserve of 1930 didn’t shy away from continuing it until the banks started accumulating excess reserves. Sound familiar? Sorry Ben, sadly you are precisely repeating the mistakes of The Great Depression.

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