"America's economic policy mix is a threat to the world"

[wiggin]

Where'd you get the 7% figure?..

Here, for example:
http://finance.fortune.cnn.com/2010/...ar-debasement/

True, but still the overall effect is to lower the CPI.

Source?

I never claimed "rampant inflation", but inflation nonetheless.

*yawns* We want inflation, it's the hyperinflation that's the problem.

The CPI does not measure what the average American can buy. Given two periods with two different CPI levels, the difference in the CPI does not equate to a difference in spending power because of employment and wages also change.

So? Doesn't have anything to do with Fed policy.

Japan didn't run deficits during its 1990s stagflationary period, as far as I remember. Anyhoo, inflation is not too low!

Uh, not true. Deficits increased steadily from 1991 or so to 7.4% of GDP in 2000. Regardless, I recognize that Japan and the US are hardly similar, but they're a lot more similar than the US and, say, Greece.

In the long run, with trade like this, we are harmed. It immediately exports jobs overseas. That's fine, as long as the benefits of trade diffuses into the economy and creates even more jobs, but does it?

This is the same argument made about immigrants taking our jobs. It's simply wrong. This is not a zero sum game.

Let's just forget the debt problems created by maintaining a constant country deficit... Given the shrinking middle class (ie: more and more people falling below the mean income) as a percentage of the population, and continually falling income mobility since the late 1980s or so... what conclusion can we draw from these figures...?

Those numbers are disputed. See my earlier thread about this.

My conclusion here is that the current 9.6% unemployment level reflects a higher structural unemployment level rather than just temporary unemployment, because the low unemployment level enjoyed till around 2006 was just an illusion created by the promise of infinitely increasing US deficit spending.

What does structural unemployment have to do with China?

[GGT]

For wiggin and aggie. Commodity inflation:

http://www.econbrowser.com/archives/...y_infla_2.html

[agamemnus]

For wiggin and aggie. Commodity inflation:

http://www.econbrowser.com/archives/...y_infla_2.html

*Strokes moustache*

Here, for example:
http://finance.fortune.cnn.com/2010/...ar-debasement/

Ha, nice try. You almost had me, there. It's a trade-weighed index... Well, we're buying more cheap goods from China than before, and fewer goods from Europe (edit: RELATIVELY), so obviously it wouldn't fall as much.

Source?

I'm saying that the overall effect of a flood of cheap goods from another country is to lower the CPI (versus those cheap goods NOT coming in), even if commodity prices increase (otherwise, why buy those goods?). I don't see why you are asking me for a source for this...

*yawns* We want inflation, it's the hyperinflation that's the problem.

Or deflation, as you were saying. But I don't think we have deflation.

So? Doesn't have anything to do with Fed policy.

I'm saying that the Fed has to look at both the CPI and the entirety of the economic situation.

Uh, not true. Deficits increased steadily from 1991 or so to 7.4% of GDP in 2000. Regardless, I recognize that Japan and the US are hardly similar, but they're a lot more similar than the US and, say, Greece.

Hmm, not sure. What's this, then? http://www.tradingeconomics.com/Econ...spx?Symbol=JPY

In the long run, with trade like this, we are harmed. It immediately exports jobs overseas. That's fine, as long as the benefits of trade diffuses into the economy and creates even more jobs, but does it?

This is the same argument made about immigrants taking our jobs. It's simply wrong. This is not a zero sum game.

That's not my point... My point is that trade does not benefit everyone in the economy equally if the wealth does not diffuse through.

Let's just forget the debt problems created by maintaining a constant country deficit... Given the shrinking middle class (ie: more and more people falling below the mean income) as a percentage of the population, and continually falling income mobility since the late 1980s or so... what conclusion can we draw from these figures...?

Those numbers are disputed. See my earlier thread about this.

O? Which one?

What does structural unemployment have to do with China?

The trade deficit!! AAAAAAAAAAAARHHHHHHHGGGKIGY&N(G^&*VD%^VD^&VW$%BExw v5erase7f8e4t <---- I make my passwords like this... in a fit of indescribable insanity!

[wiggin]

Ha, nice try. You almost had me, there. It's a trade-weighed index... Well, we're buying more cheap goods from China than before, and fewer goods from Europe, so obviously it wouldn't fall as much.

I specifically said it was a trade-weighted valuation, you asked for a source, I gave one.

I'm saying that the overall effect of a flood of cheap goods from another country is to lower the CPI (versus those cheap goods NOT coming in), even if commodity prices increase (otherwise, why buy those goods?). I don't see why you are asking me for a source for this...

It's hardly that simple. This seems to be the problem with most of your reasoning.

Or deflation, as you were saying. But I don't think we have deflation.

Not yet, but inflation expectations took a serious blow this spring/summer until QE2 was hinted at in the September Fed meeting. Too low expectations (even if technically positive) can lead to a deflationary spiral.

I'm saying that the Fed has to look at both the CPI and the entirety of the economic situation.

The entirety of the economic situation is that the risks of deflation far outweigh the risks of inflation right now, and the Fed's tools to deal with inflation are a lot better than their available tools to deal with deflation. So, better to err on the side of caution. Trust me, if we get into serious deflation things will be far worse for consumers than they are today.

Hmm, not sure. What's this, then? http://www.tradingeconomics.com/Econ...spx?Symbol=JPY

Sorry, I thought you meant fiscal deficits, not trade deficits. Yes, in general Japan is a trade surplus country, but that has little bearing on its deflationary impact (in fact, deflation really screwed over Japanese exporters). Regardless, I think we can agree that deflation would be a Bad Thing.

O? Which one?

http://www.theworldforgotten.com/showthread.php?t=1190

The trade deficit!! AAAAAAAAAAAARHHHHHHHGGGKIGY&N(G^&*VD%^VD^&VW$%BExw v5erase7f8e4t <---- I make my passwords like this... in a fit of indescribable insanity!

That's not a structural problem IMO; structural unemployment is normally seen as a skill mismatch.



Anyways, I think we're talking past each other. All I wanted to say from the beginning is that QE2, like QE1, is a fairly reasonable monetary policy to deal with unprecedented levels of deleveraging in the economy that had a significant contractionary impact. Inflation is simply not a major concern right now, as evidenced both by market inflation expectations and current inflation measures (as well as the effects of QE1 on a number of indicators of the cash supply). When inflation and economic activity pick up again, the Fed can easily contract the money supply to keep inflation in check. *shrugs* You can argue that the Fed should be doing something else, but I think they're doing their job as mandated by Congress.

[agamemnus]

I see.

Whenever the Fed does a reverse course on anything, it makes markets jittery, however.

In terms of structural unemployment, I do agree that normally a skill mismatch is what it is. Just think about this, though. India and China each have a population of 1.2/1.4 or so billion people, and hundreds of millions in each country now have a skill set in technical/research and business fields. Up until before 2007 (when housing prices stopped rising), these are the fields that all the professors, and all the textbooks, and all the TV programs, and all the reporters, and all the King's men, have said would make the US competitive in the world: the US would buy cheap goods in return for services, research innovation, business leadership, and very complex items such as planes.

And it did happen, but of course much of the cheap goods were also financed by the Chinese drive to industrialize. (the yuan peg) Now that so many people are unemployed -- and not just those who have a high school education, but across the board -- and many European and Asian markets have almost fully recovered, how are we getting any of these jobs back? They don't need us anymore. The structural problem is that we do not have enough capital invested, not that we don't have enough infrastructure invested.

In my state, Massachusetts, we have many great, clean and efficient stores and malls. Our highway system is excellent, and the local roads are decent enough (though very bad in some places). We have good water, electricity, and cable services. We have many of the best universities in the country, and in the world. Our education system is one of the best in the country. We are one of the thinnest and healthiest people in the country.

However, our political, economic, and social system is a mess.

Even with low housing values, developers are now converting pristine woodland in the north into unattractive, expensive, and (often) vacant house lots, devoid of trees. They are building right next to major highways. (who would want to live there?) In short, our urban planning laws are weak and encourage terrible planning (see the 2010 Question 2 about housing permits, which failed miserably).

Our big high-tech industries, pharma and software, are stagnating and failing because of lack of money availability in the economy. Our urban cities are crumbling because of a political culture of corruption and irresponsibility, the poor's belief in the right to handouts, and stagnant police funding despite tax increases and stimulus funding.

We have a 6.25% sales tax rate, while New Hampshire to the north has 0% -- no one smart buys TVs, expensive furniture, fridges, or computers in this state. Our political discourse is very weak, with all our representative slots going to Democrats in the last election. We are paying more and more for social welfare to people (many here illegally and who can't speak English) who just get by in crappy apartments and have tons of babies.

Even though we are one of the thinnest and healthiest people in the country, many of us are fat or obese slobs.


So... yes, nice rant Aga, but what about the structural unemployment you were going to talk about? Well, the structural unemployment problem is still a skill mismatch. We all want to work in business/marketing pharma research, software, or engineering firms since that is what our top world-renowned universities actually teach, but no one is hiring. Instead, there are plenty of openings in the bloated (and soon to be bloated even more) all-encompassing "health care industry", but low supply -- the bubble of 2015. There's also a huge demand for life-force batteries in China, but just not enough people here willing to do it. We should just import people from Mars; I'm sure they're willing to work the long life-force battery hours for ridiculously low wages.

[wiggin]

I don't want to drag this argument out any further, so I'll just say that I'm much more bullish on America than you are.

[agamemnus]

LOL, well.. even though I am disappoint, I am bullish on Amerika, too. I have to be in order to stay sane. The alternative is freezing in Canada, getting probed daily you-know-where by British cameras, or learning Chinese...

[GGT]

My memory must be failing. I could have sworn wiggin said (in some other thread) that our problems can't be addressed with Fed monetary policies.
My reading comprehension must be failing. It looks to me like wiggin is saying that what the Fed is doing is perfectly reasonable to address our problems.

[Dreadnaught]

REVIEW & OUTLOOK | NOVEMBER 13, 2010
Embarrassment in Seoul
The world won't follow slow-growth, weak-dollar America.


Has there ever been a major economic summit where a U.S. President and his Treasury Secretary were as thoroughly rebuffed as they were at this week's G-20 meeting in Seoul? We can't think of one. President Obama failed to achieve any of his main goals while getting pounded by other world leaders for failing U.S. policies and lagging growth.

The root of this embarrassment is political and intellectual: Rather than leading the world from a position of strength, Mr. Obama and Treasury Secretary Timothy Geithner came to Seoul blaming the rest of the world for U.S. economic weakness. America's problem, in their view, is the export and exchange rate policies of the Germans, Chinese or Brazilians. And the U.S. solution is to have the Fed print enough money to devalue the dollar so America can grow by stealing demand from the rest of the world.

But why should anyone heed this U.S. refrain? The Germans are growing rapidly after having rejected Mr. Geithner's advice in 2009 to join the U.S. stimulus spending blowout. China is also growing smartly having rejected counsel from three U.S. Administrations to abandon its currency discipline. The U.K. and even France are pursuing more fiscal restraint. Only the Obama Administration is determined to keep both the fiscal and monetary spigots wide open, while blaming everyone else for the poor domestic results.

The American failure was most acute on trade, as the U.S. and South Korea couldn't agree on a bilateral pact that the two countries had signed three years ago. Mr. Obama had campaigned against that pact in 2008, let it languish for two years in office, and now suddenly wants the South Koreans to agree to new terms.

But the Koreans aren't pushovers, and they want new concessions from America in return. They also see a less urgent need for a trade pact with the U.S. because, while Mr. Obama has fiddled, the Koreans have been negotiating other trade deals with all and sundry—not least a pact with the European Union that carries nearly identical terms to what the Bush Administration negotiated in 2007. Mr. Obama's negotiators left Seoul empty-handed.

Meanwhile, China and other Asian economies see first-hand that rather than spurring more U.S. growth (on which Asian exporters still depend), U.S. monetary ease has flooded the developing world economies with dollars they're not able to absorb; produced exchange-rate turmoil to the detriment of the region's traders; and sent the world's dollar-denominated commodity prices climbing.

Far from distancing himself from this Federal Reserve policy, Mr. Obama defended it more than once. "From everything I can see, this decision was not one designed to have an impact on the currency, on the dollar," Mr. Obama said in Seoul. "It was designed to grow the economy."

But this defense will only confirm to most of the world that the goal of U.S. monetary easing is solely domestic and political. Isn't the U.S. central bank supposed to be independent? Mr. Obama may come to regret his political embrace of Fed Chairman Ben Bernanke if commodity price increases flow through to consumer prices and leave Americans feeling poorer than they already feel.

The Administration's dubious monetary theories also led it to waste valuable political energy pushing an unlikely deal with China to revalue the yuan (and devalue the dollar). Instead Mr. Obama could have argued for reforms to China's capital account that would do some genuine good. China's exchange rate by itself has not contributed to global imbalances, but China's capital-account regulations have.

In particular, the fact that Beijing sterilizes capital inflows and recycles them into U.S. government debt instead of allowing capital to enter and exit more freely contributes to a global misallocation of resources. Mr. Geithner is too busy focusing on the exchange rate to notice, let alone to respond to Beijing's complaints about U.S. monetary instability by challenging China to liberalize its own capital account.

The world also rejected Mr. Geithner's high-profile call for a 4% limit on a nation's trade surplus or deficit, which would amount to new political controls on trade and capital flows. This contradicts at least three decades of U.S. policy advice against national barriers to the flow of money and goods. We don't like to see U.S. Treasury Secretaries so completely shot down by the rest of the world, except when they are so clearly misguided.

***
None of this should be cause for celebration, because a world without American leadership is a more dangerous place. The U.S. is still the world's largest economy, the issuer of its reserve currency, and its lone military superpower. No other nation has the will or capacity to lead the way the U.S. has for 70 years, so faltering American influence will produce a vacuum in which every nation can seek narrow advantage.

If Mr. Obama wants to restore his economic leadership, both at home and abroad, he needs an urgent shift in priorities. Strike a deal with Republicans to extend the current tax rates across the board, pursue the spending cuts proposed by his own deficit commission, end the regulatory binge that has constrained America's animal spirits, stop trying to direct capital toward political mirages like "green jobs," and press Congress to pass the Korean and other trade pacts.

The world will follow American leadership again only when it sees policies that restore robust U.S. economic growth.

http://online.wsj.com/article/SB1000...024501384.html

[Being]

I guess we can assume that article reflects your exact opinion on the subject since you didn't offer one. I'd like to know how people with this opinion believe any economy can grow without jobs.


Rebuttal: Throwing Free Trade Overboard

The following excerpts pretty much outline my opinion on the subject (and I generally despise Tea Partiers),

...frustrated with Washington, and that includes its failure to make free trade work for America. Our trade deficit in manufactured goods was about $4.3 trillion during the last decade, and the country lost some 5.6 million manufacturing jobs.

...the rest of the world is stacking the free-trade deck against us.

...most policymakers agree that the Chinese currency is grossly and deliberately undervalued, that China fails to respect intellectual property rights and that it uses government subsidies to protect its own manufacturing base. Meanwhile, the movement says, the United States does virtually nothing in response.

...what good does it do to reduce the role of our government if foreign governments are free to rig the
rules, attack American industries and take American jobs?

...the value of foreign investments in the United States now exceeds the value of American investments abroad by $2.74 trillion,

...if our trade policy is so successful, (why do) so many experts believe that the 21st century will belong to China, not the United States.

...heroes like Alexander Hamilton, Theodore Roosevelt and Ronald Reagan had no problem restricting imports to promote our national interest.

...push Washington to stand up to China and re-establish American pre-eminence, even at the cost of the country’s free-trade record.

...a fundamental reorientation of our country’s attitude toward trade and globalization.

[Dreadnaught]

I can't tell if you dislike trade, or just how we haven't done a good job promoting it. But I think part of our poor job promoting free trade and being able to take on anti-competitive policies abroad is that we have built-up so many barriers to entry over here.

[Loki]

He's a unionist. What do you think?

[Being]

I can't tell if you dislike trade, or just how we haven't done a good job promoting it. But I think part of our poor job promoting free trade and being able to take on anti-competitive policies abroad is that we have built-up so many barriers to entry over here.

I have nothing against fair trade.

He's a unionist. What do you think?

Really? Who is paying union dues? Not me, that's for sure.

[Dreadnaught]

What's your definition of "fair trade"?

[Being]

What's your definition of "fair trade"?

If one partner gives up barriers the other gives up subsidies.

[agamemnus]

I agree with Being on this, in a way. (Didn't I have this discussion in a dream I had a few years ago? It didn't end well for anyone, though...)

Tariffs are only a temporary solution.

As I was saying in my earlier rant, the late 90s and early 2000s outlook that we can trade non-tangible goods for cheap manufactured products is starting to fade. We need to put more thingy industry in America. What kind of thingy industry? The really good, high tech kind...

I often enjoy reading/watching about various advances in prosthetics, robotics, nanotech, miniaturization, biofuels and all kind of recycling schemes (has anyone seen the new show Dean of Invention? It's wonderful), and I often wonder why this tech is so slow to permeate through the country. Imo, it is all the government's fault. Perhaps this osmosis is so slow because of not too much or too little regulation, but bads regulation... decaying urban cities (see my street sweeper post) are a light example of this.

=======================

One of the oddest things in this bads regulation that has recently really evoked wonderment is our prescription system. In Spain, France, Germany, etc. (Europe), and even Thailand (was just watching Bangkok Dangerous, which showed this), drugs (like antibiotics) are freely sold at an affordable price by trained licensed pharmacists that would in most cases require a prescription in the US, or even isn't available in the US yet.

So let's take antibitotics as an example. In the US, you'd need a prescription... go to the doctor, and wait 1-3 hours (ok, usually 30 minutes to an hour) in either/or the waiting/exam room. There is a high risk of infection while waiting for the doctor in the waiting room. The exam room that has an unfiltered air conditioning system. Then the nurse comes in and does the routine and unnecessary quick checkup (you only want an antibiotic prescription, damnit!)... after a while the tired doctor comes in. After listening to your problems and request for an antibiotic, he writes a prescription and sends the order to a pharmacy you ask for. You pay $20 as a copay, and your plan or the state pays as well. You go to the pharmacy. Oh, they don't have it. Come back tomorrow at 10AM. Ok, it's 10AM and they still don't have it. You wait another hour and finally get your antibiotics.

VERSUS:

You go to a corner pharmacy in Europe, buy the antibiotics after a quick discussion with the doctor, and off you go.

It just makes me really sad.

[GGT]

The QEII explained.





The Ben Bernank. The Goldman Sachs.

[GGT]

One of the Fed's mandates is "maximum employment through monetary policy". But it's viewed it from a monetizing angle, flow of money and credit / price of money and credit. That leaves huge gaping holes in our reality, when more money or more profit doesn't "trickle down" to mean more jobs. Where's the policy for that?

Regarding "structural unemployment" and "mismatched skill sets", efficiency is hollowing out the American middle. Not a damn thing the Fed can do about that. I've asked this question a million times, but never get a straight answer: How is a service-based economy supposed to grow, when even skilled services are being outsourced overseas or replaced with efficient robotics or computers? Where's the policy for that?

In Rome, a few hours' drive to the east across New York's midsection, the loss of middle-skill jobs is felt in an unusual indirect way. Accountants used to come in from nearby Syracuse to pore over the books of a copper mill owned by Revere Copper Products Inc., a company founded by the famed crier who warned of the coming British.

"They used to have 150 people in their accounting office in Syracuse. Today they come into Revere and they scan the materials, and our accounts and ledgers and computer files, and they'll just transmit that to India. And they'll have a lot of the analysis of our books done in India," said Brian O'Shaughnessy, Revere's chairman.

He declined to name the firm, but noted that the independent accounting firm has substantially thinned its ranks, as have its competitors who bid to win his business.

"Instead of 150 people in Syracuse, they now have about 25 or 30, so all of a sudden you've seen a lot of accounting jobs go offshore," he said.

That might seem surprising, since the conventional wisdom is that the U.S. has become a service-driven economy.

In a 2007 study, Princeton University economist Alan Blinder estimated that 1 in 4 U.S. jobs potentially could be sent offshore because of technology, low-cost labor and the fact that service sector jobs are so much more abundant in the U.S. economy.

"I'm not totally convinced that the deep recession has accelerated the trend toward offshoring. There are certainly examples of that. But the main effect seems to be that firms learned to get by with less labor, whether domestic or foreign," said Blinder, a former vice chairman of the Federal Reserve. "That said, as employment expands and labor markets normalize, we should see the offshoring trend reassert itself."

Blinder identifies accountants and providers of similar financial services as prime targets. Accounting blogs set up to lure these jobs to India boast of a $47,000 saving per U.S. accountant whose job is sent offshore.

Historical trends also reveal the mounting loss of middle-skill jobs.

According to data in the MIT study by Autor, skilled professional employment rose by 28 percent from 1979 to 1989, while employment in office and administrative jobs jumped 11 percent.

Then, from 1999 and 2007, those employment gains slowed to 11 percent and 1 percent respectively. And from 2007 to 2009, spanning most of the Great Recession, there was no job growth for professionals, while office and administrative employment fell by 8 percent.

This loss of middle-skill jobs — what Autor calls polarization of the job market — intersects with another discouraging trend, the concentration of wealth at the highest rungs of the wealth ladder.



Read more: http://www.mcclatchydc.com/2010/11/1...#ixzz15H4PgX4x

[Dreadnaught]

Heh, nice video especially at about 1 minute.

[GGT]

http://blogs.wsj.com/economics/2010/...-ben-bernanke/

NOVEMBER 15, 2010, 12:01 AM ET

Open Letter to Ben Bernanke

By WSJ Staff

The following is the text of an open letter to Federal Reserve Chairman Ben Bernanke signed by several economists, along with investors and political strategists, most of them close to Republicans:

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in the Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.” In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.

Cliff Asness
AQR Capital

Michael J. Boskin
Stanford University
Former Chairman, President’s Council of Economic Advisors (George H.W. Bush Administration)

Richard X. Bove
Rochdale Securities

Charles W. Calomiris
Columbia University Graduate School of Business

Jim Chanos
Kynikos Associates

John F. Cogan
Stanford University
Former Associate Director, U.S. Office of Management and Budget (Reagan Administration)

Niall Ferguson
Harvard University
Author, The Ascent of Money: A Financial History of the World

Nicole Gelinas
Manhattan Institute & e21
Author, After the Fall: Saving Capitalism from Wall Street—and Washington

James Grant
Grant’s Interest Rate Observer

Kevin A. Hassett
American Enterprise Institute
Former Senior Economist, Board of Governors of the Federal Reserve

Roger Hertog
The Hertog Foundation

Gregory Hess
Claremont McKenna College

Douglas Holtz-Eakin
Former Director, Congressional Budget Office

Seth Klarman
Baupost Group

William Kristol
Editor, The Weekly Standard

David Malpass
GroPac
Former Deputy Assistant Treasury Secretary (Reagan Administration)

Ronald I. McKinnon
Stanford University

Dan Senor
Council on Foreign Relations
Co-Author, Start-Up Nation: The Story of Israel’s Economic Miracle

Amity Shales
Council on Foreign Relations
Author, The Forgotten Man: A New History of the Great Depression

Paul E. Singer
Elliott Associates

John B. Taylor
Stanford University
Former Undersecretary of Treasury for International Affairs (George W. Bush Administration)

Peter J. Wallison
American Enterprise Institute
Former Treasury and White House Counsel (Reagan Administration)

Geoffrey Wood
Cass Business School at City University London

A spokeswoman for the Fed responded:

“As the Chairman has said, the Federal Reserve has Congressionally-mandated objectives to help promote both increased employment and price stability. In light of persistently weak job creation and declining inflation, the Federal Open Market Committee’s recent actions reflect those mandates. The Federal Reserve will regularly review its program in light of incoming information and is prepared to make adjustments as necessary. The Federal Reserve is committed to both parts of its dual mandate and will take all measures to keep inflation low and stable as well as promote growth in employment. In particular, the Fed has made all necessary preparations and is confident that it has the tools to unwind these policies at the appropriate time. The Chairman has also noted that the Federal Reserve does not believe it can solve the economy’s problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators, and the private sector.”

[Veldan Rath]

If even 1/2 of the video represents reality....WHAT THE FUCK is Bernake still doing in his position???

[Loki]

Don't you mean "The Ben Bernank"?

[Being]

If even 1/2 of the video represents reality....WHAT THE FUCK is Bernake still doing in his position???

Rich people rule (party affiliation be damned) so of course they will choose the person easiest to bend to their will.

[Veldan Rath]

Don't you mean "The Ben Bernank"?

&#$$@!

[GGT]

Has the Fed Been a Failure?

As the one-hundredth anniversary of the 1913 Federal Reserve Act approaches, we assess whether the nation‘s experiment with the Federal Reserve has been a success or a failure. Drawing on a wide range of recent empirical research, we find the following: (1) The Fed‘s full history (1914 to present) has been characterized by more rather than fewer symptoms of monetary and macroeconomic instability than the decades leading to the Fed‘s establishment. (2) While the Fed‘s performance has undoubtedly improved since World War II, even its postwar performance has not clearly surpassed that of its undoubtedly flawed predecessor, the National Banking system, before World War I. (3) Some proposed alternative arrangements might plausibly do better than the Fed as presently constituted. We conclude that the need for a systematic exploration of alternatives to the established monetary system is as pressing today as it was a century ago.

http://www.realclearmarkets.com/blog...r-2%5B1%5D.pdf

[wiggin]

BTW, finally got around to seeing the video, and it's simply awful in perpetuating some of the worse economic myths.

Look, the Fed could have done unsanitized foreign currency purchases if they really wanted to print money (and help exporters at the same time). They didn't.

[wiggin]

Worried about inflation? Don't be:

http://www.marketwatch.com/story/us-...k=MW_news_stmp

Core CPI is essentially zero, and even when you throw in the full CPI, it's well below trend. One year CPI is at 0.6%, the lowest reading since they started taking data 53 years ago.

[GGT]

How about stagflation?

http://www.minyanville.com/businessm...1169?page=full

[wiggin]

Why are we worried about high inflation? You can't get stagflation without the 'flation' part.

[GGT]

Why are we worried about high inflation? You can't get stagflation without the 'flation' part.

We also don't get an accurate picture of the health of our country by looking at just CPI. Let's recap:

Wages have been flat for at least a decade. Unemployment is high, 9.5%-17% depending on metric. 14 million out of work, at least 2 million for almost two years. 40 million on food stamps. 80 million aging boomers preparing to tap SS and Medicare. More folks needing Medicaid or SCHIPs now than ever before. Private insurance premiums rising 10-30% annually. 49 million now uninsured, up from 39 million two years ago. Something like 48/50 states are broke with unfunded pensions and billion dollar budget shortfalls. Costs of college are up and rising. Youth unemployment highest in decades. Bond vigilantes on the prowl, commodities rising, grocery prices rising, heating and electric prices rising....

All it took a couple of years ago for the consumer to freak out, was gas prices rising above $3/gallon. I know you like to be bullish on America, but the big picture isn't so rosy.....stagnant growth and stagnant wages only need a tiny bit of inflation of basic things to become Stagflation.