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|User Info||Euro Area: We're Fooked And We Know It; entered at 2012-04-16 14:02:09|
Registered: 2009-02-28 DFW, Tx
Ben, everyone isn't for CB monetization save for those that are using the banking system to steal the rest of us blind. That bears repeating. Ben, everyone isn't for CB monetization save for those that are using the banking system to steal the rest of us blind.|
Bernanke is a fraud. He knows absolutely nothing about the Great Depression. Lets Repeat That! Bernanke is a fraud. He knows absolutely nothing about the Great Depression.
Everything the Fed did in the 1930's was a response to a mistake they made previously. The real problem was the same, save for the fact that the government of the US hasn't spent itself broke prior to the depression as they have this time. If any of this is working, why has the economy failed to respond to what amounts to a couple of over leveraged banks going broke after over $6 trillion in stimulus since? Bernanke has stolen at least $3 trillion from savers to the benefit of the banks since this mess started. Geithner fiddled while Rome was invaded.
Weimar Germany worked until the world reflated and then it collapsed. What happens to Bernanke bucks and the government strategy if Europe fixes its problems? Are we suddenly going to grow outselves out of a $20 trillion hole? Or, is the world going to decide it has enough dollars and move away? All that needs to happen is a loss in faith.
It appears to me we are faced with a death by fire or ice and not much in between. What is the problem in Europe? Too much debt in relation to the economies involved. What is the solution to too much debt? Printing press? This is in essense a default arranged through a third party, but it doesn't solve the solvency problem. Cut spending? Cries of austerity!
Years ago I thought up the black hole theory. I know I am not original in this, but the fact is credit comes out of a black hole and money goes back into the same black hole. Fractional reserve in reverse. Balance the budget in the US? Cut 10% of GDP from USG spending. What happens to government revenues and spending? Unemployment costs go up, income tax receipts fall. This requires another round of cuts if the government is to be able to finance itself. Or, you hope the economy recovers.
Governments problem isn't only what they deficit spend, but what they have to refinance. There is no guarantee the current holders of government debt are going to be the next holders, that the investors are going to roll their debt. Some will because it is a core of their business, as banks hold treasuries to offset reserves.
QE is probably the worst thing Bernanke can be doing. I can understand the first QE, as the banks had lost their credit standings, the paper between them was no longer and good, the mortgages on their books no longer marketable and something had to be done. Anyone who believes these banks actually had $800 billion in reserves should invest in swamp land in an environmentally sensitive area. That money was in places like Saddam Hussain's wall and Maria Mexico's mattress. These guys were cycling their own IOU's between them and bribing us to use debit cards and stay away from cash.
Point being, what happened in QE1 and QE2? Interest rates went up, not down. Every time the Fed has stopped a QE, rates have gone down. Bernanke is doing twist. I would bet it has had no effect. It is the ant on the log on the Mississippi thinking he is controlling the current.
Can you think of any greater disaster than all of this failing? I can. Central planning might succeed and damn us to a life of constantly being wired into the system. Even worse is it doesn't work, but appears to have worked. We have had 100 years of Federal Reserve disaster, but because of scientific advance and accounting trickery, the Fed has appeared to work well. If this is true, why is its credit now worth less than 10% of what it was in the 1960's. Snickers bars were a nickle in the 60's and now over $1. Bottled cokes were a dime with a 3 cent refundable deposit or 40 cents an 8 pack. Gasoline? I was filling up the other day and realized the gallons were running almost the pace of the dollars years ago and the dollars were running the pace of the gallons, meaning I used to get 80 gallons for $20 instead of 20 gallons for $80. I am not that old and I have bought regular gasoline in my life for 16.9 cents, premium for 2 cents more. Taxes were 9 cents of that, now 38 cents, meaning the retail price of the gasoline was a mere 8 cents. Even if gas was $1.50 a gallon, we aren't looking at much difference than the Snicker bar example. That is a pretty rough example for an outfit charged with maintaining stable prices. Once they lose control of interest rates, which they will, because you can't force people and institutions to roll debt under terms not acceptable to them, the curtain will have been pulled on the clowns that have been robbing us for decades.