Ben Bernanke is a highly educated PhD from Princeton who has never worked a day in the real world since he graduated from college in 1975. His entire life has been spent in the ivory tower of academia surrounded by models and theories that work perfectly in the comfort of his office. After building his reputation as an “expert” on the Great Depression by studying it and reaching the wrong conclusions, he came down from his ivory tower in 2002 to join an organization that has systematically destroyed the value of the US currency, thereby undermining the well being of the once vibrant middle class.
He became a member of the Federal Reserve and has served his masters (Wall Street Banks, Mega-corporations, Washington politicians) unswervingly since. When he makes his now regular appearances on 60 Minutes, he tries to give the appearance of being someone concerned about the average American. The facts in the real world completely obliterate the lies he nervously mouths while answering softball questions underhanded to him by corporate media mouthpieces. His quivering lip and nervous ticks reveal his true nature. How could Bernanke blatantly take measures that destroy the lives of millions of Americans? Maybe Dr. Seuss had the answer:
It could be his head wasn’t screwed on just right.
It could be, perhaps, that his shoes were too tight.
But I think that the most likely reason of all,
May have been that his heart was two sizes too small.
Whatever the reason, His heart or his shoes,
He stood there on Christmas Eve, hating the Whos,
Staring down from his cave with a sour, Grinchy frown – Dr Seuss
If the Grinch had been pimping for a small pack of Grinchsters who impoverished the honest people of Whoville, then the Dr. Seuss poem would have perfectly described Ben Bernanke, the Federal Reserve and the banksters that run the show here in the USA. The actions taken by Ben Bernanke, Alan Greenspan and their brethren on the Federal Reserve over the last quarter century have destroyed the middle class and left senior citizens impoverished, while enriching its Wall Street masters. Now he is stealing Christmas from the hard working middle class of this country.
Bernanke’s latest theoretical venture into manipulating the puppet strings of the economy began with his speech at Jackson Hole in August and concluded with his Op-Ed on November 4. His master plan to buy an additional $600 billion of Long-term Treasuries is being implemented on a daily basis. This QE2 follows his previous QE1, which consisted of buying $1.4 trillion of toxic mortgage securities from his masters, the insolvent Wall Street banks. What follows are Ben Bernanke’s own words:
“I believe that additional purchases of longer-term securities, should the FOMC choose to undertake them, would be effective in further easing financial conditions.” – Ben Bernanke – August 27, 2010 – Jackson Hole
“Given the Committee’s objectives, there would appear–all else being equal–to be a case for further action. For example, a means of providing additional monetary stimulus, if warranted, would be to expand the Federal Reserve’s holdings of longer-term securities. Empirical evidence suggests that our previous program of securities purchases was successful in bringing down longer-term interest rates and thereby supporting the economic recovery.” – Ben Bernake – October 15, 2010 – Boston Speech
“To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.” – Ben Bernanke Fed Announcement – November 3, 2010
“This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.” – Ben Bernanke – November 4, 2010 – Washington Post Op-Ed
Ben and his friends on the Federal Reserve have a PR machine to help sell their lies. Let’s assess whether Ben and his Federal Reserve have helped or hurt the average American.
Throwing Senior Citizens Under the Bus
Then he slunk to the ice box. He took the Whos’ feast, he took the who pudding, he took the roast beast. He cleaned out that ice box as quick as a flash. Why, the Grinch even took their last can of Who hash. – Dr Seuss
There are approximately 40 million senior citizens living in 25 million households in the US. According to the Census Bureau, more than 12 million of these households survive on less than $30,000 of income per year. The median household income in the US is $49,777. A full 70% of all over 65 households make less than the median income. A recent study found that 58% of those between 60 and 84 will at some point fail to have enough liquid assets to allow them to get through unanticipated expenses or declining income.
The vast majority of their income is from Social Security payments. Most senior citizens are rightly risk adverse and dependent upon income from certificates of deposit. During the 1990’s and as recently as 2007, a senior citizen could get a 5% return on a CD. Many of these people depended on this interest income to pay their everyday expenses. Below is a chart that plots the average interest rate for 6 month CDs since 1964. Today the average rate on a 6 month CD is .30%.
Ben Bernanke is to thank for this poverty enhancing rate. He reduced the discount rate to 0% while paying interest on deposits at the Fed. The affect of this policy has been to transfer hundreds of billions to the Wall Street criminal banks from the pockets of senior citizens and other Americans dependent upon interest income to sustain their meager lives. A brainless CNBC anchor can look at this chart and realize that the Federal Reserve caused the housing crisis by driving down rates from 2002 through 2005. Ben Bernanke, who never saw the housing collapse coming and personally had an exploding adjustable rate mortgage, has learned nothing from the prior disaster. He has driven rates down to 0% in order to force people into speculative investments. The Federal Reserve is a perennial bubble blower. This will likely be the final bubble of Bennie’s career.
These recent actions by the Federal Reserve are just the tip of the iceberg. Alan Greenspan, the Federal Reserve and the US Government have systematically screwed senior citizens for decades by purposely understating CPI. The result has been that the cost of living adjustments to Social Security has seriously lagged real inflation. For the 2nd consecutive year senior citizens will get no cost of living increase on their Social Security. The average monthly Social Security payment is $1,074. While seniors struggle to make ends meet, Wall Street banks are handed billions in free money by Ben Bernanke. The chart below details the COLA increases since 1975. Alan Greenspan and his commission began manipulating the CPI in the early 1980s.
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| a The COLA for December 1999 was originally determined as 2.4 percent based on CPIs published by the Bureau of Labor Statistics. Pursuant to Public Law 106-554, however, this COLA is effectively now 2.5 percent. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Since 2000, seniors have seen their monthly payment increase by 27%, or less than 2.5% per year. I challenge anyone to convince me that inflation has been 0% for the last two years. I have calculated my real inflation and it is four times the government reported figure. I suppose government bureaucrats and Federal Reserve Chairmen don’t fill up their gas tanks or go food shopping. John Williams at www.Shadowstats.com calculates the CPI as it was calculated prior to the Greenspan fraud. Based on this true assessment of inflation, prices have increased by 100% since 2000, or 8% per year.
Only an Ivy League academic could examine the following yearly price data and conclude, as Bernanke has, that inflation is well contained:
- Unleaded gas up 24%
- Heating Oil up 28%
- Corn up 50%
- Wheat up 48%
- Coffee up 56%
- Sugar up 27%
- Soybeans up 30%
- Beef up 26%
- Pork up 22%
- Cotton up 101%
- Copper up 33%
- Silver up 72%
I wonder what a can of Who Hash will cost in 2011?
The truth is that senior citizens spend a much higher percentage of their limited income on the basics of housing, transportation, food, and insurance. So, these increases have a much greater impact on seniors than rich bankers and Princeton scholars. The figures for key items over the last decade prove the point that seniors have fallen further due to the inflationary policies of the Federal Reserve.
| Category | Expense | Cost in 2000 | Cost in 2010 | % Increase, 2000 – 2010 |
| Housing | Homeowner’s insurance (annual) | $508.00 | $1,059.00 | 108% |
| Real estate tax (annual) | $690.00 | $1,223.88 | 77% | |
| Heating oil (gallon) | $1.15 | $2.88 | 150% | |
| Natural gas (per thousand cubic foot) | $6.37 | $10.39 | 63% | |
| Electricity (per kw hr) | $0.08 | $0.12 | 50% | |
| Transportation | Regular gas (gallon) | $1.26 | $2.75 | 118% |
| Medical | Medicare Part B premiums (monthly) | $45.50 | $110.50 | 143% |
| Food | 10 lbs. potatoes | $2.98 | $4.98 | 67% |
| Eggs (dozen) | $0.93 | $1.79 | 93% | |
| Ground chuck (lb.) | $1.90 | $2.83 | 49% | |
| Bread, white loaf | $0.91 | $1.36 | 50% |
Helping Housing?
And the one speck of food That he left in the house,
Was a crumb that was even too small for a mouse.
Then He did the same thing To the other Whos’ houses
Leaving crumbs Much too small For the other Whos’ mouses! – Dr. Seuss
Not only was Ben Bernanke complicit in aiding Greenspan in creating the housing bubble by keeping interest rates too low for too long, completely missing a two standard deviation (PhDs love this stuff) price bubble right in front of his eyes, telling Americans that we had a strong housing market, telling Americans that housing price declines would not affect the economy, not regulating or policing the rampant mortgage fraud that was happening under his nose, and aiding and abetting the very criminal banks that created the bubble, but now he has blatantly lied by saying his QE2 $600 billion monetization of our debt is to support the housing market. If you believe this, I have some prime real estate with great views in the mountains of Afghanistan to sell you.
In his October 15 speech, Bernanke assured the world that QE2 would reduce long term interest rates. On November 4, he stated:
“Lower mortgage rates will make housing more affordable and allow more homeowners to refinance.”
On October 7, one week before Bernanke gave the green light to QE2, the 10 Year US Treasury rate was 2.38%. Today it stands at 3.3%, almost 100 basis points higher. I’m guessing this guy isn’t very good picking his weekly football pool. Interest rates have done the exact opposite of what he proclaimed they would do. These rates have surged in the face of an already weakening economy, as unemployment continues to rise and home prices continue to fall. A 100 basis point rise in Treasury bonds piles approximately $120 billion more interest expense per year onto the backs of future generations.
The rate on 30 year fixed mortgages has surged to 5.07% from 4.4% in mid-October. That should do wonders for refinancing and home purchases. Bernanke’s actions have priced millions of people out of the market. He has inflicted more damage on an already teetering housing market and has insured that home prices will plunge by another 20% in the next year.
Despite the trillions of dollars thrown at the housing market by Bernanke and Obama through home buyer tax credits, mortgage modification programs, purchasing toxic mortgages from the criminal banks at 100 cents on the dollar, artificially reducing mortgage rates, and forcing those government run disasters Fannie Mae, Freddie Mac and the FHA to backstop more bad loans, home prices are resuming their downward trajectory to fair value. That value is at least 20% lower. With 22.5% of all properties (10.8 million properties) with a mortgage having negative equity, the housing market was already in dire straits. With the surge in mortgage rates caused by Ben Bernanke’s actions, a rapid plunge in prices can be expected in 2011, resulting in more foreclosures and negative equity swamping millions.
The truth is that Ben Bernanke could care less about the average American homeowner making $48,000 per year. The real purpose of QE2 was to further enrich his masters on Wall Street and the ruling elite who control the wealth in this country.
Wall Street Wealth Bailout
“When the Fed uses QEII to subsidize the largest players on Wall Street, it is disadvantaging the smaller, better run banks, and it is also playing with politics. Priyank Gandhi and Hanno Lustig, in a National Bureau of Economic Research working paper issued in November (No. 16553), suggest that the implicit collective guarantee extended to large U.S. financial institutions reflects an annual subsidy to the largest commercial banks of $4.71 billion per bank, measured in 2005 dollars. But, even more important, the paper notes that subsidies for the “too big to fail” banks shows the Fed’s willingness to support the equity markets, an extraordinary and ultimately political act that requires further hearings by the Congress.” – Chris Whalen
Chris Whalen and a few other brilliant analysts realize the true purpose of Ben Bernanke’s actions. Bernanke even revealed his true intentions in his November 4 Op-Ed:
“Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.”
On August 26, the day before Bernanke’s Jackson Hole speech, the S&P 500 was at 1,047. Today, it stands at 1,247, a 19% increase in the face of weakening economic conditions for the middle class worker. The more speculative NASDAQ stood at 2,119 on August 26, and today sits at 2,649, a phenomenal 25% increase as more middle class Americans have lost their jobs. Over this same time frame, according to the BLS, there are 500,000 less Americans employed.
The truth is that Ben Bernanke’s sole reason for implementing QE2 is to enrich the few at the expense of the many. The chart below paints the picture clearer than the lies and misinformation you will get from CNBC and Fox. The top 1% wealthiest Americans own 60.6% of all the stocks in America, with the next 9% wealthiest owning 37.9% of the stocks in America. That leaves a full 1.5% of stocks in the hands of the remaining 90% of Americans. Who is benefitting from QE2?
Part 2 of the table clarifies who Bennie is working for. The 90% of Americans have 42.3% of the liquid deposits, 61.5% of residential investment and 73.4% of the debt in the country. Ben Bernanke’s actions have resulted in liquid deposits paying 0% interest (19 largest banks out of 7,700 banks control 50% of all deposits), residential real estate prices declining, and the cost of carrying debt to rise. Meanwhile, the top 1% convinced the public they needed a tax cut so they could continue to buy gifts like Clive Christian’s $247,000 Imperial Majesty perfume, packaged in a diamond-encrusted Baccarat crystal bottle.
| Table 2: Wealth distribution by type of asset, 2007 |
| Investment Assets | |||
|---|---|---|---|
| Top 1 percent | Next 9 percent | Bottom 90 percent | |
| Business equity | 62.4% | 30.9% | 6.7% |
| Financial securities | 60.6% | 37.9% | 1.5% |
| Trusts | 38.9% | 40.5% | 20.6% |
| Stocks and mutual funds | 38.3% | 42.9% | 18.8% |
| Non-home real estate | 28.3% | 48.6% | 23.1% |
| TOTAL investment assets | 49.7% | 38.1% | 12.2% |
| Housing, Liquid Assets, Pension Assets, and Debt | |||
| Top 1 percent | Next 9 percent | Bottom 90 percent | |
| Deposits | 20.2% | 37.5% | 42.3% |
| Pension accounts | 14.4% | 44.8% | 40.8% |
| Life insurance | 22.0% | 32.9% | 45.1% |
| Principal residence | 9.4% | 29.2% | 61.5% |
| TOTAL other assets | 12.0% | 33.8% | 54.2% |
| Debt | 5.4% | 21.3% | 73.4% |
| From Wolff (2010). | |||
Of course, we all know the rich create all the jobs. Too bad they were created in India and China. No more conclusive evidence of the Federal Reserve destroying the American middle class can be found on the US Census Bureau site. The median household income in the US reached its all-time peak in 1999 at $52,388, in today’s dollars (key data point). Ten years later the median household income is $49,777. The standard of living for the median household in the US has fallen by 5% in the last decade, even using the government manipulated CPI.
The mainstream media will not report this fact. They will report the non-inflation adjusted figures that show a 22% increase in the median household income. They do this because they know that the average American has no clue what the term “inflation adjusted” means. Ben Bernanke, the Federal Reserve, and the ruling oligarchy can only retain their power through the use of inflation, while slowly destroying the currency, impoverishing the masses and enriching them. The website www.mybudget360.com has suggested the proper mission statement for Bennie and the Feds should be:
“To aggregate as much wealth into the banking system while eliminating the American middle class by a slow systematic dilution of their currency and financial well being and standard of living.”
| Table H-6. Regions–All Races by Median and Mean Income: 1999 to 2009 | |||||
| (Households as of March of the following year. Income in current and 2009 CPI-U-RS adjusted dollars (28)) | |||||
| Region and year | Number (thousands) | Median income | Mean income | ||
| Current dollars | 2009 dollars | Current dollars | 2009 dollars | ||
| 2009 | 117,538 | 49,777 | 49,777 | 67,976 | 67,976 |
| 2008 | 117,181 | 50,303 | 50,112 | 68,424 | 68,164 |
| 2007 | 116,783 | 50,233 | 51,965 | 67,609 | 69,940 |
| 2006 | 116,011 | 48,201 | 51,278 | 66,570 | 70,819 |
| 2005 | 114,384 | 46,326 | 50,899 | 63,344 | 69,597 |
| 2004 | 113,343 | 44,334 | 50,343 | 60,466 | 68,662 |
| 2003 | 112,000 | 43,318 | 50,519 | 59,067 | 68,886 |
| 2002 | 111,278 | 42,409 | 50,563 | 57,852 | 68,976 |
| 2001 | 109,297 | 42,228 | 51,161 | 58,208 | 70,521 |
| 2000 | 108,209 | 41,990 | 52,301 | 57,135 | 71,165 |
| 1999 | 106,434 | 40,696 | 52,388 | 54,737 | 70,462 |
While real average weekly earnings for the average American are lower today than they were in the early 1970s, you will be happy to know that Wall Street bonuses have recovered nicely from the dip in 2008. Compensation at Goldman Sachs, Morgan Stanley, JPMorgan Chase, Bank of America, and Citicorp increased by 31% in 2009. Average compensation rose by 27% to more than $340,000. Bonuses jumped above the $20 billion mark in 2009, but sadly trail the record of $35.5 billion in 2006 just before Wall Street destroyed the financial system of the entire world. According to the NYT, 2010 will be a banner year:
“Wall Street’s five biggest firms have put aside nearly $90 billion for bonuses. Whether it’s for jewelry, high-end clothing or apartments, bonus spending has long fed a post-holiday boom in January and February, especially in Manhattan and expensive suburbs like Greenwich.”
I’m sure this information warms the cockles of your heart.
At the end of Dr. Seuss’ poem, the Grinch repents and brings a happy ending to Whoville:
That the Grinch’s small heart Grew three sizes that day!
And the minute his heart didn’t feel quite so tight,
He whizzed with his load through the bright morning light,
And he brought back the toys! And the food for the feast!
And he, HE HIMSELF! The Grinch carved the roast beast! – Dr. Seuss
Even if Ben Bernanke’s heart was to grow three sizes, he would be discarded by the other Grinchsters (banksters) like piece of Whoville tinsel. The truth of our current situation is better captured by Mick Jagger in his song Sympathy for the Devil:
I’m a man of wealth and taste
I’ve been around for a long, long year
Stole many a man’s soul and faith
But what’s confusing you
Is just the nature of my game
The people running the show in this country will not be bringing joy to Whoville. You need to understand the nature of their game.
Bernanke is nothing more than a rote trained servant of the shadow banking system that has robbed the American people of trillions of dollars..
Why do you accuse Ben of being the Grinch? What did the Grinch ever do to you to warrant that insult?
Ben Bernanke’s response when shown this article:
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How about a chart of Gold Distribution? Who owns all the gold/silver in America, by percentages?
I’ll bet the same top 1% that already owns everything else. If the top 1% owns the majority of everything, they are the same people that own GLD/SLV, and likewise, the various junior miners, etc.
So what are us middle class peons to do? Buy gold and silver, trying to gain a disproportionate amount of real assets on a personal level versus everyone else? If FRNs are all that the big banksters own, that would make me happy, but I would assume that they are smart enough to know that bankrupting the peons (us) means they need some shinies to keep them safe. A million bucks in FRNs for a bonus buys plenty of shinies, still – while I sock away 1 oz of gold or 50 oz of silver every two months based on my pathetic salary. In the endgame, I’ll probably have to sell everything I save to survive, while they swim in their Uncle Scrooge swimming pools of coins and bars. Bastards.
As two of those senior citizens described above, my wife and I would just like to say Merry Christmas and FUCK YOU BEN!
Now some uninformed questions…
1. Why would we go back to a gold standard when there isn’t enough gold out there to cover all the trillions of dollars that have been created?
2. Since there is no connection between gold and dollars anymore, why would the government want to confiscate gold?
3. What would you buy with gold if the government simply outlawed it as legal tender?
I’m actually beginning to wonder why it couldn’t just continue indefinitely.
The U.S. national debt is already approaching $14 trillion, and long ago passed the point at which we had any hope of being able to repay it. So why not $50 trillion? Or 100? When the interest on the debt gets to be too much to pay, why not print those dollars, too? Why not just print those Social Security checks? Heck, we can even make ’em bigger! Why not give every 75-year-old a bypass surgery, a hip replacement, and an organ transplant? We’ve already borrowed more money than we can ever repay, so what’s stopping us now?
True, fiat currencies are only backed by everyone’s misplaced faith in them, and not by assets. But why should we think that will change? J6P will ALWAYS have faith in the U.S. dollar because every last one of us is already so heavily vested in the status quo. NONE of us really wants to see it end. The alternative is one of the kooky armageddon scenarios I keep seeing here. No one wants that. And truthfully, we don’t really care whether our dollars are backed by anything or not, as long as we keep getting paid enough that we can buy groceries and cable, put gas in the car, keep the lights on, and quit our jobs when we’re 65. If believing in a lie keeps people from starving, THEY WILL BELIEVE THE LIE. The alternative is too unthinkable.
Also, consider that the vast majority of people simply have no idea what is going on in the first place, aren’t smart enough to understand it, and couldn’t possibly care less. The sheer volume of mass ignorance is enough to keep the mass delusion of fiat currencies going, and a few people crying wolf here on TBP or Zero Hedge aren’t going to change a damn thing. The incentive to keep it going is just too big. I for one am not going to jump up and say, ‘Hey, I have lost my faith in the U.S. dollar! I’m not going to use dollars anymore, because they are not backed by assets! Guess I’ll just starve when the fridge gets empty.’
If I’m wrong, tell me why.
The reason it won’t continue indefinitely is because it can’t, due to the mathematical functions. It is precisely because the Federal Reserve prints money as debt, and then charges interest on the debt in dollars that don’t exist yet, that the system will eventually collapse on itself. There will be a point where the “debt” becomes too big, and nobody will “buy” the debt of the US anymore. How far away is that point? Who knows? Soon enough, at any rate. I’m 27 – so within my lifetime, certainly. The term “Peak Oil” should mean something here, since when there isn’t enough abundant and cheap energy to keep everything going anymore, it won’t. Your fridge won’t remain full when the world goes to shit. What will replace the current system? Another “who knows” there, but hard assets, such as gold and silver, remain the Austrian sound money siren song that I’m sure many readers and posters here believe in.
…including myself
Dave-
You should pick up some Murray Rothbard (all of his writings are free at mises.org.) He makes some excellent common-sense arguments for the mechanisms to return to a 100% gold backed dollar.
Here’s the synopsis-
1) Congress demands the Fed carry a 100% gold backed dollar through legislation.
2) The Fed announces a price and a date, as agreed upon with Congress. “On March 1, 2011, the Fed fixes the dollar as worth 1/1500 ounce of gold.” All of its current reserves are published to demonstrate compliance. This works if the Fed has enough gold to back all dollars circulating (it does, at some price. This is what it defines the dollar as.)
3) After this date, convertibility is assured. I can walk into a bank and trade $1500 in bills for a one ounce coin.
4) In the case the Fed has zero gold in its portfolio, it can still accomplish this in the long run by liquidating its other “assets” until the gold assets equal gold liabilities.
“There will be a point where the “debt” becomes too big, and nobody will “buy” the debt of the US anymore. How far away is that point? Who knows?”
Well, logically, that point would be where the U.S. cannot pay back its debt. Since we have already passed that point, then I don’t know what could possibly restrain it now.
Here is the very best Financial Advice you will ever get anywhere.
Here it comes.
Get your pencils ready.
.
———————————————————————
Do the OPPOSITE of whatever Ben Bernake says.
———————————————————————
.
You will become a millionairre.
Bernanke is pulling an Enron.
Someday historians will look back on central banking as the dumbest and most evil of institutions. To trust our money, our economy, and our way of life to a bunch of crooked bankers boggles the mind.
Ben Bernanke needs to go to jail for what he’s done. That bag of bones, Alan Greenspan, should be his cellmate.
Ben Cramer Bernanke
Bomber Ben is the banksters bitch….and apparently proud of it.
BIG NEWS
Ask and you shall receive. I asked Tyler Durden if he would add The Burning Platform to the Zero Hedge blogroll and he said yes. Yippee. We’ve made the big time.
How do you solve a debt problem with more debt? How can we look up to the people that got us into this crisis to get us out of the crisis? If these idiots don’t understand how we got into this mess, how in the world do we trust them to know how to get us out of this mess? These are fundamental issues that lack fundamentals. If you trust Bernanke, trust the dollar. If you distrust Bernanke, trust gold and silver.
Jim,
We shall see if ZH can provide an Oprah Effect for this site. The traffic should at the very least improve. Good job growing some cahones to ask him! You may need to up your featured articles now and post one every week instead of every 2 weeks. =)
You guys are totally unfair to Ben. Don’t you realize that all that wealth will trickle down?
Jo, you ask some very relevant, thought-provoking questions. Still, the very reason we cannot just keep the status quo (no matter how much people want to) is because this path is completely unsustainable. And unstainable practices eventually stop, usually with great damage.
Think of it in simple terms: if you farmed a piece of ground and raised only one crop (let’s say corn) on that land, over and over, without using any kind of sustainable practice to replenish the land’s fertility, give the ground a rest, etc. what would you have? Many years of corn crops, yes, but eventually the yields drop and eventually the land won’t even produce corn any more. It’s dead, lacking any kind of mineral value that can be transferred into a crop, and can’t even rejuvenate itself any more. It literally dries up and blows away.
What we’re doing with the US economy is not unlike that field of corn. It’s just not sustainable, and eventually something will happen where we can’t go on, no matter how much we’d like to. Our creditors have already warned us to stop spending. They’re already making moves to switch to another reserve currency because they see ours as imminently failing. These are not unlike the warning signs of anything whose sustainability is threatened.
You’re right, we’ve already passed the point of being able to pay back our debt — in the traditional sense. But don’t forget, we have assets that can be seized by our creditors, should they choose to. I don’t think anyone wants to see that happen, which is why there are so many of us calling for the government to stop their madness now, while we still have a chance to prevent that from happening.
Bens peeing on your leg and telling you its dew from hebun abub
Speaking of Zero Hedge, I think they just made my point: “Total US Unfunded Liabilities are estimated at $144 trillion, roughly $1.2 million per taxpayer.”
See what I mean? We surpassed our ability to ever repay our debt a LONG time ago, yet no one stopped lending to us. Apparently our lenders have just as much of a vested interest in the status quo as we do. They see the receivables on their balance sheet keep getting bigger and that makes them feel richer.
See, Quinn, that’s the difference between you and me. I’d have said, “Look here you fucking pussy, if you want me to continue to grace your board with my unrivaled wisdom and astute insights on everything economic and financial, (to say nothing of the ass-whipping you’re setting yourself up for), you will put my site at the top of your blogroll forthwith, you fucking douchebag.”
Smokey
That is the exact email I sent to Tyler.
I dont think we can even pay the interest on our debt at this point.
“But don’t forget, we have assets that can be seized by our creditors, should they choose to.”
.
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That’s great news. I would love for the China Man to come here and seize their piece of shit slippers I bought a couple months ago that are falling apart … plus the shit table lamp that keeps shorting out … plus all the other cheap shit I will get over Christmas.
.
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Congrats Jim on Zero Hedge.
Ben Bernanke also has a web site. I suggest you make that your next target.
Im gonna make a huge fire this merry krampus eve so that fat commie in the red suite cant leave his chinese crap behind again.
Nice, Bill. But 99% of readers here will have no clue who Krampus is.
I really like the way, after Jim posts a truly informative article, there is a group on TBP that starts blatting and yada,yada about how Benover Burnitall sucks….. I suppose it lets out the internal pressures of knowing your being screwed and can’t do a thing about it.
I listen to people where ever I go. No less than three times this week, I’ve heard ordinary people (like thee and I) pick something up, check the price and all essentially say, “Oh my! That is just too much to pay for XXXX.” and put it back down. My wife does the same thing. (I, on the other hand, think life is too short to sweat it and buy what I want without regard to price – yet! But I do shop around for the best deal.)..
By the way, Pirate-Jo….. I’ve already had a triple bypass that you helped pay for, so suck it up.
It will end when it ends. When the only buyer for US Treasuries is the Federal Reserve, or even close to that point, the angle of the slippery slope we are one will exceed our ability to crawl up fast enough to even keep sliding down gently and TSHTF. When TSHTF, paper dollars will not be worth squat although I find it hard to believe that the people (i.e. Feds and State) who run things are stupid enough to allow that to happen. Notice I said “hard to believe”. But sadly I do believe they are dumber than rocks and because of their self interest and egos, we will indeed cut our own throats and bleed to death. Actually, they’re caught in the trap set by those before them and have no way out of it and no one with balls to even try.
Watch California, Illinois and Nevada (not to mention NJ and CT). When they cease paying their bills (and Illinois is teetering on the brink) you will see a chain reaction financial train wreck that will be totally out of the control of the Feds.
Sleep tight and happy dreams..
What kind of traditionalist doesnt know about Krampus?
They should teach this stuff in those colleges SSS dislikes.
(I, on the other hand, think life is too short to sweat it and buy what I want without regard to price – yet! But I do shop around for the best deal.).. -=Much About=-
wha?
Quinny
You can’t have it both ways. You bemoan the low interset rate paid to savers and also complain about a 100 basis point rise in interest rates resulting from QEII. Savers will benefit from this while housing will suffer another kick in the teeth. Also the resulting inflation will boost Social Security payouts. Unfortunately that inflation is real so the bigger checks won’t go as far.
Pat
CDs are short term. Bennie controls those rates. They are not going up. Deposit rates at the criminal banks are not going up. The beneficiaries will be the banks who take the free money from Bennie and invest in 5% Treasury bonds.
Middle class savers will not benefit. The government will manipulate away the inflation increases, so Social Security payments will remain low.
BJ’s will go bankrupt.
Let’s see… We’ve lived a great lifestyle for the past 60 years, built on an expanding money supply and boosting credit, and now you want to tei the dollar back to gold, shrink the money supply and dry up credit, and 340 million people in this country will enjoy going back to living like Mopey in Mayberry? I wonder what 2 billion Asians (except those in North korea and Myanmar) will do when they find out that the American lifestyle they want will no longer be available.
The focus of the article is Bernanke the individual, but it is the institution of the Fed that is the true villain. For an alternative, go to publicbanking.wordpress.com
Dave
Boomers have lived a great life for the past 60 years at the expense of their children and grandchildren. I’m not pointing to every Boomer but the Boomers who lived beyond their means at the expense of our country’s financial future. I’m ready for the fiat system to end and I want gold to back our currency. We need sound money and discipline if we ever want to rebuild this country back on a sound foundation.
I talked to a woman who runs an antique store last night. She told me that when the financial crisis hit in 2008, people stopped using credit cards. Purchases went down a little, but they were virtually all cash or check, where as at least a third of the sales pre 2008 had be on plastic. Recently, she says, in the past three months, credit cards are being used again. She is a sharp lady, who is hip to the scams being pulled by the government and the banksters. Yet, she sees confidence in the system slowly returning.
Something to think about.
As RE would say ……….. Coming Soon To a Theatre Near You
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After the stock market plunged on Sunday by 552 points or 6.72%, hundreds of angry investors took to the streets, “threw bricks at police, marched in the streets shouting slogans, and staged a sit-down protest.” These very same “investors” which have and always will be better known as momo investors, which chase returns only to end up with the live grenades, “chanted slogans against the government and the regulators, and marched through the busy roads and halting traffic. They also staged a sit-in at the SEC building.”
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Yesterday in Bangladesh
Holy crap, Jimbo.
MORE GOOD NEWS.
This story is on the main page at Amped Status … a damn nice site.
http://ampedstatus.com/
Thinker, thank you for your well-reasoned response. I am playing devil’s advocate here, to a degree. (I would like to see us return to a sound monetary policy too, but I don’t think it is even on very many people’s radar.)
As to your comparison to an over-farmed cornfield. The fertility of an acre of land can be measured in a meaningful way, as far as nitrogen content, soil nutrients, etc. It actually is an asset-backed material. The amount of resources it can provide is finite. If you use too much, you will run out.
Our monetary system has jumped that hurdle, in that (due to the blind faith of millions of easily misled people) when we run out, we just print more out of thin air.
What I’m not getting (yet, at least) is an understanding of what point we “run out.” The Fed is soon to be our number one lender. So, MuckAbout, as to your triple bypass, I raise my glass to you. I’m glad you got your triple bypass, and if the one left holding the bag is the Federal Reserve, good work outta you! I should sign up for one myself. We seem to have found a way to make money work for us. It can give us nicer homes, nicer clothes, nicer cars, more kids, and in your case prolonged life. Isn’t that supposed to be the point of it? If we want all that stuff badly enough, we’ll keep believing in the system, and that belief itself keeps the system alive. ALL currency systems, asset-backed or not, are dependent upon people’s belief in them, right? Even a gold-based currency assumes that at some point you’d trade an ounce of gold for a side of beef.
It does seem to defy logic. Yet logic has already been defied, and has been for decades. If it hasn’t crashed by now, who says it will? What would it take for people to lose faith in the system? U.S. treasury bills to be downgraded to junk? Well, then maybe the Chinese won’t buy any more, but we can always make the Fed pony up.
What I’m not getting (yet, at least) is an understanding of what point we “run out.”
I think that would be when the USD/FRN is no longer the global reserve currency.
Thing is the fiat system isnt working for us. Wages havent really increased since 1985 while CEO have increased 300%
Taxes arent the reason America isnt creating jobs its that cheap labor, which we cant possibly work for here, are drawing production and jobs away from America The collapse of the Soviet Union has opened India and China to cheap labor which parallels with stagnant wages from 1985 on. Thats where the money is being invested not here in America.
The Chinese and Russians have already stopped buying as many treasuries [China and Japan alone buy half our debt] causing Bernanke to print money to buy that debt.
As with any empire, which we have become, it must expand or die. What has changed in the great game is that we dont exact tribute instead we get them to accept our dollars which they then use to buy our debt.
Me: What I’m not getting (yet, at least) is an understanding of what point we “run out.”
Kill Bill: I think that would be when the USD/FRN is no longer the global reserve currency.
Me again: What WOULD be the global reserve currency, if any? Are you aware of any currencies in the world that are not as phony and fiat-based as ours?
If Bernanke keeps printing currency to buy our debt, and that keeps food on everyone’s table, isn’t that what money is for? Again, I admit I am playing devil’s advocate here. As someone on Zero Hedge said, as long as everyone shrugs and puts up with it, is there really an end in sight? If there is an end, what would that be?
Pirate Jo —-The International Monetary Fund (IMF) has something called an SDR (special drawing rights ) which is made up of a basket of currencies and is an international reserve asset that the IMF uses to pay with. Some countries are pushing for the SDR’s to be the new world reserve currency. Also, China has indicated in recent months that they would like their own currency (Renminbi) to be the reserve to replace the USD.—–It is important to realize that the USD will be under enormous pressure in the next ten years or so and WILL CEASE to be the world’s reserve currency. Regardless of which currency replaces the dollar, you can rest assured that China will make damn certain that it is on terms favorable to them, and it will most likely be backed at least in part by gold.
Smokey
DP the Douche posted your suggested email to Tyler Durden on Zero Hedge. What a pathetic excuse for a human being. His life must be so miserable that he has nothing to do but troll TBP and copy and paste. Amazing that they allow mongoloids like him to reproduce. Can you imagine the IQs of his spawn? They probably make the banjo dude from Deliverance look like a rocket scientist.
It does warrant repeating: DP makes this fellow look like Einstein:
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DP about to be taken for a ride by his farm animal:
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Sometimes I think his entire existence revolves around a vendetta toward you. I mean, goddamn, every post that ZH picks up, he is over there to spam his psycho shit.
Thanks, Smokey. Can you tell me why this would be a bad thing? If the SDR becomes the “new world currency,” what difference does that make? The SDR can become worthless, too, and a local (of Anywhere, Planet Earth) currency take its place as the only one that means anything. Average people all over the world could buy some of it on their computers. Until it, too, becomes as meaningless as anything on the stock market.
In the end, only your own willingness to pay your own bills matters.
Pirate Jo—–The only reason any currency is viable as a means of exchange is because the people involved in the exchange have confidence in the currency. China for many years has produced vast amounts of cheap goods by using cheap raw materials and by paying their workers a couple dollars a day. China then exports that vast amount of goods to other countries, mainly the USA. China exports far more than they import and they take their leftover (surplus) US dollars as payment and invest much of that leftover money in US Treasury bills. These bills are backed by the promise of the United States to redeem them for cash. Now, whenever the US Government prints more dollar bills, each subsequent bill printed is worth less. It has been devalued. The more cash the government prints, the less the money is worth. More dollars chasing fewer goods. The confidence in the dollar is undermined a little more with each additional dollar printed. When we fund wars with trillions of dollars that we don’t have, and have to print them out of thin air, that means that each dollar already owed China is worth less than before, and it pisses China off. When Bernanke brags on Sixty Minutes about printing more money to “save the system”, this pisses China off, because that means that each dollar we already owe China (in the form of the Treasury bills they own), becomes less valuable to them. China knows the US Dollar is being debased (devalued) intentionally by Bernake, so they are now in the process of exchanging their dollar assets for REAL assets all over the globe—buying land, oil, precious metals etc. The USA is projected to owe about 24 trillion dollars by 2015.—–If China had not invested their surplus in US Treasury bills over the past two decades, the US would probably already be bankrupt. They will almost certainly tell the US to eat shit in the next 10 years, and quit buying US treasury bills. When they do that, we are fucked. When confidence collapses in a currency, runaway inflation occurs, like in Zimbabwe or in Weimar, Germany in 1923. Pretty soon it takes $50,000,000 to buy a loaf of bread.——–The currency of the United States currently is backed in part by an enormous economy with thousands of productive people and assets and businesses and an enormous amount of capital equipment and innovative products. But even those vast resources are not enough to support the currency if shortsighted and poor decisions are made that undermine the integrity of the system–i.e. printing more money. Those are the types of decisions that have defined our country for about 25 years now and their will be consequences.
The IMF has a habit of making economic demands on countries it loans money to. Brazil, for one, paid its loans off early to get out from under plutocratic demands.
I wouldnt want the IMF holding the reserve currency for that reason alone.
The UN is gung ho for the IMF to hold the reserve currency. That is another ENORMOUS strike against the SDR. Pretty much any policy that the UN is in broad agreement about will very definitely fuck the USA.