Bernanke Makes Sure Fed Reminds Congress Deficit Bigger Than QE2

[slug]

Exactly, so why even concern yourself with anything he says. Ben Bernanke is a sales person pitching what he believes is going to save us from crisis. My point was that listening to Ben Bernanke talk yesterday, last week or three years ago is not going to give you a real picture of what is really going on. Ben Bernanke defending QE2 is a non story and irrelevant. Just like you said... What would you expect him to say..

Quote from olias:

No one is saying that, bro. The Youtube video is totally irrelevant to the discussion. But just to play Devil's advocate, what would you expect Ben to say in that situation? "yes, we are on the brink of a huge collapse in housing prices" I mean really....He's not in a position where he can speak his mind. It is a very tough spot to be in.

 

[schizo]

Quote from olias:

Don't call QE2 monetizing the debt: Monetization would involve a permanent increase in the money supply to pay the government's bills through money creation. What we're doing here is a temporary measure, which will be reversed so that at the end of this process the money supply will be normalized, the Fed's balance sheet will be normalized, and there will be no permanent increase either in money outstanding, in the Fed's balance sheet, or in inflation. ..."

What the hell does this mean exactly? Be more specific.

QE2 is in fact monetization of debt. What Bernanke is doing is intentionally deleveraging American debt by exporting inflation to other countries. This can only be a short term fix. In the long run, this would be more harmful IMO.

 

[bkveen3]

Quote from schizo:

What the hell does this mean exactly? Be more specific.

QE2 is in fact monetization of debt. What Bernanke is doing is intentionally deleveraging American debt by exporting inflation to other countries. This can only be a short term fix. In the long run, this would be more harmful IMO.

Being completely serious, can you explain how we are exporting inflation. Because there is so much cash on the sidelines effective money supply has remained unchanged. When that starts to change the FED can simply sell its assets to keep money supply fixed. The USD is little changed against a basket of currencies since the announcement of QE2. It seems more likely to me that the increase in commodity prices is more related to increasing demand than anything else. I guess I just don't understand your logic. Could you clarify your position for me.

 

[olias]

Quote from bkveen3:

Being completely serious, can you explain how we are exporting inflation. Because there is so much cash on the sidelines effective money supply has remained unchanged. When that starts to change the FED can simply sell its assets to keep money supply fixed. The USD is little changed against a basket of currencies since the announcement of QE2. It seems more likely to me that the increase in commodity prices is more related to increasing demand than anything else. I guess I just don't understand your logic. Could you clarify your position for me.

That's my opinion also. We're talking about big numbers here obviously, so I'm not sure any of us has that great a grip on what effect 600 billion has, but I've read enough people I respect who say 600 billion probably wasn't enough. The opposite opinion is held by bloggers who, to me, clearly don't know WTF they are talking about. They have a little but of information and then stand up and shout that know what's going on and have all the answers. They are the types to say the say the Fed is 'stupid' and Bernanke is an idiot. I don't believe them.