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Posted by The Trucker on July 20, 2008, 8:02 pm
On Sat, 19 Jul 2008 10:26:12 -0700, Don Tiberone wrote:
>
http://www.moneyandmarkets.com/Issues.aspx?Ben-Bernanke-Destroyer-of-Worlds-1988
>
> Ben Bernanke: Destroyer of Worlds
> by Jack Crooks 07-19-08
>
> I love readers' comments at the end of online articles and blog
> entries. I recently came across one at the end of an article regarding
> general Federal Reserve policy that simply said:
>
> "Ben Bernanke is like the death star. Destroyer of worlds."
>
> For those of you not up on movie trivia, the comment is referencing
> Star Wars. In the film, the bad guys build a manmade space station
> meant to destroy an entire planet in a single attack.
>
> And while Bernanke's official job description isn't destroying
> planets, some might argue that he's at least destroying the U.S.
> economy.
>
> That opinion may have gained greater support this week after
> Bernanke's two days of Congressional testimony.
>
> Accompanied by Treasury Secretary Henry Paulson and SEC Chairman
> Christopher Cox, Big Ben paid lip service to the panel of Congressmen
> bombarding him with questions. While Bernanke gave the normal
> reassurances about the state of the economy and inflation, the subject
> of giving the Fed additional regulatory responsibilities made for a
> heated discussion.
>
> The best quote came from Senator Jim Bunning. When it was his turn to
> address the Fed Chairman, he noted, "The Fed is the systemic risk."
>
> Both that reader comment and the Congressional testimony point to the
> same thing ...
>
> People Are Sick and Tired of the Fed's Decision
> To Fight Economic Fire with Molotov Cocktails!
>
> Almost any economist will tell you that every boom period is followed
> by a bust period. And typically, the larger the boom, the larger the
> bust.
That is true. The Fed engineered the boom to help cover Republican
malfeasance and the Fed is _STILL_ manipulating to cover Republican
malfeasance. The difference _is_ that now the Fed is actually
manipulating to ward off a depression like the one caused by the 1920's
Republicans. I do not like the way the Fed is doing it, but the
Republicans will not allow the _proper_ fix.
> But it seems like lately the Federal Reserve is disregarding the
> historical boom-bust cycle, doing everything in (and beyond) its power
> to keep the good times rolling.
Actually the Fed is acting very differently than what it did in 1930 -
1934. At the same time the Fed is not attempting to continue the "good
times", but to prevent a total collapse. It remains to be seen if the Fed
can prevent collapse and/or how long it can do so without major fiscal
intervention.
> Sounds nice, but there comes a point when the economic system needs to
> cleanse itself. Hence the subsequent bust to every boom. Excesses need
> to be worked off; idle capital goods need to be redistributed or
> repurposed; the fat needs to be trimmed.
Sure, sure, sure.... Every ideologue has the perfect solution. Me too.
> By making every effort to sustain the boom when it's already naturally
> run its course only delays the inevitable; the impending bust will
> feel all the more painful. Think about fighting fire with Molotov
> Cocktails.
The boom had no "natural course". The "boom" was bubbles created by
one piece of Republican thievery after the next. All the Republican
bubble money has now come to rest in commodities.
> Many analysts, including myself, are beginning to believe the Fed
> needs to stop fighting the fire with bailouts and cheap money.
> Instead, they need to tighten up and let the market process work
> things out from here.
That was the 1930 approach. It is, in fact, what any Republican would
highly recommend. It makes the rich people richer.
> Right now, the Fed is no doubt in bailout mode. Just look at the
> obvious Bear Stearns backstop a couple months ago and now the Fannie/
> Freddie fiasco. And who knows how many other firms the Fed has saved --
> so far -- by opening up the vault doors to nearly everyone.
>
> Have a look at the following set of charts. This first one shows the
> total borrowings of depository institutions (banks) from the Federal
> Reserve from 1980 until 2006:
>
> Total Borrowings 1980 - 2006
>
> You can see a major spike to roughly eight billion dollars of borrowing
> in 1984, likely due to the economy's recovery from recession in years
> prior.
>
> This spike in total borrowings was also coupled with a brief surge of
> inflation (of similar proportions to what we're experiencing today)
> after Fed Chairman Paul Volcker brought the inflation rate down from
> 13.5% in 1980 to as low as 3.2% in 1983.
>
> Now, this next chart shows the exact same series of data, only this time
> I've included up through June of 2008 ...
>
> Total Borrowings 1980 - current
>
> As you can see, the period up through June 2008 completely dwarfs the
> amount of borrowings in any period before it. In fact, it makes all
> other periods look like a flat line!
>
> The spike to more than $170 billion dollars of borrowings reflects the
> newly created auction facilities.
>
> What This Means for the U.S. Dollar ...
>
> Bernanke recently admitted that the U.S. dollar needed to work off some
> of the excesses from the rally that began in the mid 1990s. That's part
> of why the bear market has extended so deep for the buck.
>
> The dollar has done that -- and more.
>
> But the charts I just showed you prove that the dollar is not nearly out
> of the woods yet.
>
> Basically, if the Fed doesn't change its attitude and stop feeding debt
> creation, asset prices will spiral higher, and more pain will be crammed
> into the closet until someone or something knocks the door open.
If we are not dependent on foreign oil and we tax assets instead of income
then the "value" of the dollar is not terribly important to the vast
majority of the people in this country.
> Bottom line: The buck is ready to fight back -- if and when the Fed
> realizes they need to HIKE interest rates just as they did in 1984 when
> they had another inflation scare after bringing rates down too soon.
This is typical Republican swill. Republicans lust after depressions
because it puts the servile masses under the direct control of the very
rich. All the dollars are in the bank accounts of the very rich. The
middle class is broke. So, yesssssssssssss, says the Republican, time for
high interest rates and a strong dollar. Republicans never change.
> And, oh yeah, I hear it every day -- "It's an election year and the Fed
> couldn't possibly use interest rate hikes to teach some lessons."
Daddy spank!@! The children have been bad. They have borrowed money
because the Republican leadership encouraged them to do so every step of
the way and the Fed kept the interest rates low to help the pig prancing
war making Republicans. It is time now to "teach some lessons", says the
Republican apologist. The lesson is that fascism works and that those in
power are anointed by God and that is why they are in power and if God had
not meant the rich Republicans to be rich then the rich Republicans would
not be rich.
> I say they could, and should. I say we stop giving politicians a free
> pass, and start making them earn our votes.
A very good answer to this problem is found at the link in my signature.
My signature itself is an intro.
But speaking from an economic point of view, now is not the time to
raise anything but TAXES on the rich. The Tax code can be used to stop
the adverse effects of inflation just as well and even better than
interest rates. Start taxing the hell out of NON-PRODUCTION and
NON-PRODUCTIVE assets and burn the money in an actual furnace or use it to
lower our dependence on foreign oil (invest in non-food biofuels). An
asset tax does not care if the asset is owned by Bill Gates or the Chinese
government. Continued inflation is a tax on the T-Bills held by the
Chinese and the financial assets that are disproportionately held by the
rich.
--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org/extend
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