Is Ben Bernanke a Grand and Wonderful Wizard?

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Read “Bernanke’s Iron Fist.”

Abstract:

I am going to show here that central banks have excessive powers which are coherent neither with democratic principles nor with morality. Their existence can not be justified from a mathematical point of view.

Because of the immediate dangers that are evoked in these lines I strongly suggest that you reproduce my deeds.

“I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan.

However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed.“

Prof. Ben Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For Presentation at the ASSA Meetings, Boston MA,
January 9th, 2000.

In my Tract: The Age of Turbulence: Plea for a New Economic Order I prove that after an unknown period of Irrational Exhuberance, which will inflate the Mother of All Asset Price Bubbles, we will have a Keynes’ Liquidity Trap, The Crash and The Deep Depression.

In fluid dynamics, turbulence or turbulent flow is a fluid regime characterized by chaotic, stochastic property changes. This includes low momentum diffusion, high momentum convection, and rapid variation of pressure and velocity in space and time.

It owns most of the discontinuous and chaotic properties of a Market Crash and of a Keynes’ Liquidity Trap.

There is a remote possibility that The Crash and The Deep Depression, in a pattern similar to the one that brought Hitler to Power during The Great Depression, would allow the instauration of a totalitarian regime, an Adventure in a New World Order.

“But the essential issue here is one of insurance, with a relatively modest premium, against a potentially catastrophic, very low probability event.

With that, Peter, would you outline your proposals to us?”

Chairman Alan Greenspan
Meeting of the Federal Open Market Committee.
August 24th, 1999

First, and with all due respect, Sir, my name is not Peter. My name is Hamou, Shalom Patrick Hamou.

I propose a plausible alternative to The Deep Depression, The Adjusted Credit Free, Free Market Economy, our New Economic Order.

It is a fair, prosperous and stable economy that protects its participants from the consequences of The Deep Depression.

That economy is both liberal and libertarian.

That New Economic Order does not discriminates and guarantees the individual freedoms of its participants.

I have designed a system by which The New Economic Order can gather momentum for a successful and quick implementation:

In order to reserve your option to participate you just need to register anonymously, before The Crash, the serial number of a €5 bank note in our Public Cra$h R€gi$t€r It is Free!.

This rapid implementation will prevent a potential Adventure in a New World Order.

By the way, I have just updated a paragraph of my Tract: Model of the Yield Curve.
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The Movement for the New Economic Order Against the Adventure in a New World Order.

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We are now living in that infamous Chinese curse.
“May you live in interesting times.”

The real demon is Alan Greenspan. The jury’s still out on Bernanke.

I found this on the net.
You be the judge.

GEORGE CASTANZA AS FED. CHAIRMAN?

As congress and the president consider the best policies to right our economic ship, it is my hope that they will pursue a strategy first developed by Seinfeld character George Costanza.

After wisely recognizing that every instinct he had up unto that point had ended in failure, George decided that to be successful, he had to do the exact opposite of whatever his instincts told him.

I suggest our policymakers give this approach a try.

There is an inexplicable, but somehow widely held, belief that stock market movements are predictive of economic conditions. As such, the current rally in U.S. stock prices has caused many people to conclude that the recession is nearing an end.

The widespread optimism is not confined to Wall Street, as even Barack Obama has pointed to the bubbly markets to vindicate his economic policies.

However, reality is clearly at odds with these optimistic assumptions.

In the first place, stock markets have been taken by surprise throughout history. In the current cycle, neither the market nor its cheerleaders saw this recession coming, so why should anyone believe that these fonts of wisdom have suddenly become clairvoyant?

According to official government statistics, the current recession began in December of 2007. Two months earlier, in October of that year, the Dow Jones Industrial Average and S&P 500 both hit all-time record highs. Exactly what foresight did this run-up provide?

Obviously markets were completely blind-sided by the biggest recession since the Great Depression. In fact, the main reason why the markets sold off so violently in 2008, after the severity of the recession became impossible to ignore, was that it had so completely misread the economy in the preceding years.

Furthermore, throughout most of 2008, even as the economy was contracting, academic economists and stock market strategists were still confident that a recession would be avoided. If they could not even forecast a recession that had already started, how can they possibly predict when it will end?

In contrast, on a Fox News appearance on December 31, 2007, I endured the gibes of optimistic co-panelists when I clearly proclaimed that a recession was underway.

Rising U.S. stock prices – particularly following a 50% decline – mean nothing regarding the health of the U.S. economy or the prospects for a recovery.

In fact, relative to the meteoric rise of foreign stock markets over the past six months, U.S. stocks are standing still. If anything, it is the strength in overseas markets that is dragging U.S. stocks along for the ride.

In late 2008 and early 2009, the “experts” proclaimed that a strengthening U.S. dollar and the relative outperformance of U.S. stocks during the worldwide market sell-off meant that the U.S. would lead the global recovery. At the time, they argued that since we were the first economy to go into recession, we would be the first to come out. They claimed that as bad as things were domestically, they were even worse internationally, and that the bold and “stimulative” actions of our policymakers would lead to a far better outcome here than the much more “timid” responses pursued by other leading industrial economies.

At the time, I dismissed these claims as nonsensical. The data are once again proving my case.

The brief period of relative outperformance by U.S. stocks in late 2008 has come to an end, and, after rising for most of last year, the dollar has resumed its long-term descent.

If the U.S. economy really were improving, the dollar would be strengthening – not weakening.

The economic data would also show greater improvement at home than abroad. Instead, foreign stocks have resumed the meteoric rise that has characterized their past decade.

The rebound in global stocks reflects the global economic train decoupling from the American caboose, which the “experts” said was impossible.

Though the worst of the global financial crisis may have passed, the real impact of the much more fundamental U.S. economic crisis has yet to be fully felt. For America, genuine recovery will not begin until current government policies are mitigated. Most urgently, we need a Fed chairman willing to administer the tough love that our economy so badly needs.

That fact that Ben Bernanke remains so popular both on Wall Street and Capital Hill is indicative of just how badly he has handled his job.

Contrast Bernanke’s popularity to the contempt that many had for Fed Chairman Paul Volcker in the early days of Ronald Reagan’s first term.

There were numerous bills and congressional resolutions demanding his impeachment, and even conservative congressman Jack Kemp called for Volcker to resign. Had it not been for the unconditional support of a very popular president, efforts to oust Volcker likely would have succeeded. Though he was widely vilified initially, he eventually won near unanimous praise for his courageous economic stewardship, which eventually broke the back of inflation, restored confidence in the dollar, and set the stage for a vibrant recovery.

Conversely, Bernanke’s reputation will be shattered as history reveals the full extent of his incompetence and cowardice.

By not counting 45% of the unemployed and under-employed, the Obama Administration has declared a false 9.4% unemployment rate a sure sign that things are improving.

Official formulas, used for the past seventy years tell a different story.

The real unemployment rate is closer to 17%. This will become increasingly apparent as we enter the fourth quarter of 2009.

George Castanza would do a better job as Fed Chairman than Bernanke, Obama would be wise to pick up the phone.

Larry, can you explain the rationale of those opposed to an audit of the Federal Reserve? If their concerns about an audit are in any way warranted, what could be done to mitigated them?

I saw Rep. Barney Frank on TV recently being asked about Rep. Paul’s bill and he seemed to hedge, giving only grudging and half-hearted support to a Fed audit. Considering his power and ability to tie up this legislation, are there any compromises or half-measures that would provide enough meaningful transparency?

I share Patience’s concern, Larry, that people like Barney Frank will do everything in their power to squelch this call for a Fed audit, regardless of the support pushing it forward.

And the question is, of course, what are they afraid of? I’m assuming the answer is the light of day.

Until the electorate gets some transparency, we’re going to see a rising tide of mistrust in anything attached to the Fed and its cheerleaders and anything involved with the national economy, including those chanting that a “recovery” is underway.

People are beginning to wake up. And they sure don’t like what they see.

Bernanke and Geithner are like two jugglers who are juggling dangerous objects between them and trying to keep them from falling to the ground or from wounding themselves fatally: a running chain saw (the stock and commodities markets); a double bladed axe (inflation-deflation); a round bomb with a lit fuse (the value of the dollar relative to other currencies); a long sharp sword (the price and yield of treasuries); a loaded and cocked revolver (mortgage and interest rates); a dagger (the solvency of banks); an angry Tasmanian devil (unemployment). One goes up while one comes down; one goes up while one comes down. Oh yes, and while juggling frantically, faster and faster, they must try to appear to the audience that they’re sitting dignified and calm, and nothing perilous is going on. Good luck boys!