Inquiring minds are reading Bernanke’s blatantly self-serving speech including some bold lies regarding the U.S. Economic Outlook.
I can condense Bernanke’s speech down to a single paragraph. An interesting set of word cloud images follows this summation.
Blah, blah, blah brief update. Economic growth slower than expected. Blah, Blah, uneven across sectors and frustratingly slow, millions of unemployed and underemployed workers. Blah, Blah, ability and willingness of households to spend will be an important determinant of the pace at which the economy expands in coming quarters. Blah, blah, signs of gradual improvement. I expect hiring to pick up. Business sector presents a more upbeat picture. Blah, blah, blah Fiscally constrained state and local governments continue to cut spending and employment. The solution to this dilemma, I believe, lies in recognizing that our nation’s fiscal problems are inherently long-term in nature. Consequently, the appropriate response is to move quickly to enact a credible, long-term plan for fiscal consolidation. Blah, blah. Establishing a credible plan for reducing future deficits now would not only enhance economic performance in the long run, but could also yield near-term benefits by leading to lower long-term interest rates and increased consumer and business confidence. Blah, Blah, the Outlook for Inflation Blah, Blah, the prices for many commodities have risen sharply, resulting in significantly higher consumer prices for gasoline. Price index for personal consumption expenditures has risen at an annual rate of about 3-1/2 percent, compared with an average of less than 1 percent over the preceding two years. Blah, blah, blah, not much evidence that inflation is becoming broad-based or ingrained in our economy Blah, Blah, subdued unit labor costs should remain a restraining influence on inflation. Blah blah, longer-term inflation expectations reasonably stable. Blah, blah, commitment of the central bank to low and stable inflation remains credible. Blah, blah world oil consumption rose by 14 percent from 2000 to 2010. Blah, blah, U.S. oil consumption was about 2-1/2 percent lower in 2010 than in 2000. Blah, blah improving diets in the emerging market economies. Blah blah, Production shortfalls have plagued many other commodities as well. Not all commodity prices have increased, blah, lumber and natural gas near levels of early 2000s. Blah, blah, dollar’s decline can explain, at most, only a small part of the rise in oil and other commodity prices. Blah, blah, blah dual mandate of maximum employment and price stability, and we will certainly do that. Blah, blah, economic recovery in the United States appears to be proceeding at a moderate pace, longer-term inflation expectations remain stable. Blah blah, (FOMC) has maintained a highly accommodative monetary policy, keeping its target for the federal funds rate close to zero. Blah blah, economic conditions are likely to warrant exceptionally low levels for the federal funds rate for an extended period. Blah, blah, blah [blatant lie coming] Federal Reserve’s actions in recent years have doubtless helped stabilize the financial system, ease credit and financial conditions, guard against deflation, and promote economic recovery. All of this has been accomplished, I should note, at no net cost to the federal budget or to the U.S. taxpayer. Blah blah blah Federal Reserve be vigilant in preserving its hard-won credibility for maintaining price stability.
Word Cloud of Bernanke’s Speech
Zero Hedge provides this word cloud image of Bernanke’s Speech.
Inspired by Zero Hedge, I ran my summation through a word cloud program.
I believe I’ve captured the essence of Bernanke’s speech perfectly except for the lies.
Bernanke did everything possible to mitigate his role and the Fed’s role in this crisis. His unmitigated gall comes through loud and clear with this bald-faced lie:
“The Federal Reserve’s actions in recent years have doubtless helped stabilize the financial system, ease credit and financial conditions, guard against deflation, and promote economic recovery. All of this has been accomplished, I should note, at no net cost to the federal budget or to the U.S. taxpayer.“
For starters, were it not for the complete ineptitude of the Greenspan and Bernanke Fed the US would not be in this mess in the first place. Second, there most assuredly is a cost to the Fed’s policies.
Prices are higher, wages are not. Banks were bailed out at taxpayer expense. The Fed pays interest on reserves. That interest comes from taxpayers. The Fed’s balance sheet is loaded to the gills with garbage from Fannie Mae and Freddie Mac. The Fed is not at risk on that garbage because Congress approved unlimited backing for GSE debt. That unlimited backing is over $300 billion and counting. Those losses are not all on the Fed’s balance sheet of course. However let’s not ignore the Fed’s role in getting Congress to pass that blatantly stupid bill.
Let’s also not forget the Fed cheerleading fiscal stupidity in Congress, not wanting Congress to do anything about monstrous deficits now. Keynesian and Monetarist clowns never want to do anything now. They always want to do it at the “appropriate” time, which in practice means never.
Most importantly I would like to point out the very real cost of those on fixed income, attempting to get by with higher food prices, higher gasoline prices, etc. I dare Ben Bernanke to face senior citizens and tell them there is no cost associated with interest rates at 0%.
In case you missed it please read Hello Ben Bernanke, Meet “Stephanie”. That post is about the plight of those on fixed incomes struggling to get by with rising costs and CD rates at 1%.
Finally, there is an unseen cost to the stupidity of Bernanke’s policies. That unseen cost is the cost associated with fostering still more speculation in the financial markets. There is another bubble in the stock market, another bubble in junk bonds, and another bubble in commodities.
We have yet to feel the ramifications when those bubble pop, and they will. Bernanke cannot see those bubbles for the same reason he could not see the bubble in housing, the bubble in credit, the rapidly rising unemployment rate, and countless other things he missed.
Bernanke is a complete fool, trapped in academic wonderland, completely oblivious as to how the real world works. To top it off, Bernanke has the gall to knowingly lie about the real world effects of his blatant stupidity.
Ben Bernanke, you are disgusting.
Mike “Mish” Shedlock
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