Bernanke: I'm Going Nuclear

digme

Bernanke: I'm Going Nuclear

Federal Reserve Chairman Ben Bernanke, at his speech this morning before the Boston Federal Reserve, made it extremely clear that the Fed is about to embark on a major money printing scheme. His justification is the current high unemployment:

So America is devaluing it's currency like there's no tomorrow.Hyper inflation is only around the corner.Was nice knowing you !!!!

southsiderosie

digme wrote: »

Bernanke: I'm Going Nuclear

So America is devaluing it's currency like there's no tomorrow.Hyper inflation is only around the corner.Was nice knowing you !!!!

Historically inflation has not been a huge bugbear politically in the US: unemployment has (in this way, we are the opposite of the Germans). Although certainly 1970s-style stagflation is a real fear.

In addition, there seems to be a real race to to bottom for major currencies right now.

Honestly, I think the folks who are going to be the most screwed from this are in the euro zone; the dollar and most emerging market currencies are going to be kept (artificially) low by their respective governments.

All of this would be a lot more interesting if the Germans still had their own currency.

Manic Moran

Odd. They mentioned his speech on the all-news station I listen to in the car, but there was little sense of impending doom.

Yes, the Fed will, in effect, be printing money, but it will not be actually printing money. Instead, it will be purchasing Treasury bonds. Inflation isn't a huge deal right now. Indeed, it's so low that it's hitting the Administration politically: With the lack of inflation, there has been no need to raise Social Security, not a popular move three weeks before an election. The size of this purchase is estimated to be under a half-trillion, compare that to the $1.7trillion injection a little over a year ago, and the world didn't end then.

Here's a slightly less sensational report on the speech.
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/10/15/financial/f051853D88.DTL

NTM

ei.sdraob

This paragraph is very relevant to the Irish economy

He is blaming the current high employment rate almost entirely on the Keynesian notion of a lack of aggregate demand. Which, by the way, ignores the conclusion of the recent Nobel winners, who in a convoluted manner, reached the obvious conclusion that the more you pay people not to work, the longer they don't work. Further, he ignores completely the Robert Higgs observation that regime uncertainty plays a role in high unemployment, i.e., firms don't hire when they don't understand the regulatory and tax structure ahead.

ei.sdraob

http://www.google.com/finance?q=eurusd

eurusd now at 1.4 ...

rigumagoo

oh wow,
time for our American friends to start buying wheelbarrows.

Is this related to the currency war that has been brewing between the US and the People's Republic?
Beijing are refusing to let the Yuan rise relative to the global currency market, and this has been frustrating American business interests for years.
I wouldn't be surprised if they have finally decided to turn the tables and force the Dollar down closer to the Yuan (thereby dragging every other currency down with them).
Desperate times call for desperate measures and this strikes me as a last ditch attempt to claw back some industry stateside.

ei.sdraob

rigumagoo wrote: »

oh wow,
time for our American friends to start buying wheelbarrows.

Is this related to the currency war that has been brewing between the US and the People's Republic?
Beijing are refusing to let the Yuan rise relative to the global currency market, and this has been frustrating American business interests for years.
I wouldn't be surprised if they have finally decided to turn the tables and force the Dollar down closer to the Yuan (thereby dragging every other currency down with them).
Desperate times call for desperate measures and this strikes me as a last ditch attempt to claw back some industry stateside.

you might find this interesting in today's paper > http://www.telegraph.co.uk/finance/comment/liamhalligan/8068335/Chinas-not-the-villain-if-the-West-tries-to-debase-its-debt-through-QE.html

pablo_escobar

gold us up against all currencies lately, not just the USD so i wouldn't pay much attention to the exchange rate.

Prepare to see price of food and fuel increase...and that's before the december budget.

fontanalis

A good article on it.
http://www.rollingstone.com/politics/matt-taibbi/blogs/TaibbiData_May2010/217520/83512

ei.sdraob

pablo_escobar wrote: »

gold us up against all currencies lately, not just the USD so i wouldn't pay much attention to the exchange rate.

Prepare to see price of food and fuel increase...and that's before the december budget.

thats because gold is in a bubble ...

pablo_escobar

bubble? are you kidding?
it's going up because the value of the USD and other currencies are going down.

ei.sdraob

pablo_escobar wrote: »

bubble? are you kidding?
it's going up because the value of the USD and other currencies are going down.

Thats only a small factor, if that was the case all other commodities be going up by same rate, they are not...

pablo_escobar

Explain how it's a bubble then.

ei.sdraob

pablo_escobar wrote: »

Explain how it's a bubble then.

Everyone and their dog is talking up gold investments, that alone sends alarm bells ringing over here.

pablo_escobar

really?

just because they have an ETF doesn't mean they own any gold.
if markets collapsed tomorrow, those holding ETFs may aswell wipe their backside with it.