"Full employment," already watered down inexcusably to four-percent to keep the pigs at the trough who really count happy, is actually literally part of the official mission of Ben's position at the Fed. Just, you know, FYI.
Thursday, December 17, 2009
Heckuva Jobless, Bennie
"Man of the Year" Ben Bernanke explicitly prefers 10% unemployment for the foreseeable future to the possibility of "price instability." He is in a position to deploy this preference in ways that facilitate unprecedented levels of misery in this country for a generation. Just, you know, FYI.
"Full employment," already watered down inexcusably to four-percent to keep the pigs at the trough who really count happy, is actually literally part of the official mission of Ben's position at the Fed. Just, you know, FYI.
"Full employment," already watered down inexcusably to four-percent to keep the pigs at the trough who really count happy, is actually literally part of the official mission of Ben's position at the Fed. Just, you know, FYI.
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2 comments:
I see your point, but despite what he says, Bernanke is doing everything he can to destroy the dollar. He's trying to cause inflation and it's not working. It's not working at all, and judging from the size of the vein in his forehead when he's on TV, he's in a panic. You can't have inflation unless people, households, and businesses borrow. The banks are sitting on over a trillion in excess reserves, and as much as Obama jawbones them into lending it out, households don't want any more debt. Small business owners don't want any more debt. Even huge corporations are selling shares of stock to raise money instead of borrowing funds by way of bond sales.
2007 marked the top of more than just the stock market. It marked the top of America's lust for borrowed money. We are in a secular credit contraction. So, as much as I think Bernanke is a tool, and should be sent packing back to academia, he's obviously in way over his head. Thirty years of rape and pillage of our country by the 'titans' of industry will take another thirty to undo, if it's undoable at all. And in the meantime, since households and businesses don't want to borrow, the Treasury is stepping in to fill the gap with $1.5 trillion of new Treasury issuance next year at the same time another 2 trillion matures and must be rolled over.
And since we aren't buying all the useless crap from overseas like we used to, there are fewer and fewer dollars available overseas to buy those Treasuries. And so Bernanke doesn't get much sleep, and veins pop out of his head, and the rest of us watch our lives quietly evaporate.
A second stimulus is surely needed. But it has to be huge -- 2 trillion would be my guess. $700 billion gave us like a 2% bump in GDP last quarter and maybe 3% this quarter, and still no jobs. We need a real stimulus, but I don't have any idea where (as a practical matter) the dollars would come from to finance it. We would need to raise 3 trillion in 2010, while rolling over 2 trillion in maturing US govt debt. That's 5 trillion dollars that has to come out of the woodwork to buy those bonds. Where the hell it's going to come from is beyond me. Last month China bought exactly zero US govt bonds, and Japan actually sold some. They're our biggest creditors. (For a comparison of the numbers involved, the cost of our stupid wars since 2001 has been roughly $1 trillion total.)
Saying Bernanke prefers 10% unemployment seems to imply (erroneously, I think) that he has the power to change his preference, and thereby the outcome. I don't think he can. It's up to Congress to authorize a stimulus that creates jobs, and find a way to finance it. But that's easier said than done, I guess.
If I think you're pertinent does that mean I also have to think you're a non-weasel?
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