Why Bernanke has Failed, and Will Continue to Fail

Why Bernanke has Failed, and Will Continue to Fail - Charles Hugh Smith → oftwominds.com/blogjan12/why … 01-12.html

Who is Charles Hugh Smith and what qualifications does he bring to the table?

Genuine question because on matters of such import surely some opinions are worth more than others.

He’s an environmentalist of the moronic doommongering variety. Looks to me like bernanke is actually doing a good job. US economy is improving eg unemployment at 3 year low.

Remember in the US a drop in unemployment does not mean that people have found jobs,
it can mean that they have conveniently been declared as no longer actively looking for work.


anyone would think there is an election this year.
If we hear of troops being pulled out of Iraq and Afganistan, you will have your answer :angry:

I’d reserve judgement until I find out how many of those jobs are seasonal or what category they fall into.

Still my objection remains: there has been a trend around here lately to post articles from all sorts of loons (Usually Libertarian loons) as if their view is worthy of considering. As far as I know, this Smith guy knows fuck all about macroeconomics and isnt fit to tie Ben Bernanke’s shoe laces so why take him seriously?

To illustrate the point, I might see what Joey Barton’a blog has to say about the merits of expansionary monetary policy and post that up.

That article made a lot of sense to me.

Especially what he says about transparency and trust being necessary for people to invest
(and thus any chance of a sustainable recovery.)

I’m struck these days when I read American blogs how rattled they have got about MF Global
even people not directly caught.

As for Bernanke… he is the person who advocated dropping money from helicopters…

Well, yes. And no.

It wasnt so long ago that most Pinsters were the ‘loons’.
And only 5-odd years since the head of government suggested people like us should commit suicide!

If I have learned anything these past few years, its that the outsider, the amateur or the fanatic are often closer to the mark than the trained professionals.

I havent read the guys article so I cannot comment further.

Still, wheres the harm in listening?

In fairness that was in response to deflation concerns at the time.

I get that- but it doesnt mean that we should listen to all loons just on the off chance one will be right.

I still maintain some respect for expertise when choosing which opinions to take seriously.

From Bloomberg
bloomberg.com/news/2012-01-1 … gages.html

Lest we forget where Geithner et al were at in 2006, as things were reaching their denoument.

nytimes.com/2012/01/13/busin … %22&st=cse


So ordinary sensible Americans trying to plan their lives, their house-buying, their careers, making long-term investment
plans, starting businesses etc. are supposed to go on doing so, to the background drone of ‘helicopters dropping money’’ ?
Just because there might be deflation?

Most likely said people would be desperately looking for visas to just about anywhere else with a half-normal
half-stable financial system… having converted their assets into gold and works of art first.

American entrepreneurship was always the golden goose, but between the Wall St psychos and the Fed ivory tower
types, they are doing their damnedest to kill it off.

Interesting article
Plenty of graphs at globaleconomicanalysis.blogspot. … nalysis%29

Shame Mr. Smith doesn’t know when the Maginot line was built…

Sad and pathetic.

More saps demonising those with the intelligence and motivation to mitigate the worst of the potential pain of the economic fall-out inevitable while the massive excesses and frauds of the boom are worked out.

Bernanke is doing an exceptional job in the circumstances.

Only mediocre saps like in that video above thought they could get rich from the slump.

No wonder they hate him.

Yeah, let’s re-enact the policies of the 30’s that so worsened that slump.

And yeah, let’s pretend that what happened 10 years ago is down to the current actions being taken.


That all depends on which side of the trade you are on. Greenspans legacy is only beginning to be realised by the mainstream, yet at the time of the LTCM crisis and the dot.com bust he was doing an exceptional job in the circumstances and he retired in 2006 to plaudits. How do you rate Greenspan today?

The Central banks are still running around with no plan pulling levers and trying desperately to find something that works. While they do this there are record numbers of people on food stamps in the United States. At the same time the baby boomer crisis is starting, there are not enough funds to support their retirement and healthcare. Then there are the endless military adventures over the past decade that destroy lives and capital, who pays for that? Why is the US trying to goad Iran into starting a war?

Bernanke is human too, he is trapped by events and is just a passenger in the whole complex, he does what he thinks his masters want and when they’ve decided they want a change in direction he will be fired. No matter who wins the next election, the next administration is likely to fire him. Nothing is being solved under Bernanke, the too big to fail banks are even larger and the OTC derivatives instruments amounts are even larger, the government deficits are even larger.

We are now at the final stage of this debt crisis, the Greeks are the first to go or maybe Hungary. The Greeks have been caught deliberately lying for a decade about their finances, but, people fail to realise that all governments have played the same games revising how their economic statistics have been calculated since the 1980s. With the absence of political will and integration, there needs to be major reform. However, that is not likely absent a major financial collapse!

In the 1930s there were several sovereign defaults. As it stands right now, the latest European downgrades are only reflecting the collapse in asset values. As sovereign debt is downgraded, the resale value of existing debt declines. This not only undermines the banks giving them incentives to avoid sovereign debt investments, and, pension funds are hit as their asset values also decline. Thus, this is very much the final stage of deflation. Inflation starts only when the majority of bond holders begin to realise that they are better off with private assets (lots of bankrupt governments selling tangible assets). The bondholders will shift from public debts to private asset investment and that’s when we’ll get the inflationary growth as compared with the stagflation we have now.

It is merely a question of time before we have a chain of sovereign defaults. That appears to be unavoidable over the course of the next two years. I reckon it’s likely that by 2017 we’ll have a new monetary system and the portrait of “the Bernank” will probably line the central banker hall of shame alongside Gideon Gono and Rudolf Havenstein.

I know in the past I have put down Greenspan for too low interest rates and supporting excessive deficit spending in a phase of the economic cycle that suggested deficit reduction and interest rate increase.

But on consideration, he was dealing with George Bush and his political bent for unbridled capitalism and war spending.

And while Greenspan strongly disagreed with the politics of Bush, however it is true that at the time he also strongly championed free-market ideology and a capitalistic libertarian environment, free of regulation and restriction.

However, he has since admitted that his free-market ideology and the shunning of regulations was flawed.

So I can respect his human admission of error. And appreciate the context he had to work in dealing with the likes of Reagan and Bush and their political agendas.

But I look to see what he did during the reign of Clinton, and that was all good for the most part.

Yes. There are exceedingly difficult problems to solve. As I said, in the circumstances, they seem to be doing a very good job.

There is no doubt there are problems. But these problems are not caused by current actions. They are caused by former actions (that happened in an environment of de-regulation and unbridled capitalism as it happened). It is odious and dishonest to say that these problems are caused by Bernanke. Anyway the “solutions” advocated by the proponents of unbridled capitalism would cause far far more misery.

That is a simplistic analysis. This question deserves proper analysis, so let’s not muddy the waters with bandying this around here.

Obama does not strike me as one who does not take advice from the experts he has appointed. Who is to say that nothing is being solved? It is only three years ago that it became apparent that unbridled capitalism had lead to a situation where it was not possible to just let one of these big banks go under. That all was connected, and the derivative markets had grown to a state that threatened the economic system of the whole world. How do you unravel such a thing? I would say very carefully. Yes, there are advocates of just ‘yanking’ the whole thing asunder. But it is not possible to take such irresponsibility and lack of foresight and analytical nous seriously.

No doubt there may be some truth in what you say here. I don’t disagree either that there is a much increased risk of financial collapse. But personally, I would prefer to have our best minds working on it, to smooth the transition, and to democratically make new strategy and plans that are in the best interest of most of the people, and that incorporate the kind of enlightenment values that are stronger in the European and Democrat tradition than in the tradition of unbridled capitalism and the US libertarian tradition. And indeed in the recent Irish gombeen version of unbridled capitalism that involved ‘buying off’ the public sector and much else. To summarise, the pursuit of profit with zero regard to cost to human substance of society.

Who knows. Maybe. Maybe not. I turn on the internet these days and I see the rise and rise of the right wing tendency Professor Morgan warned about in one of his articles. It gives me the impression that middle America has sprouted tuberous roots and infested the rest of the world with its thinking and values. Perhaps it’s time to turn the bloody thing off.

Hear, hear. More than once in these discussions Naomi Klein’s Shock Doctirne has come to mind as extremists like the Libertarians argue that an ancien regime has passed and that unless their radical prescriptions for society are adopted in full to we are doomed.

The current Republican primaries are another good example: People are looking for answers in all the wrong places.