It is far easier to translate Bernanke than Greenspan. Both men had this task: to deceive the public. Greenspan adopted verbal obfuscation as his technique. Bernanke has adopted boredom.
I hope this exercise will help you understand his speech of August 27.
CHALLENGES AND DAUNTING CHALLENGES
People who are unfamiliar with Bernanke’s strategy of downplaying everything, in good professorial fashion, may miss the significance of what he said.
On the whole, when the eruption of the Panic of 2008 threatened the very foundations of the global economy, the world rose to the challenge, with a remarkable degree of international cooperation, despite very difficult conditions and compressed time frames.
Translation: (1) “The world rose to the challenge.”Hank Paulson nationalized the mortgage market unilaterally. He let Lehman Brothers go bust, so as to catch Congress’s attention. Then he got Congress to bail out AIG and the largest banks. I cooperated. The FED swapped liquid Treasury debt at face for heavily discounted promises to pay that were held by the largest banks for which there was no market.
Then the Financial Standards Accounting Board reversed itself on FAS 157. Banks would not be required to list their assets at market value. This kept them solvent.
Then other central banks and politicians imitated Paulson and me by bailing out their largest banks. We set the pattern. They followed suit.
(2) “Despite very difficult conditions and short time frames.
Notwithstanding some important steps forward, however, as we return once again to Jackson Hole I think we would all agree that, for much of the world, the task of economic recovery and repair remains far from complete.
Translation: Everyone knows the economy is slowing. The two stimulus packages totalling $1.5 trillion barely reversed the recession, assuming it reversed at all. Meanwhile, the pantywaists on the National Bureau of Economic Research committee that decides when recessions end decided in April not to decide. That left me holding the bag. So the FED has declared that it ended in April 2009. Like it or lump it.
When Fed Chairman Ben Bernanke admits to seeing an “unusually uncertain” economy ahead, it’s pretty terrifying to imagine what he’s really thinking. What John Williams envisions – and he’s by no means looking to the far horizon – is a systemic collapse, a hyperinflationary great depression and the cessation of normal commerce. Despite that bleak outlook, however, when the economist and editor of ShadowStats.com sat down for this exclusive Energy Report interview, he also had some good news.
The Energy Report: A few months back, John, you said, “if you strangle liquidity you always contract an economy and deliberately or not, liquidity is being strangled, resulting in sharp declines in consumer credit, commercial and industrial loans.” Does this mean it would spur more economic growth if banks actually started lending?
John Williams: It sure wouldn’t hurt. We’re still seeing contractions in liquidity, and that’s adjusted for inflation. In real terms, M3 money supply is down almost 8% year-over-year. It’s the sharpest fall in the post -World War II era. It’s not so much the depth of the decline in the liquidity or the duration, but the fact that the liquidity turns negative year-over-year that signals the economy turning down.
We had the signal in December of 2009 indicating intensification of the downturn, in this case, within six to nine months. We’re in that timeframe now and see softening numbers. People are talking about a weaker economy. Even Mr. Bernanke has described the economy as “unusually uncertain” in terms of its outlook. Wording like that from the Fed is a pretty good indication that something’s afoot.
Why is M3 still contracting?
JW: Just as you noted, the banks are not lending. The money the Fed put into the system in terms of buying mortgage-backed securities from the banks and trying to help bank liquidity ended up back with the Fed as excess reserves. We have well over $1 trillion there; had the banks loaned that money in the normal stream of commerce, it would have added more than $10 trillion to the broad money supply, which otherwise is up around $14 trillion. That certainly would have had some inflationary impact if not in terms of actual business activity. You can’t always get the economy to grow by pushing money into it. Sometimes it’s like pushing on a string.
It has been 65 years since Europe’s last major war. Still, when Germany gets up off its knees, the continent trembles.
Last week, the Berlin government announced the best results since the wall fell in ’89. From the first quarter to the second one the republic’s GDP rose 2.2%. At that rate – about 9% a year if it continues – Germany is running neck and neck with China. Compared to France and the US, Germany is flying nearly 4 times as fast. Greece meanwhile is backing up. Its economy shrank 1.5% last quarter.
The Teuton tribes are an aggressive lot. The Usipetes, Tenchteri, Batavi, Cherusci, Chatti, Vandals, Goths, Franks, Alans, Suebians – all jostled each other for centuries. They must have gotten a taste for competition. And when Rome wheezed her last gasps they fell on her like French tax collectors on a widow’s estate. The Vandals pushed all the way across Gaul and Iberia, crossed to North Africa, and from their new base in Carthage, continued to tickle the old Empire until it rolled over on them. Everybody has his elbows out. But competition takes many forms. Better to build Audis and Mercedes than Tigers and Messerschmitts. Better to race for market share than for the Champs Élysée. Whatever form it takes, competition isn’t likely to stop. Happily, most of the time, it is a boon to everyone – even to the losers. That’s why Germany’s current success is only a threat to the economists and commentarists who’ve been giving her advice. The rest of us hold our breath and hope for more.
In just six months, on January 1, 2011, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves. OnJanuary 1, 2011, here’s what happens… (read it to the end, so you see all three waves)… First Wave: Expiration of 2001 and 2003 Tax Relief In 2001 and 2003, the GOP Congress enacted several tax cuts forinvestors, small business owners, and families. These will all expire on January 1, 2011. Personal income tax rates will rise. The topincome tax rate will rise from 35 to 39.6 percent (this is also the rateat which two-thirds of small business profits are taxed). Thelowest rate will rise from 10 to 15 percent. All the rates inbetween will also rise. Itemized deductions and personal exemptionswill again phase out, which has the same mathematical effect as highermarginal tax rates. The full list of marginal rate hikes is below:
‘We the people” are the familiar opening words of the Constitution of the United States — the framework for a self-governing people, free from the arbitrary edicts of rulers. It was the blueprint for America, and the success of America made that blueprint something that other nations sought to follow.
At the time when it was written, however, the Constitution was a radical departure from the autocratic governments of the 18th century. Since it was something so new and different, the reasons for the Constitution’s provisions were spelled out in the Federalist, a collection of essays written by three of the writers of the Constitution, as a sort of instruction guide to a new product.
The Constitution was not only a challenge to the despotic governments of its time, but has been a continuing challenge — to this day — to all those who think that ordinary people should be ruled by their betters, whether an elite of blood, or of books, or of whatever else gives people a puffed-up sense of importance.
By Paul Craig Roberts
Evidence that the US is a failed state is piling up faster than I can record it.
One conclusive hallmark of a failed state is that the crooks are inside the government, using government to protect and to advance their private interests.
Income inequality in the US is now the most extreme of all countries. The 2008 OECD report, “Income Distribution and Poverty in OECD Countries,” concludes that the US is the country with the highest inequality and poverty rate across the OECD and that since 2000 nowhere has there been such a stark rise in income inequality as in the US. The OECD finds that in the US the distribution of wealth is even more unequal than the distribution of income.
I couldn’t have said it better!!…Excellant article…
~jude
By Giordano Bruno
Neithercorp Press – 08/17/2010
“From now on, depressions will be scientifically created.” — Congressman Charles A. Lindbergh Sr. , 1913
Everyone loves money. Even people like myself who abhor the abuse of money and commerce, who understand the fraudulent nature of the system we live in, still work hard and save so that we might attain a sense of stability within that system. Many people see money as a focal point to their existence. But is it really money that they are after, or is it something else entirely? In truth, money represents ‘security’ in the minds of the masses. Money affords us the ability to survive, and the more of it we have, the safer we all feel. Because we subconsciously associate the extension of our very life with the variable health of the economic structure in which we live, we tend to become unwitting devotees to its continued existence, even if it is corrupt and condemned to failure. We gullibly deny the system or the currency that supports it is doomed to the contrary of all evidence because, even though it has beaten us bloody, we have never known anything else.
In light of this entrenched way of perceiving things, especially in the U.S., it is difficult enough to convince some people that the economy is in fact not providing the security they desire, but is actually destroying their future completely. To explain to them that this is deliberate, that the economy is designed to self-destruct, that is another prospect altogether.
Many people hit a proverbial wall on this issue because they simply cannot fathom that certain groups of men (globalists and central bankers) view money and economy in completely different terms than they do. The average American lives within a tiny box when it comes to the mechanics and motivations of finance. They think that their monetary desires and drives are exactly the same as a globalist’s. But, what they don’t realize is that the box they think in was BUILT by globalists. This is why the actions of big banks and the decisions of our mostly corporate establishment run government seem so insane in the face of common sense. We try to rationalize their behavior as “idiocy”, but the reality is that their goals are highly deliberate and so far outside what we have been taught to expect that some of us lack a point of reference. If you cannot see the endgame, you will not understand the steps taken to reach it until it is too late.
Outside the Preobrazhenskoye cemetery in eastern Moscow, Muscovites hawking books and trinkets are still in shock from the scorching heat and choking smog that filled the Russian capital and made it hell on earth for nearly a week.
“People couldn’t breathe,” said one. “The authorities did nothing,” said Nadezhda, a pensioner selling flowers.
Inside the cemetery gates, gravediggers are taking respite from a surge in funerals that first grew as temperatures reached record levels and then climbed, as toxic smog from forest and peat bog fires shrouded the city. Death rates doubled in recent days, according to a senior Moscow health official, as the elderly and those suffering from bronchial and heart problems were hit.
MORE IMPORTANT:
A ban on Russian grain exports ordered by Prime Minister Vladimir Putin came into force on Sunday, with the government battling to keep down prices of basic foodstuffs amid a record drought.
According to a government decree signed by Putin on August 5, the ban will extend from August 15 up until December 31, although the powerful premier has indicated it may even extend beyond that date if the harvest is bad.
Russia, the world’s number three wheat exporter last year, has already warned that its grain harvest this year will be just 60-65 million tonnes, compared to 97 million tonnes in 2009.
The drought amid the worst ever heatwave in Russia’s history has ruined one quarter of the country’s crops, according to President Dmitry Medvedev.
The export ban is aimed at keeping the Russian domestic market well supplied with grain to prevent sharp rises in prices. Russia’s leaders, acutely nervous of social unrest, will be keen to avoid any discontent over food prices.
