Federal Reserve Montary Policy in Light of An Asset Bubble

[DaisyDuke]

One last reply . . . Bush says the economy is strong.

Is this where I vomit?

[PerryChase]

Let’s not forget the Fed’s pumpinp the economy full of liquidity in 1999 on the eve of the supposed Year 2000 bug collapse. Remember that everyone was predicting a shutdown on Jan 1, 2000?

So the Fed actions one, after another compounded the problems.

[Anonymous]

The New America-

Dear Daisy… I do have an optomistic vision of the New America. It will require considerably more cooperation, honesty, and sacrifice than we have shown in the last 60 years…. I am encouraged by the new congress (David Obey), and the fact that the Republican party (which radically ran up the national debt over Regan and the two Bush's terms in office) seems to be permenently out of power for the considerable future….

I think that the only hope of avoiding a big economic meltdown in the U.S. is if the majority of citizens and businesses bite the bullet and INSIST that both the banking/finance industry and the federal government quickly shift to a pay-as-you-go economy where debt accumulation is eliminated.

• The Federal Government (the citizens of the United States) must report total debt including Social Security and Medicare in its books, and institute policies to both decrease expenditures and raise taxes to show a budget surplus sufficient to reduce public debt burden over time. (Are Americans willing to give up government services and pay higher taxes?)
• The SEC & the FED have to institute credit policies sufficient to reduce the leveraging ratios on private assets. (Are banks and businesses willing to carry higher cash positions instead of leveraging every last dime?)
• The general public has to SAVE MONEY and reduce its dependence on debt to fuel its lifestyle. This of course would require their choice of a more frugal lifestyle… (Are Americans willing to drive less in smaller more fuel efficient cars, live in smaller homes, prepare their own food, and do less shopping?)

These are big hurdles for America to surmount if we are to really have a "soft landing". Of course we can ignore the problem and have a "hard landing" where the eventual outcome is the same with considerably more suffering.

[PerryChase]

I finally got a chance to read the Mishkin speech. It sounds to me like the Fed will intervene if there’s a housing crash “to ensure that it will not do serious harm to the economy.”

I read this as meaning that if the housing downturn affects the general economy, the Fed will lower rates to provide households some “breathing room.” So far consumer confidence and spending are holding up but if the consumers tighten too much, the Fed will act decisively to lower rates.

This will only prolong the pain in real estate but save the general economy. I say don’t buy RE in 2007 because there are more price decreases in store in 2008.

I predict a rate decrease as the economy weakens towards the end of 2007.

[Zeitgeist]

Time to clean house:

“A Republican senator said Tuesday that documents showing Federal Reserve Board Chairman Ben Bernake covered up the fact that his staff recommended he not bailout AIG are being kept from the public. And a House Republican charged that a whistleblower had alerted Congress to specific documents provide “troubling details” of Bernanke’s role in the AIG bailout.”

http://www.huffingtonpost.com/2010/01/26/is-bernanke-hiding-a-smok_n_437509.html

[Zeitgeist]

Time to clean house:

“A Republican senator said Tuesday that documents showing Federal Reserve Board Chairman Ben Bernake covered up the fact that his staff recommended he not bailout AIG are being kept from the public. And a House Republican charged that a whistleblower had alerted Congress to specific documents provide “troubling details” of Bernanke’s role in the AIG bailout.”

http://www.huffingtonpost.com/2010/01/26/is-bernanke-hiding-a-smok_n_437509.html

[Zeitgeist]

Time to clean house:

“A Republican senator said Tuesday that documents showing Federal Reserve Board Chairman Ben Bernake covered up the fact that his staff recommended he not bailout AIG are being kept from the public. And a House Republican charged that a whistleblower had alerted Congress to specific documents provide “troubling details” of Bernanke’s role in the AIG bailout.”

http://www.huffingtonpost.com/2010/01/26/is-bernanke-hiding-a-smok_n_437509.html

[Zeitgeist]

Time to clean house:

“A Republican senator said Tuesday that documents showing Federal Reserve Board Chairman Ben Bernake covered up the fact that his staff recommended he not bailout AIG are being kept from the public. And a House Republican charged that a whistleblower had alerted Congress to specific documents provide “troubling details” of Bernanke’s role in the AIG bailout.”

http://www.huffingtonpost.com/2010/01/26/is-bernanke-hiding-a-smok_n_437509.html

[Zeitgeist]

Time to clean house:

“A Republican senator said Tuesday that documents showing Federal Reserve Board Chairman Ben Bernake covered up the fact that his staff recommended he not bailout AIG are being kept from the public. And a House Republican charged that a whistleblower had alerted Congress to specific documents provide “troubling details” of Bernanke’s role in the AIG bailout.”

http://www.huffingtonpost.com/2010/01/26/is-bernanke-hiding-a-smok_n_437509.html

[Aecetia]

More bad news from Bernanke:
“WOW!!!! Fed Bernanke came out and said the economy won’t recover for five to six years. When did he suddenly get so enlightened?!! He didn’t know that until now? He didn’t see this coming? Seriously? He went from we’re recovering just fine to five to six years. Good job commander!!! We’re so proud of you.”

http://www.fxstreet.com/technical/analysis-reports/weekend-analysis/2010-07-15.html

Got Gold?

[Aecetia]

More bad news from Bernanke:
“WOW!!!! Fed Bernanke came out and said the economy won’t recover for five to six years. When did he suddenly get so enlightened?!! He didn’t know that until now? He didn’t see this coming? Seriously? He went from we’re recovering just fine to five to six years. Good job commander!!! We’re so proud of you.”

http://www.fxstreet.com/technical/analysis-reports/weekend-analysis/2010-07-15.html

Got Gold?

[Aecetia]

More bad news from Bernanke:
“WOW!!!! Fed Bernanke came out and said the economy won’t recover for five to six years. When did he suddenly get so enlightened?!! He didn’t know that until now? He didn’t see this coming? Seriously? He went from we’re recovering just fine to five to six years. Good job commander!!! We’re so proud of you.”

http://www.fxstreet.com/technical/analysis-reports/weekend-analysis/2010-07-15.html

Got Gold?

[Aecetia]

More bad news from Bernanke:
“WOW!!!! Fed Bernanke came out and said the economy won’t recover for five to six years. When did he suddenly get so enlightened?!! He didn’t know that until now? He didn’t see this coming? Seriously? He went from we’re recovering just fine to five to six years. Good job commander!!! We’re so proud of you.”

http://www.fxstreet.com/technical/analysis-reports/weekend-analysis/2010-07-15.html

Got Gold?

[Aecetia]

More bad news from Bernanke:
“WOW!!!! Fed Bernanke came out and said the economy won’t recover for five to six years. When did he suddenly get so enlightened?!! He didn’t know that until now? He didn’t see this coming? Seriously? He went from we’re recovering just fine to five to six years. Good job commander!!! We’re so proud of you.”

http://www.fxstreet.com/technical/analysis-reports/weekend-analysis/2010-07-15.html

Got Gold?

[Author]

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