Paying Attention?

[pemeliza]

“Japan experience deflation because their prices were so expensive relative to the rest of the world.”

Interesting point.

[briansd1]

[quote=Arraya]
I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

[/quote]

I think that the Federal Reserve has more firepower.

If we have deflation, the Fed can print money until we have inflation. In the face of central bank printing, what would obviate intervention and cause deflation instead?

Japan experienced deflation because their prices were so expensive relative to the rest of the world. That’s not the case with American, but perhaps for wages and health care.

I’m not worried about runaway inflation either because, in an uncertain world, America is still a safe haven.

Also, because of high unemployment and globalization, workers can’t demand pay raises. That leaves room for the Fed to implement QE3.

As you mentioned in your other thread, $4.5 trillion of equity was wiped-out. Sure, the market will bounce back, that that’s still a real loss of wealth. More liquidity on the part of the Fed can only help. IMO, fiscal stimulus would be better, but monetary intervention is better than nothing.

[briansd1]

[quote=Arraya]
I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

[/quote]

I think that the Federal Reserve has more firepower.

If we have deflation, the Fed can print money until we have inflation. In the face of central bank printing, what would obviate intervention and cause deflation instead?

Japan experienced deflation because their prices were so expensive relative to the rest of the world. That’s not the case with American, but perhaps for wages and health care.

I’m not worried about runaway inflation either because, in an uncertain world, America is still a safe haven.

Also, because of high unemployment and globalization, workers can’t demand pay raises. That leaves room for the Fed to implement QE3.

As you mentioned in your other thread, $4.5 trillion of equity was wiped-out. Sure, the market will bounce back, that that’s still a real loss of wealth. More liquidity on the part of the Fed can only help. IMO, fiscal stimulus would be better, but monetary intervention is better than nothing.

[briansd1]

[quote=Arraya]
I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

[/quote]

I think that the Federal Reserve has more firepower.

If we have deflation, the Fed can print money until we have inflation. In the face of central bank printing, what would obviate intervention and cause deflation instead?

Japan experienced deflation because their prices were so expensive relative to the rest of the world. That’s not the case with American, but perhaps for wages and health care.

I’m not worried about runaway inflation either because, in an uncertain world, America is still a safe haven.

Also, because of high unemployment and globalization, workers can’t demand pay raises. That leaves room for the Fed to implement QE3.

As you mentioned in your other thread, $4.5 trillion of equity was wiped-out. Sure, the market will bounce back, that that’s still a real loss of wealth. More liquidity on the part of the Fed can only help. IMO, fiscal stimulus would be better, but monetary intervention is better than nothing.

[briansd1]

[quote=Arraya]
I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

[/quote]

I think that the Federal Reserve has more firepower.

If we have deflation, the Fed can print money until we have inflation. In the face of central bank printing, what would obviate intervention and cause deflation instead?

Japan experienced deflation because their prices were so expensive relative to the rest of the world. That’s not the case with American, but perhaps for wages and health care.

I’m not worried about runaway inflation either because, in an uncertain world, America is still a safe haven.

Also, because of high unemployment and globalization, workers can’t demand pay raises. That leaves room for the Fed to implement QE3.

As you mentioned in your other thread, $4.5 trillion of equity was wiped-out. Sure, the market will bounce back, that that’s still a real loss of wealth. More liquidity on the part of the Fed can only help. IMO, fiscal stimulus would be better, but monetary intervention is better than nothing.

[briansd1]

[quote=Arraya]
I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

[/quote]

I think that the Federal Reserve has more firepower.

If we have deflation, the Fed can print money until we have inflation. In the face of central bank printing, what would obviate intervention and cause deflation instead?

Japan experienced deflation because their prices were so expensive relative to the rest of the world. That’s not the case with American, but perhaps for wages and health care.

I’m not worried about runaway inflation either because, in an uncertain world, America is still a safe haven.

Also, because of high unemployment and globalization, workers can’t demand pay raises. That leaves room for the Fed to implement QE3.

As you mentioned in your other thread, $4.5 trillion of equity was wiped-out. Sure, the market will bounce back, that that’s still a real loss of wealth. More liquidity on the part of the Fed can only help. IMO, fiscal stimulus would be better, but monetary intervention is better than nothing.

[Arraya]

http://www.oftwominds.com/blog.html

The era of quasi-religious belief in “Don’t fight the Fed” is drawing to a close; the Fed has been revealed as significantly less omnipotent and powerful than previously imagined.
Many observers expect the Federal Reserve to bail out the stock market next Tuesday with an announcement of QE3, another round of “monetary easing” to reinstall the trade in risk assets. If they do, it will fail. The basic reason it will fail is that the Fed’s credibility has fallen below a critical threshold. Put another way, the quasi-religious trust in the Fed’s infallibility and power to single-handedly reverse global markets has been eroded by reality: QE2 was a monumental failure.

Here’s a couple of things to understand about the Fed before you “buy the bounce when they announce QE3.”

1. Though nominally independent, the Fed is a political construct. The idea that public opinion and political support have no influence on the Fed is wrong; the Fed’s failure to revive the economy while squandering trillions of dollars propping up banks and Wall Street bonuses was not lost on the political class. Though nobody’s talking about it, the Fed’s abject failure to revive the real economy has greatly diminished its political range of maneuver.

Rumor has it that the word has already gone out to the Fed not to intervene with additional trillions to prop up Europe.

2. The consensus view is the Fed has either engineered the stock market drop to give it a free hand with QE3, or it will be “forced to do something” to combat the implosion of its pet fix to the broken economy, the “wealth effect” of rising stocks.

What these views miss is the Fed is now in a no-win endgame where its best move is to minimize the damage to what’s left of its own reputation and credibility. The worst move here would be to double-down on QE3, because if it failed to goose global markets in a sustained fashion, then the Fed’s remaining credibility and “magic” would vanish in a puff of smoke.

Chairman Ben Bernanke telegraphed this in his recent testimony to Congress, in which he basically stated that the Fed had done all it could and there was little more it could do other than wave a dead chicken and chant a few old incantations. Though he dutifully repeated the standard reassurances, i.e. “There is always more monetary easing we can do,” he was careful to lower expectations that such easing would accomplish anything.

His testimony was that of someone setting up CYA in a major way. (CYA = cover your behind from recrimination when things head south.)

3. The Fed’s power rests not in the fabled printing press but in the invisible coin of trust. Now that its fallibility has been exposed, its power, i.e. the magical faith in the guaranteed efficacy of its actions, has been destroyed.

This cloak of invincibility is what generated its power, and now that its grand policy of rescuing the economy via monetary easing and “the wealth effect” have collapsed into smoking ruins, that cloak has been shredded.

[Arraya]

http://www.oftwominds.com/blog.html

The era of quasi-religious belief in “Don’t fight the Fed” is drawing to a close; the Fed has been revealed as significantly less omnipotent and powerful than previously imagined.
Many observers expect the Federal Reserve to bail out the stock market next Tuesday with an announcement of QE3, another round of “monetary easing” to reinstall the trade in risk assets. If they do, it will fail. The basic reason it will fail is that the Fed’s credibility has fallen below a critical threshold. Put another way, the quasi-religious trust in the Fed’s infallibility and power to single-handedly reverse global markets has been eroded by reality: QE2 was a monumental failure.

Here’s a couple of things to understand about the Fed before you “buy the bounce when they announce QE3.”

1. Though nominally independent, the Fed is a political construct. The idea that public opinion and political support have no influence on the Fed is wrong; the Fed’s failure to revive the economy while squandering trillions of dollars propping up banks and Wall Street bonuses was not lost on the political class. Though nobody’s talking about it, the Fed’s abject failure to revive the real economy has greatly diminished its political range of maneuver.

Rumor has it that the word has already gone out to the Fed not to intervene with additional trillions to prop up Europe.

2. The consensus view is the Fed has either engineered the stock market drop to give it a free hand with QE3, or it will be “forced to do something” to combat the implosion of its pet fix to the broken economy, the “wealth effect” of rising stocks.

What these views miss is the Fed is now in a no-win endgame where its best move is to minimize the damage to what’s left of its own reputation and credibility. The worst move here would be to double-down on QE3, because if it failed to goose global markets in a sustained fashion, then the Fed’s remaining credibility and “magic” would vanish in a puff of smoke.

Chairman Ben Bernanke telegraphed this in his recent testimony to Congress, in which he basically stated that the Fed had done all it could and there was little more it could do other than wave a dead chicken and chant a few old incantations. Though he dutifully repeated the standard reassurances, i.e. “There is always more monetary easing we can do,” he was careful to lower expectations that such easing would accomplish anything.

His testimony was that of someone setting up CYA in a major way. (CYA = cover your behind from recrimination when things head south.)

3. The Fed’s power rests not in the fabled printing press but in the invisible coin of trust. Now that its fallibility has been exposed, its power, i.e. the magical faith in the guaranteed efficacy of its actions, has been destroyed.

This cloak of invincibility is what generated its power, and now that its grand policy of rescuing the economy via monetary easing and “the wealth effect” have collapsed into smoking ruins, that cloak has been shredded.

[Arraya]

http://www.oftwominds.com/blog.html

The era of quasi-religious belief in “Don’t fight the Fed” is drawing to a close; the Fed has been revealed as significantly less omnipotent and powerful than previously imagined.
Many observers expect the Federal Reserve to bail out the stock market next Tuesday with an announcement of QE3, another round of “monetary easing” to reinstall the trade in risk assets. If they do, it will fail. The basic reason it will fail is that the Fed’s credibility has fallen below a critical threshold. Put another way, the quasi-religious trust in the Fed’s infallibility and power to single-handedly reverse global markets has been eroded by reality: QE2 was a monumental failure.

Here’s a couple of things to understand about the Fed before you “buy the bounce when they announce QE3.”

1. Though nominally independent, the Fed is a political construct. The idea that public opinion and political support have no influence on the Fed is wrong; the Fed’s failure to revive the economy while squandering trillions of dollars propping up banks and Wall Street bonuses was not lost on the political class. Though nobody’s talking about it, the Fed’s abject failure to revive the real economy has greatly diminished its political range of maneuver.

Rumor has it that the word has already gone out to the Fed not to intervene with additional trillions to prop up Europe.

2. The consensus view is the Fed has either engineered the stock market drop to give it a free hand with QE3, or it will be “forced to do something” to combat the implosion of its pet fix to the broken economy, the “wealth effect” of rising stocks.

What these views miss is the Fed is now in a no-win endgame where its best move is to minimize the damage to what’s left of its own reputation and credibility. The worst move here would be to double-down on QE3, because if it failed to goose global markets in a sustained fashion, then the Fed’s remaining credibility and “magic” would vanish in a puff of smoke.

Chairman Ben Bernanke telegraphed this in his recent testimony to Congress, in which he basically stated that the Fed had done all it could and there was little more it could do other than wave a dead chicken and chant a few old incantations. Though he dutifully repeated the standard reassurances, i.e. “There is always more monetary easing we can do,” he was careful to lower expectations that such easing would accomplish anything.

His testimony was that of someone setting up CYA in a major way. (CYA = cover your behind from recrimination when things head south.)

3. The Fed’s power rests not in the fabled printing press but in the invisible coin of trust. Now that its fallibility has been exposed, its power, i.e. the magical faith in the guaranteed efficacy of its actions, has been destroyed.

This cloak of invincibility is what generated its power, and now that its grand policy of rescuing the economy via monetary easing and “the wealth effect” have collapsed into smoking ruins, that cloak has been shredded.

[Arraya]

http://www.oftwominds.com/blog.html

The era of quasi-religious belief in “Don’t fight the Fed” is drawing to a close; the Fed has been revealed as significantly less omnipotent and powerful than previously imagined.
Many observers expect the Federal Reserve to bail out the stock market next Tuesday with an announcement of QE3, another round of “monetary easing” to reinstall the trade in risk assets. If they do, it will fail. The basic reason it will fail is that the Fed’s credibility has fallen below a critical threshold. Put another way, the quasi-religious trust in the Fed’s infallibility and power to single-handedly reverse global markets has been eroded by reality: QE2 was a monumental failure.

Here’s a couple of things to understand about the Fed before you “buy the bounce when they announce QE3.”

1. Though nominally independent, the Fed is a political construct. The idea that public opinion and political support have no influence on the Fed is wrong; the Fed’s failure to revive the economy while squandering trillions of dollars propping up banks and Wall Street bonuses was not lost on the political class. Though nobody’s talking about it, the Fed’s abject failure to revive the real economy has greatly diminished its political range of maneuver.

Rumor has it that the word has already gone out to the Fed not to intervene with additional trillions to prop up Europe.

2. The consensus view is the Fed has either engineered the stock market drop to give it a free hand with QE3, or it will be “forced to do something” to combat the implosion of its pet fix to the broken economy, the “wealth effect” of rising stocks.

What these views miss is the Fed is now in a no-win endgame where its best move is to minimize the damage to what’s left of its own reputation and credibility. The worst move here would be to double-down on QE3, because if it failed to goose global markets in a sustained fashion, then the Fed’s remaining credibility and “magic” would vanish in a puff of smoke.

Chairman Ben Bernanke telegraphed this in his recent testimony to Congress, in which he basically stated that the Fed had done all it could and there was little more it could do other than wave a dead chicken and chant a few old incantations. Though he dutifully repeated the standard reassurances, i.e. “There is always more monetary easing we can do,” he was careful to lower expectations that such easing would accomplish anything.

His testimony was that of someone setting up CYA in a major way. (CYA = cover your behind from recrimination when things head south.)

3. The Fed’s power rests not in the fabled printing press but in the invisible coin of trust. Now that its fallibility has been exposed, its power, i.e. the magical faith in the guaranteed efficacy of its actions, has been destroyed.

This cloak of invincibility is what generated its power, and now that its grand policy of rescuing the economy via monetary easing and “the wealth effect” have collapsed into smoking ruins, that cloak has been shredded.

[Arraya]

http://www.oftwominds.com/blog.html

The era of quasi-religious belief in “Don’t fight the Fed” is drawing to a close; the Fed has been revealed as significantly less omnipotent and powerful than previously imagined.
Many observers expect the Federal Reserve to bail out the stock market next Tuesday with an announcement of QE3, another round of “monetary easing” to reinstall the trade in risk assets. If they do, it will fail. The basic reason it will fail is that the Fed’s credibility has fallen below a critical threshold. Put another way, the quasi-religious trust in the Fed’s infallibility and power to single-handedly reverse global markets has been eroded by reality: QE2 was a monumental failure.

Here’s a couple of things to understand about the Fed before you “buy the bounce when they announce QE3.”

1. Though nominally independent, the Fed is a political construct. The idea that public opinion and political support have no influence on the Fed is wrong; the Fed’s failure to revive the economy while squandering trillions of dollars propping up banks and Wall Street bonuses was not lost on the political class. Though nobody’s talking about it, the Fed’s abject failure to revive the real economy has greatly diminished its political range of maneuver.

Rumor has it that the word has already gone out to the Fed not to intervene with additional trillions to prop up Europe.

2. The consensus view is the Fed has either engineered the stock market drop to give it a free hand with QE3, or it will be “forced to do something” to combat the implosion of its pet fix to the broken economy, the “wealth effect” of rising stocks.

What these views miss is the Fed is now in a no-win endgame where its best move is to minimize the damage to what’s left of its own reputation and credibility. The worst move here would be to double-down on QE3, because if it failed to goose global markets in a sustained fashion, then the Fed’s remaining credibility and “magic” would vanish in a puff of smoke.

Chairman Ben Bernanke telegraphed this in his recent testimony to Congress, in which he basically stated that the Fed had done all it could and there was little more it could do other than wave a dead chicken and chant a few old incantations. Though he dutifully repeated the standard reassurances, i.e. “There is always more monetary easing we can do,” he was careful to lower expectations that such easing would accomplish anything.

His testimony was that of someone setting up CYA in a major way. (CYA = cover your behind from recrimination when things head south.)

3. The Fed’s power rests not in the fabled printing press but in the invisible coin of trust. Now that its fallibility has been exposed, its power, i.e. the magical faith in the guaranteed efficacy of its actions, has been destroyed.

This cloak of invincibility is what generated its power, and now that its grand policy of rescuing the economy via monetary easing and “the wealth effect” have collapsed into smoking ruins, that cloak has been shredded.

[briansd1]

Arraya, I read Charles Hugh Smith years ago, but I stopped because his writing is incoherent and wishful thinking.

Wanting the political and economic order to change does not equate to it realistically being on the cusp of change.

First, how did the Fed squander trillion of dollars? The Fed can create money at zero cost to buy assets. They have been making money on their asset purchases.
http://articles.latimes.com/2011/jan/11/business/la-fi-fed-profit-20110111

Second, if one believes that there is collusion on the part of the political class with the elite economic upper-class, then why would one believe that polical class is telling the Fed not to intervene the support the economic system?

Finally, as far as the Fed’s power resting, not in the printing press, but in trust, I disagree.

If you look at developing countries, where the central bankers don’t enjoy much trust, when they printed enough money, inflation inevitably set in.

With enough currenty sloshing around, there will be inflation in that currency. Theoretically, central banks can print unlimited amounts of money

[briansd1]

Arraya, I read Charles Hugh Smith years ago, but I stopped because his writing is incoherent and wishful thinking.

Wanting the political and economic order to change does not equate to it realistically being on the cusp of change.

First, how did the Fed squander trillion of dollars? The Fed can create money at zero cost to buy assets. They have been making money on their asset purchases.
http://articles.latimes.com/2011/jan/11/business/la-fi-fed-profit-20110111

Second, if one believes that there is collusion on the part of the political class with the elite economic upper-class, then why would one believe that polical class is telling the Fed not to intervene the support the economic system?

Finally, as far as the Fed’s power resting, not in the printing press, but in trust, I disagree.

If you look at developing countries, where the central bankers don’t enjoy much trust, when they printed enough money, inflation inevitably set in.

With enough currenty sloshing around, there will be inflation in that currency. Theoretically, central banks can print unlimited amounts of money

[briansd1]

Arraya, I read Charles Hugh Smith years ago, but I stopped because his writing is incoherent and wishful thinking.

Wanting the political and economic order to change does not equate to it realistically being on the cusp of change.

First, how did the Fed squander trillion of dollars? The Fed can create money at zero cost to buy assets. They have been making money on their asset purchases.
http://articles.latimes.com/2011/jan/11/business/la-fi-fed-profit-20110111

Second, if one believes that there is collusion on the part of the political class with the elite economic upper-class, then why would one believe that polical class is telling the Fed not to intervene the support the economic system?

Finally, as far as the Fed’s power resting, not in the printing press, but in trust, I disagree.

If you look at developing countries, where the central bankers don’t enjoy much trust, when they printed enough money, inflation inevitably set in.

With enough currenty sloshing around, there will be inflation in that currency. Theoretically, central banks can print unlimited amounts of money

[briansd1]

Arraya, I read Charles Hugh Smith years ago, but I stopped because his writing is incoherent and wishful thinking.

Wanting the political and economic order to change does not equate to it realistically being on the cusp of change.

First, how did the Fed squander trillion of dollars? The Fed can create money at zero cost to buy assets. They have been making money on their asset purchases.
http://articles.latimes.com/2011/jan/11/business/la-fi-fed-profit-20110111

Second, if one believes that there is collusion on the part of the political class with the elite economic upper-class, then why would one believe that polical class is telling the Fed not to intervene the support the economic system?

Finally, as far as the Fed’s power resting, not in the printing press, but in trust, I disagree.

If you look at developing countries, where the central bankers don’t enjoy much trust, when they printed enough money, inflation inevitably set in.

With enough currenty sloshing around, there will be inflation in that currency. Theoretically, central banks can print unlimited amounts of money

[Author]

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