Where have you gone Paul Volcker?

[XBoxBoy]

Yes it definitely appears that the fed’s rescue has failed. But here is the thing I’ve been wondering for several months now:

What do the fed governors and BB really think? Given that if they say negative things, there’s a good chance real panic will happen, the question is what are they really thinking and saying to each other in private. Do they believe what they say, that things aren’t that bad, or in private do they roll their heads and mutter, “hey guys, We’re f*ckd. Interest rate cuts aren’t working and inflation is totally getting out of hand.”

I keep seeing the fed governors give speeches in which they talk about how it’s important that we don’t allow “inflation expectations to become unmoored.” (Is it just me, or do others keep seeing that phrase?) And every time I see that phrase I wonder, “What in god’s name are you talking about? Inflation expectations broke away from the dock months ago! Don’t you guys even look at the press? Have you seen all the articles talking about how inflation is clobbering people? And have you seen the price of everything from gold to oil to wheat?”

Then add to this the fact that the fed governors are now talking about how if (if??? if??? wtf is with the if?) inflation expectations get unmoored they will have to reverse their rate declines rapidly. Huh???? WTF? How in the world are they going to keep the economy from full collapse if they throw in the towel and reverse their rate declines?

So, the final question here is how does this play out? Everyone is certain the fed is going to keep cutting rates, (and god help us if they change course, cause that will really unhinge the markets) Which so far clearly means that inflation is gonna keep right on going full steam ahead. (Despite what Mish and the deflationista’s say) Are we headed for a long period of stagflation? At what point will policy change? When the dems take the white house will they throw BB out and bring in a Paul Volker? (I find that hard to believe but what do I know) How long are we going to have a slowing economy and rising inflation?

Always wondering… XBoxBoy

[afx114]

I posted this a month ago, Volcker endorsed Obama:
http://piggington.com/paul_volcker_endorses_obama

Dunno if that’s a “two-way” endorsement though…

[afx114]

I posted this a month ago, Volcker endorsed Obama:
http://piggington.com/paul_volcker_endorses_obama

Dunno if that’s a “two-way” endorsement though…

[afx114]

I posted this a month ago, Volcker endorsed Obama:
http://piggington.com/paul_volcker_endorses_obama

Dunno if that’s a “two-way” endorsement though…

[afx114]

I posted this a month ago, Volcker endorsed Obama:
http://piggington.com/paul_volcker_endorses_obama

Dunno if that’s a “two-way” endorsement though…

[afx114]

I posted this a month ago, Volcker endorsed Obama:
http://piggington.com/paul_volcker_endorses_obama

Dunno if that’s a “two-way” endorsement though…

[gdcox]

Critics of Bernanke forget one major, even mega-matter.

The US Congress requires by statute that the Fed keep inflation low AND growth going.

By contrast the Bank of England only has one target…inflation.

You can’t blame Bernanke for trying to take the edge of a probable recession. He is required to by his employers.

Also bear in mind that it is better for the US that the adjustment made inevitable by the the mad irresponsibility of many in recent years, is accomplished through a longer period of slow growth than a significant recession. The damage done by recession to hard working people and businessmen (and hence to the long term health and incentives of the economy) is appalling. Perfectly good firms ( ie not founded on bubble economics) are forced out of business because customers pay late or not at all, for example, and the banks withdraw previously reliable sources of finance for ordinary working capital needs.

In short, the best outcome is a period of slugflation as the Fed raised rate when the economy stabilises and during which time the regulators can sort out how to stop next time the financial hoodlums who caused this mess .

[gdcox]

Critics of Bernanke forget one major, even mega-matter.

The US Congress requires by statute that the Fed keep inflation low AND growth going.

By contrast the Bank of England only has one target…inflation.

You can’t blame Bernanke for trying to take the edge of a probable recession. He is required to by his employers.

Also bear in mind that it is better for the US that the adjustment made inevitable by the the mad irresponsibility of many in recent years, is accomplished through a longer period of slow growth than a significant recession. The damage done by recession to hard working people and businessmen (and hence to the long term health and incentives of the economy) is appalling. Perfectly good firms ( ie not founded on bubble economics) are forced out of business because customers pay late or not at all, for example, and the banks withdraw previously reliable sources of finance for ordinary working capital needs.

In short, the best outcome is a period of slugflation as the Fed raised rate when the economy stabilises and during which time the regulators can sort out how to stop next time the financial hoodlums who caused this mess .

[gdcox]

Critics of Bernanke forget one major, even mega-matter.

The US Congress requires by statute that the Fed keep inflation low AND growth going.

By contrast the Bank of England only has one target…inflation.

You can’t blame Bernanke for trying to take the edge of a probable recession. He is required to by his employers.

Also bear in mind that it is better for the US that the adjustment made inevitable by the the mad irresponsibility of many in recent years, is accomplished through a longer period of slow growth than a significant recession. The damage done by recession to hard working people and businessmen (and hence to the long term health and incentives of the economy) is appalling. Perfectly good firms ( ie not founded on bubble economics) are forced out of business because customers pay late or not at all, for example, and the banks withdraw previously reliable sources of finance for ordinary working capital needs.

In short, the best outcome is a period of slugflation as the Fed raised rate when the economy stabilises and during which time the regulators can sort out how to stop next time the financial hoodlums who caused this mess .

[gdcox]

Critics of Bernanke forget one major, even mega-matter.

The US Congress requires by statute that the Fed keep inflation low AND growth going.

By contrast the Bank of England only has one target…inflation.

You can’t blame Bernanke for trying to take the edge of a probable recession. He is required to by his employers.

Also bear in mind that it is better for the US that the adjustment made inevitable by the the mad irresponsibility of many in recent years, is accomplished through a longer period of slow growth than a significant recession. The damage done by recession to hard working people and businessmen (and hence to the long term health and incentives of the economy) is appalling. Perfectly good firms ( ie not founded on bubble economics) are forced out of business because customers pay late or not at all, for example, and the banks withdraw previously reliable sources of finance for ordinary working capital needs.

In short, the best outcome is a period of slugflation as the Fed raised rate when the economy stabilises and during which time the regulators can sort out how to stop next time the financial hoodlums who caused this mess .

[gdcox]

Critics of Bernanke forget one major, even mega-matter.

The US Congress requires by statute that the Fed keep inflation low AND growth going.

By contrast the Bank of England only has one target…inflation.

You can’t blame Bernanke for trying to take the edge of a probable recession. He is required to by his employers.

Also bear in mind that it is better for the US that the adjustment made inevitable by the the mad irresponsibility of many in recent years, is accomplished through a longer period of slow growth than a significant recession. The damage done by recession to hard working people and businessmen (and hence to the long term health and incentives of the economy) is appalling. Perfectly good firms ( ie not founded on bubble economics) are forced out of business because customers pay late or not at all, for example, and the banks withdraw previously reliable sources of finance for ordinary working capital needs.

In short, the best outcome is a period of slugflation as the Fed raised rate when the economy stabilises and during which time the regulators can sort out how to stop next time the financial hoodlums who caused this mess .

[HereWeGo]

The Fed should definitely hold at the next meeting.

[HereWeGo]

The Fed should definitely hold at the next meeting.

[HereWeGo]

The Fed should definitely hold at the next meeting.

[HereWeGo]

The Fed should definitely hold at the next meeting.

[Author]

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