[patientrenter]

arraya,

I agree that the management of our money supply and credit has been irresponsible for many years now. But what you are seeing there is a projection of the wishes of the Congress, mainly.

If Congress wants to have cheap and easy credit, then they can make it happen, because they have the legislative power. Everyone in govt, or organizations that live or die at the pleasure of the govt, knows that. You don’t think the CEO of Fannie Mae, in its day, made a move without chatting with Chris and Barney first? Same for the Fed. It’s convenient for Congress to allow the Fed to ‘get out in front’ on issues opposed by most voters, but if the Fed were to actually act against Congress’s real wishes, Bernanke would be humiliated or re-chartered in a flash.

[patientrenter]

arraya,

I agree that the management of our money supply and credit has been irresponsible for many years now. But what you are seeing there is a projection of the wishes of the Congress, mainly.

If Congress wants to have cheap and easy credit, then they can make it happen, because they have the legislative power. Everyone in govt, or organizations that live or die at the pleasure of the govt, knows that. You don’t think the CEO of Fannie Mae, in its day, made a move without chatting with Chris and Barney first? Same for the Fed. It’s convenient for Congress to allow the Fed to ‘get out in front’ on issues opposed by most voters, but if the Fed were to actually act against Congress’s real wishes, Bernanke would be humiliated or re-chartered in a flash.

[patientrenter]

arraya,

I agree that the management of our money supply and credit has been irresponsible for many years now. But what you are seeing there is a projection of the wishes of the Congress, mainly.

If Congress wants to have cheap and easy credit, then they can make it happen, because they have the legislative power. Everyone in govt, or organizations that live or die at the pleasure of the govt, knows that. You don’t think the CEO of Fannie Mae, in its day, made a move without chatting with Chris and Barney first? Same for the Fed. It’s convenient for Congress to allow the Fed to ‘get out in front’ on issues opposed by most voters, but if the Fed were to actually act against Congress’s real wishes, Bernanke would be humiliated or re-chartered in a flash.

[patientrenter]

arraya,

I agree that the management of our money supply and credit has been irresponsible for many years now. But what you are seeing there is a projection of the wishes of the Congress, mainly.

If Congress wants to have cheap and easy credit, then they can make it happen, because they have the legislative power. Everyone in govt, or organizations that live or die at the pleasure of the govt, knows that. You don’t think the CEO of Fannie Mae, in its day, made a move without chatting with Chris and Barney first? Same for the Fed. It’s convenient for Congress to allow the Fed to ‘get out in front’ on issues opposed by most voters, but if the Fed were to actually act against Congress’s real wishes, Bernanke would be humiliated or re-chartered in a flash.

[patientrenter]

I wouldn’t get too bent out of shape over the governance of the Federal Reserve. Yes, it’s a very important institution. Yes, it can theoretically act against the wishes of Congress and the White House. But I think we all know that the Fed cannot really go up against those entities. On the margins, it can act against the wishes of Congress/WH, but that’s about it.

Just imagine if Bernanke had a conversion experience and adamantly opposed any bailout for irresponsible institutions or people. He would be summoned before Congress within 24 hours. If the public humiliation before Dodd, Frank, Schumer et al failed to produce results, his power to block any bailout would be removed within a week.

Congress is the key. The WH is less important, and the Fed is down the list quite a way, important as it is.

[patientrenter]

I wouldn’t get too bent out of shape over the governance of the Federal Reserve. Yes, it’s a very important institution. Yes, it can theoretically act against the wishes of Congress and the White House. But I think we all know that the Fed cannot really go up against those entities. On the margins, it can act against the wishes of Congress/WH, but that’s about it.

Just imagine if Bernanke had a conversion experience and adamantly opposed any bailout for irresponsible institutions or people. He would be summoned before Congress within 24 hours. If the public humiliation before Dodd, Frank, Schumer et al failed to produce results, his power to block any bailout would be removed within a week.

Congress is the key. The WH is less important, and the Fed is down the list quite a way, important as it is.

[patientrenter]

I wouldn’t get too bent out of shape over the governance of the Federal Reserve. Yes, it’s a very important institution. Yes, it can theoretically act against the wishes of Congress and the White House. But I think we all know that the Fed cannot really go up against those entities. On the margins, it can act against the wishes of Congress/WH, but that’s about it.

Just imagine if Bernanke had a conversion experience and adamantly opposed any bailout for irresponsible institutions or people. He would be summoned before Congress within 24 hours. If the public humiliation before Dodd, Frank, Schumer et al failed to produce results, his power to block any bailout would be removed within a week.

Congress is the key. The WH is less important, and the Fed is down the list quite a way, important as it is.

[patientrenter]

I wouldn’t get too bent out of shape over the governance of the Federal Reserve. Yes, it’s a very important institution. Yes, it can theoretically act against the wishes of Congress and the White House. But I think we all know that the Fed cannot really go up against those entities. On the margins, it can act against the wishes of Congress/WH, but that’s about it.

Just imagine if Bernanke had a conversion experience and adamantly opposed any bailout for irresponsible institutions or people. He would be summoned before Congress within 24 hours. If the public humiliation before Dodd, Frank, Schumer et al failed to produce results, his power to block any bailout would be removed within a week.

Congress is the key. The WH is less important, and the Fed is down the list quite a way, important as it is.

[patientrenter]

I wouldn’t get too bent out of shape over the governance of the Federal Reserve. Yes, it’s a very important institution. Yes, it can theoretically act against the wishes of Congress and the White House. But I think we all know that the Fed cannot really go up against those entities. On the margins, it can act against the wishes of Congress/WH, but that’s about it.

Just imagine if Bernanke had a conversion experience and adamantly opposed any bailout for irresponsible institutions or people. He would be summoned before Congress within 24 hours. If the public humiliation before Dodd, Frank, Schumer et al failed to produce results, his power to block any bailout would be removed within a week.

Congress is the key. The WH is less important, and the Fed is down the list quite a way, important as it is.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

[patientrenter]

President, I am not sure we disagree. This bailout alone will not prevent home prices from continuing to decline significantly, in my opinion. My point is that this isn’t all that important. What is important is that getting home prices to stop falling is a top priority for the most influential people in power, and they are determined to do whatever is within their combined power to achieve that. This bailout is just a first step. When the bailout alone doesn’t work, they will take progressively stronger actions.

So the real question is, I think, do the power brokers from both parties in Congress and the White House, and from the media and amongst intellectuals have the combined power to get home prices to stop falling? That’s a lot of power.

(Oh, and of course persistently high inflation would be the only practical way to achieve this.)

[Author]

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