Thursday, October 27, 2005

Bernanke: No Housing Bubble

Last week, according to an article at the Washington Post the man picked to be the new fed chief when Greenspan leaves next year told Congress there isn't a housing bubble (though not in so many words).

So now Bernanke is a puffer fish, trying to blow air into a balloon by making statements.

This is perfect for the Bush administration.

Bernanke also earlier made a statement that showed he thought it was okay (according to some) for the US government to print extra money.

Ben "Printing Press" Bernanke's reputation is engraved in stone with weary asset managers since he said in a speech inNovember 2002,"the US government has a technology, called a printing press - or, today, its electronic equivalent - that allows it to produce as many US dollars as it wishes at essentially no cost."

Such a stance certainly pleases Bush who has been running up more debts than any other president in US history and is for this reason actually the biggest enemy to a sound monetary policy in times of rising inflation. Public debt jumped from US$5.8 trillion to more than $8 trillion (that is $8,000,000,000,000) since he took office in 2001, and he is the first president who has never vetoed any costly bill Congress has presented to him.

No problem, Homey.

A New York Times article says that printing money isn't the only problem idea with Bernanke --"a nominee from central casting".

The Times article goes on to dispute the idea that by controlling the fed rate, the group can make the economy do what it wants (a pillar of Greenspan policy and through which he started 2 recessions), and disputes the fed's obsession with avoiding deflation in the face of globalization of goods as loomed in 2002.

It also notes:
the rally in stock prices following word of Mr. Bernanke's nomination was no vote of confidence that the presumptive chairman would settle on the right, or true, federal funds rate. It was, rather, an expression of hope that he would do his all to ensure a speculatively appropriate (meaning very, very low) rate.

Author compares setting the fed rate with "fixing prices" in other commodities. That is an interesting point.

Now I need an analyst to explain the implications of what the Time's analyst just said.

Oh yeah, Krugman cost $50 to read now. Lovely.

Toon: Making people pay to be exposed to progressive thought.

Still the effects of Bernanke-Greenspan thought are obvious as the rich have become immensely more wealthy and the middle and working classes have been his with financial bird flu. About half have survived and are now immune to future outbreaks, but is that good? I remember when presidents worked for the middle class, not an amalgum of very rich and backwoods poor.


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