After TARP's first attempt to pass through Congress last year, the BBFiles officially named the Congressional Session the worst Congress since Reconstruction. However, two weeks later they reconciled themselves by passing TARP attempt 2.
However there is now a chance that the current Congress could go down as the worst Congress since Reconstruction. Ron Paul (R) Texas, has actually received 300 approvals to audit the Fed. Paul proposes giving Congress the power to "audit" the Fed. I guess his reasoning goes like this: the Federal Reserve caused the current recession, we should make sure this never happens again so lets improve upon the Fed by incorporating the Awesome Congress into the Fed's primary duty of monetary policy. ..
Wednesday, December 9, 2009
Sunday, December 6, 2009
Poor Bernanke
Here is what Bernanke has to deal with.
The BBFiles is by nature anti-stupid people... making it easy to pick on this poorly argued article on MSNMoney. When the author says that Bernanke gave the Japanese bad advice, we wonder what Japan he is talking about. Japan has had a stagnant economy since the early 90's. They have gone MASSIVELY into debt (their Debt to GDP ratio is several times higher than America's), and have printed trillions of Yen to improve economic conditions. Yet, even with this they have suffered from negative inflation for 20 years! Bernanke realizes that for the common person deflation is as bad as (or worse than) inflation. Bernanke does not want the USA to suffer from inflation or deflation and looks for a good "channel" (about 3-4%) for price changes to sit. We currently have .01% inflation, which is causing 10% unemployment. Only someone that would gain from inflation would want us to change our policy right now... maybe a gold bug. The author's good friends own gold companies, so of course this author is bias against Bernanke.
The BBFiles is by nature anti-stupid people... making it easy to pick on this poorly argued article on MSNMoney. When the author says that Bernanke gave the Japanese bad advice, we wonder what Japan he is talking about. Japan has had a stagnant economy since the early 90's. They have gone MASSIVELY into debt (their Debt to GDP ratio is several times higher than America's), and have printed trillions of Yen to improve economic conditions. Yet, even with this they have suffered from negative inflation for 20 years! Bernanke realizes that for the common person deflation is as bad as (or worse than) inflation. Bernanke does not want the USA to suffer from inflation or deflation and looks for a good "channel" (about 3-4%) for price changes to sit. We currently have .01% inflation, which is causing 10% unemployment. Only someone that would gain from inflation would want us to change our policy right now... maybe a gold bug. The author's good friends own gold companies, so of course this author is bias against Bernanke.
Friday, December 4, 2009
Today's News
The new reports dorve the markets today. The dollar increased over 1%, gold plummeted 4% and crude oil dropped 4% as well. All of this occurred as the most recent unemployment numbers came out with unexpected results. Jobless claims were expected to increase by about 150,000 jobs. Instead they increased by only 11,000, an amazing statistic. One year ago we were losing jobs 700,000 jobs a month. New jobs at retail stores gearing up for Christmas sales probably drove this statistic.
In the BBFiles analysis, today's numbers support the theory that the American dollar is no where close to a default and, in fact, is probably approaching a bottom. Lets examine the chain of events that has driven the value of the dollar. Before the recession began the dollar floated between 70 and 75. This is low, but not dangerous and reflected America's large fiscal and trade deficits. When the recession struck, there was a general "flight to safety" (in which investors seek the safest investments) and a lot of investors rose the value of the dollar to about 86 by buying American dollars. Then, over the last several months, investors have gained confidence and slowed their purchases of bonds, thus driving the dollar back down to pre-recession levels. But it also reflects the amount of money that has bee created to fight the recession. Therefore, the value of the dollar should be
DollarValue=(Pre-recession Value)-(Value Lost Due to Increased Money Supply)
When numbers like today are reported, investors realize that the Federal Reserve will begin reducing the money supply, so the (Value Lost Due to Increased Money Supply) will decline, thus raising the value of the dollar. Assuming the dollar is close to a bottom, the Fed can really put the dollar wherever it wants by adjusting how much money goes into the system.
In the BBFiles analysis, today's numbers support the theory that the American dollar is no where close to a default and, in fact, is probably approaching a bottom. Lets examine the chain of events that has driven the value of the dollar. Before the recession began the dollar floated between 70 and 75. This is low, but not dangerous and reflected America's large fiscal and trade deficits. When the recession struck, there was a general "flight to safety" (in which investors seek the safest investments) and a lot of investors rose the value of the dollar to about 86 by buying American dollars. Then, over the last several months, investors have gained confidence and slowed their purchases of bonds, thus driving the dollar back down to pre-recession levels. But it also reflects the amount of money that has bee created to fight the recession. Therefore, the value of the dollar should be
DollarValue=(Pre-recession Value)-(Value Lost Due to Increased Money Supply)
When numbers like today are reported, investors realize that the Federal Reserve will begin reducing the money supply, so the (Value Lost Due to Increased Money Supply) will decline, thus raising the value of the dollar. Assuming the dollar is close to a bottom, the Fed can really put the dollar wherever it wants by adjusting how much money goes into the system.
Thursday, December 3, 2009
Bernanke's Testimony
Bernanke began defending his tenure as Chairman of the Federal Reserve today. As usual he made the predatory Senators look stupid. Case in point: Senator Bunning (R-KY) argued that Bernanke was not qualified to oversee the financial crisis... but he couldn't even make his argument without reading verbatim from his notes, and he made several errors in his speech! Should we really listen to someone who can't even read properly?
Then Senatory Shelby asked Bernanke to explain how the Regional Presidents were chosen... after Bernanke's explanation Shelby replied "Well we understand that Chairman, but that's not the issue here..." Well then why did you ask him to answer the question, Shelby? Our Congressmen need to realize that they are speaking to a National Icon and should treat him with respect!!
Then Senatory Shelby asked Bernanke to explain how the Regional Presidents were chosen... after Bernanke's explanation Shelby replied "Well we understand that Chairman, but that's not the issue here..." Well then why did you ask him to answer the question, Shelby? Our Congressmen need to realize that they are speaking to a National Icon and should treat him with respect!!
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