A Cautious Bernanke Finally Gets It Right

The stock market often swings wildly on insignificant news, but yesterday Wall Street appears finally to have taken some real news in stride, flatlining in response to one of the most delicately and judiciously worded speeches we’ve heard from Mr. Bernanke since he took office. The Fed chairman was addressing perhaps the most crucial economic topic of them all — namely, how the Fed plans to wean the financial system off easy credit in the wake of the most spectacular monetary blowout in U.S. history.  Turns out, he does have a plan. And although we have rarely given Mr. Bernanke a passing grade for anything he has said or done, this time he gets an ‘A’ for handling a tough topic without roiling the markets even slightly. Given the choices available, the plan is probably the best we could have hoped for.

Bernanke

Very simply, the Fed intends to replace the federal-funds rate as its main policy tool, relying instead on adjustments in the interest the Fed pays to banks on excess reserves. Here’s how the Wall Street Journal explained it:  “Raising the excess-reserves rate would give banks an incentive to park more funds at the Fed instead of lending them out to companies or households. In this way, the Fed would be able to restrain an economy that risks overheating and sparking inflation. Moving this rate would pull up other short-term rates, including the federal-funds rate, long the Fed’s main tool for steering the economy.”

Deflation Bonus

Excess reserves currently earn 0.25%, but in today’s deflationary environment, with nominal rates at historical lows,  it’s not  hard to imagine banks turning into hard-core “savers” if the incentive to park funds risklessly at the Fed were raised even a skoach. What’s more, the process makes tightening sound more like a reward than a punishment. Instead of raising interest rates to throttle credit, the Fed would be raising them indirectly by giving the banks a greater incentive not to lend. The very word “tightening” always scares hell out of investors, but yesterday’s subdued reaction to Mr. Bernanke’s speech suggests he has found a way to say what needs to be said without causing a stampede. Although we don’t expect the Fed to attempt tightening in any way, shape or form for the foreseeable future, it’s mildly comforting to know that there may be way to at least talk about it without bringing the whole house of cards tumbling down.

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  • Rick Ackerman February 15, 2010, 1:09 am

    Posted by Rick for Brian Benton:

    One of your subscribers here … I had a different take than you on Bernanke and the Fed. Here are my comments, which I will probably wrap up into another Financial Sense article that follows the piece I did last July on the “Fed Exit Strategy”. http://financialsense.com/fsu/editorials/2009/0729a.html

    I believe that most of the financial media do not have their eye on the ball. Monetary policy targeting the federal funds rate (and discount rate) is impotent now. Massive QE made sure of that. Any talk of hiking the target for federal funds is empty speak because it will not matter to the current state of the banking system.

    The Fed is powerless to affect the fed funds rate by conventional monetary policy. Banks do not need reserves. They are flush with them.

    The discount rate does not matter either at this juncture. Banks do not need reserves. They are flush with them. Besides, nobody is using the discount window now. The Primary credit facility has a balance of less than $15 billion.

    Bernanke knows that monetary policy targeting interest rates at this time is impotent. But by speaking out about how the Fed is going to get tough with interest rates, he can fool most into thinking that the Fed is really tackling the tough problems and is executing a real exit strategy. But he is not. He is buying time to stretch out these problems as long as he can … and so he can figure out the best option spread out over the longest time period possible.

    Monetary policy targeting the federal funds and discount rates can only be effective again once the Fed gets its balance sheet back to near pre-crisis levels and interest on reserves is rescinded. All of these supposed “tools” for exit (these are not new) are simply delay tactics. They lock bank reserves into place (sterilize them) (interest on reserves, term deposits) or temporarily drain the balance sheet (reverse repos) only to re-fill the balance sheet once the reverse repos mature (< 1 month). As for the interest rate paid on excess reserves, this obviates the federal funds rate while it is in place. But it still suffers from the same problems I describe above. And it is not an exit strategy because it does not drain reserves (drain the Fed balance sheet). It only serves to discourage bank lending/investment (lock them up or sterilize them) ... which is not a problem right now because the Fed is only paying 0.25% interest on reserves and the banking system still has over $1 trillion in excess reserves. If the banks are not lending these reserves now, why would the Fed pay them even more (increase in interest on reserves) to still not lend these reserves? The Fed has never been known to be proactive ... just reactive. When the banks do begin lending/investing these reserves, then you will see the Fed move ... and then the banks will reassess what to do (lend/invest or hold reserves and get free interest). The federal funds rate and discount rate are not important now. Increasing the interest paid on excess reserves does not drain reserves. It is a stall tactic, not an exit strategy. The real operations of the Fed, the size of the balance sheet, and excess reserve levels are what is important. That will tell you what is really going on. Until the Fed begins a real move to sell a sizeable chunk of the assets on its balance sheet (needs to sell about $1 trillion for a complete exit from this point), everything else is just a distraction (smoke and mirrors). This is when the rubber is going to meet the road. Regards, Brian

  • Andy February 12, 2010, 2:39 pm

    Apparently a lot of inflationists are not paying any attention at all to what is happening in the REAL economy. Consumers are cutting back on consumption and trying desperately to pay down debt. They are running scared. Reguardless of what the Fed and Washington does the rest of the country thinks we are going to hell in a handbasket. Or a tub full of invisible money. All the people I know have stopped spening on anything other than what they need to get by.

    I’m in Rick’s camp. Inflation is coming, but not for at least another 5 years or so. In the meantime the only solution to an economy that has borrowed beyond its limit to support said borrowing is deflation. Massive deflation. First in housing, then in the stock market, followed by commodities, including gold and silver, then in just about everything else as it all gets sold to pay off debts. And when the defaults really get going its going to get a lot worse.

    I just read a description of the problem from another site via Kitco. I quote:

    “Let’s be totally blunt here. The fiscal policies/ bailouts/ stimulus plans of the world’s central bankers have fixed nothing. Zero. Nada. Nothing. Why? Because shoveling garbage debt from the private sector onto the public’s balance sheet DOESN’T pay off the debt or fix the debt problem.

    It’s really quite simple. I’m not sure why the expert economists and pundits don’t understand this. Using this logic (shift debt around, but don’t pay it off or default on it) you could easily argue that the best way to deal with moldy cheese in the refrigerator is to hide it under the kitchen sink. Sure the fridge looks better, but pretty soon the entire kitchen stinks. And the cheese keeps getting moldier. ”

    http://www.kitco.com/ind/Summers/feb102010.html

    So how does one dispose of moldy cheese?

    Andy

  • Occdude February 12, 2010, 8:40 am

    Andy,

    They have done it, thats how. Who of these mighty deflationist in this room right now would deny that we wouldn’t all be wearing barrels and using messenger pigeons instead of computers if Bernanke and Co. hadn’t stopped deflation cold? He can and if allowed, most definitely will prod inflation back again, the system needs it, the system wants it and Bernanke is gonna give it to them and if they don’t, then I think when the “fit hits the shan” they’ll draft him and make him President of the United States, because the pain is too much.

    All primitive organisms “Boobus Americanus” included, avoid pain and pursue pleasure. There aint nothing but pain with unchecked deflation, so people will get what they want which is something that resembles the status quo, but in fact is the water slowly starting to heat up so you dont jump out of the pot.

  • Gee Jay February 12, 2010, 12:16 am

    Several of Mises boys think the #1 problem facing the economy are those pesky excess reserves sitting at the fed. They are said to be an amount in excess of all dollars in circulation presently, if they go mainstream then insta-inflate-death spiral and all that. One would think fed intelligence would prevent this blow out so what if all this non-lending is by design. We have zero way of knowing exactly how much interest the Bernanke Fed has been paying banksters to stay put as he can pay them any amount needed for compliance and likely is, and the rate differential logically dictates the huge bonus pay outs we’ve seen.

  • jjay February 11, 2010, 11:39 pm

    Since the Federal Government is going to wind up holding the bag for all the underwater mortgages, they may issue a new debt instrument backed up by all the real estate they will more or less own, single family homes and commercial real estate. At least it will be debt backed by something tangible this time.
    Fannie, Freddie, Ginny, FHA all get rolled into one big new Federal Agency.
    They’ve got to do something, and their SOP is to grow, grow, grow.

  • Other Paul February 11, 2010, 11:08 pm

    Uh-oh, Rick and others have unleashed the inflation-deflation debate again. And I’m drawn to the discussion like a moth to a WWII anti-aircraft searchlight.

    To pick up on Rick’s comment to Myron–

    It would be great to believe that some of those indebted, 80MM “semi-homeowners” could buy an ounce of gold or a roll of silver eagles today. When the hyperinflation strikes they sell the bullion to pay off the mortgage in the afternoon, maybe have enough leftover cash to buy movie tickets, popcorn and sodas for the whole family that evening, and comfortably sleep at their full-paid for house that night.

  • Tim February 11, 2010, 10:22 pm

    Being a bit thick and all that, but I still can;t see how this is any reassurance atall.

    Raising the discount rate is a bit meaningless when the banks are currently rolling in cash already. Raising the rate paid on reserves is also flawed because banks have no desire to make loans in this climate anyway, it would be better for the rate to be zero since its presumably the tax payer that gets the bill for interest. BUT the real flaw surely is that by holding onto the money, the real economy is being strangled and therefore the debts already made are going to go even more bad. Given the choice between slow drawn out death from debt default and inflation, I would have though the better bet for the banks was inflation.

    Given the problem for the economy is not a cyclical one and therefore is not simply going to nicely go away with time of its own accord, I can;t see anyway this is going to end well without inflation, not that inflation is a great ending. How is Ben going to get his inflation with these policies? Still stuck!

  • Myron February 11, 2010, 9:15 pm

    Andy said:

    “All those reserves are meaningless if they are not loaned out. And they won’t be. Not for a very long time. So where does the inflation come from?”

    The answer Andy is that the inflation has already happened, beginning in 1913 but really getting underway at end of WWII and continuing up to the present time. There is no need for further “printing of money”. The massive US gov indebtedness, funded by never-ending bond issuances in a mad attempt to maintain the status quo is clear evidence of this. Even so, Obama and co. just added what? Another 1.9 trillion to the legal government debt limit, pushing it up to around 14 trillion or so? Are you or Rick or any other deflationist going to pretend that this won’t be monetized? Sure, the cost of some things has gone down and others have risen, but those are sideshows.

    I re-iterate: Massive inflation has already taken place, and we are just now starting to feel the consequences, regardless of further (inevitable) credit expansions Gold will rise, even if demand remains more or less static, if for no other reason than because supply is falling relatively.

    &&&&&&

    To reiterate this for, oh, the zillionth time, the point is not whether all of that debt will be monetized — it will be, of course — but rather, whether this will occur in time to save 80 million homeowners who are, or who will be, drowning in mortgage debt. I shouldn’t have to point out that when hyperinflation comes, it will destroy the rentiers who supposedly control our economic lives.

    In the event of a hyperinflation, who will own the real estate that collateralized most of the debt that now exists? RA

  • davepowers February 11, 2010, 7:50 pm

    Paying interest on ‘excess reserves’ was the key to Bernanke’s statement during the period when he was first advocating that to the effect that paying interest would allow the Fed to infinitely expand its balance sheet. By which he meant infinitely expand the asset side of its balance sheet.

    Compare the Fed balance sheet before it began buying MBS and GSE debt with the current one. The asset side of the balance sheet expanded by over a trillion as it absorbed those ‘assets.’ Where did the Fed get the money? The liability side of the balance sheet expanded by almost a trillion due to the interest payment program, which sucked in excess bank reserves. Essentially, the Fed borrowed from the banks the reserves used to buy the MBS/GSE debt.

    Setting aside what might have been happening off balance sheet (always a big consideration), this ‘money flow’ meant that the Fed’s oft described injection of liquidity/printing money was greatly exaggerated.

    In essence, money flowed into coffers of whoever was selling the MBS/GSE debt (the banks?) into the banks who deposited the money back at the Fed.

    By increasing the amount of interest paid, the Fed has the option to expand its MBS/GSE/Treasury purchase program.

    The added wrinkle of the new program, namely the creation of certificate of deposit like limits on banks’ ability to withdraw the ‘excess reserves’ also protects the Fed. One risk the Fed runs (to itself) is that by borrowing short (currently the Banks can withdraw the excess reserves on demand) buy lending long (buying longer term MBS/GSE debt).

  • Steve February 11, 2010, 7:45 pm

    Got what you are were saying Rick. Listened to (see; actually read) what your posters wrote. Alexander Hamilton’s argument was/is that the only way to control the People is by debt. It has taken a long time in infringement of rights to get to this point in time where we no longer talk about the reasons in this nation for debt control, and what the target of that control is. Please note that my belief is; that debt control by congress is not getting out of debt, but; insuring that the People can never get out of debt. One cannot get to congress without corruption from the Federal Reserve, and cannot stay in congress without said corruption.

    Bernanke – worries only about civl disorder, and how to keep that contained. As far as enslaving you, destroying your children – Bernanke does not care. The only other thing Bernanke worries about is keeping the People in Debt. Beyond that; see “The Prince” grow, see “The Prince” work. Who was the author of that book so old in the hands of the federal reserve and the few bankers ?

    I believe People are concerned about how they are going to control more debt instruments, which is saying that I want to control more people than control me. I want the debt tally against me to be less than that guy over there. If I am smarter, can understand Bernanke better, I can be on top of the heap. The ‘heap’ from my perspective is only a scale of slavery that cannot be relieved by extinguishment, only discharge of slavery level to another level of slavery to debt, and the grantee of that debt. One cannot change what the acts are, one can only ignore reality, change the names, and hope the con can go on. Or one can CHANGE !

    Once People were Free Sovereigns in Common in a Nation of Liberty. We had allodial titles to Our Land – no tyranny could tax us from the Land we inherited by Right. Hamilton’s theory has won, and now we the slaves only talk about what is being done in an anti-constitutional abuse of power that was once tried as High Treason in the Trial of Thomas Earl of Strafford. The acts of Bernanke, discussed in regard to Bernanke, are High Treason res Judicata, stare Decisis. Yet all we talk about is how to get more of Hamilton debt/slavery via private contract exterior of the Constitution.

    The discussion should be, in my belief, the Trial of Thomas, Earl of Strafford, Overlord of Ireland, for embasement of Coin with Brass, and taking the People’s money to give great Loans to the said Earls’ benefit. Sure sounds like forcing YOU to make a Loan to the Banks can I spell “Bailout”.

    In this case the ‘reasons’ for debt control are insuring that the people are in debt, and remain in debt. Slavery has many forms, and involuntary slavery violates the 13th amendment on the several States. The congress can still slave in the district of Columbia, Article I, sec. 8, cls. 17, and within federal territory Article IV, sec. 3, cls. 2. One can examine the Buck Act and make determinations. Additionally, one can examine the interstate compacts done by government, and find additional federal power over the several States rights at Article of Amendment IX, & X, by interstate agreements which are the purview of the federal government under Commerce Article I, sec. 8, cls. 3.

    I appreciate all of the great thoughts about the Federal Reserve in this discussion. Bringing all of the great minds together on the reasons for the Fed. The reason for the current problems with debt needs to be addressed against the backdrop of Article I, sec. 1o, cls. 1; No State Shall. . .make any Thing but gold and silver Coin a Tender in Payment of Debts. The capitalization of the words is specific to the Original Text. The context is for the several States, and then there is federal territory, and federal citizenship, 14th amendment which is territorial when a voluntary citizen slave of the congress does business as a corporate enfranchisee subject to excise taxation – which is exclusive to the corporate world.

    Why should I be expounding on the Constitution within this talk of the Fed ? Slavery is voluntary by taking on debt. The Debtor is the Master. People since, and before Hamilton have known that the only way to take Freedom without blood is by debt. Bernanke and the congress are not going to do anything to relieve the debt from the backs of the People. For the constitutional buff I continue.

    Anyone who voluntarily uses Federal Reserve Notes is a voluntary slave of the congress under the Banking Act of 1913 “General and Paramount Lien. . .for use. . .”, giving up Freedom that is secured at Article IV, sec. 2 of the Constitution. If you borrow from me you are my indenture as Grantor, you remain grantee corporately enfranchised.

    CHANGE –
    simply get Legal Tender silver specie Coin Dollars from the Treasury and conduct your Trade by Extinguishment as Free Men under Article IV, and Article I, sec. 10, cls. 1 of the Constitution. BUT, a corporate enfranchisee in debt under the Banking Act is unable to own silver specie Coin Dollars, that reserved to a man out of debt by extinguishment, the silver specie Coin must be valued in a tally of slavery called federal reserve notes by the Internal Excise Tax, because the enfranchisee can only hold value for the master/creator congress.

    Hamilton was brilliant, and those who have followed have played upon the greed inherent in me. I want that, but; I cannot afford it. I want more than him. I want more than you.

    Once we could have refused to use Federal Reserve Notes, MacLeod v. Hoover, a 1925 case “Federal Reserve Notes are good for money, unless specially objected to”.

    The only CHANGE will not be accepted because I want more than you, and I want more than him, and I want to work the floor to margin away more of that. Bernanke et.al. are engaged in what history calls High Treason by embasement of gold Coin with brass, and by forcing Loans to corrupt corporations for governmental gain personally to the pockets of the few. The Earl of Strafford was prosecuted by the Legislative Branch which was We the People. Today the Legislative, Executive, and Judicial Branches are Hamiltonian abuse in progressive enfranchisement to slavery by a debt theory that has absolutely enslaved.

    All of the talk in the world about Bernanke is not going to solve the problems. The Federal Reserve will keep the People in debt making them corporate enfranchisees to the Banking Act of 1913 General and Paramount Lien. Some of High Intelligence and keen understanding will be the task masters over their brothers – that is fact. Yet look at the real world, the task masters are becoming fewer and fewer, the wealth in the hands of less and less people.

    Bernanke is a wisp in the wind of progressive slavery that will not be discussed.

    What was it that Aaron Burr fought for: the lady of freedom, the sin of forced debts, the first Banker who saw debt as power and control over a newly Free People.

  • Rich February 11, 2010, 6:51 pm

    Greenspan also appeared on Meet The Press recently with Paulson.

    What, we worry?…

  • Rich February 11, 2010, 6:48 pm

    In Liar’s Poker, Michael Lewis describes the gambling lying culture at Salomon, later Citicorp, on Wall Street where he worked.

    Wouldn’t it be funny if Princeton Academic BB is not lying and really means to withdraw liquidity and raise real rates above the 7.25% where they are now (-7.3% GDP trailing contraction plus .95% T Bills), in a belated attempt to prevent the financial destruction of the western world?

    http://www.bloomberg.com/apps/news?pid=20670001&sid=aSn2_iDKbl1g

    For what it’s worth, the nominal yield of the 90 day T Bill, currently at .95%, having broken out and up on Feb 1st, is currently targeting 2.69%, hardly inflationary.

    http://stockcharts.com/charts/gallery.html?$IRX

    That might illuminate recent market trends, still being digested by johnny come latelies.

    It certainly seems like a full court press by the media masters with Buffett, Bernanke, Geithner, Paulson, Romer and Summers all in.

    (Hey Schwarzenegger and Obama, how’s that WEB advice working out forya?)

    Maybe that’s why the world is standing still

    Cheers All*Rich

  • FranSix February 11, 2010, 4:52 pm

    Bernanke was quoted in Bloomberg as saying that discount rates could foreseeably rise in the not too distant future.
    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a40GStIgz9Rc

    Going by the $IRX chart, what we are facing is yet another decline in rates, and this time lower than the set rate of .25%. I would say the next step in the coming months is negative interest rate policy.

    http://stockcharts.com/h-sc/ui?s=$IRX&p=M&b=5&g=0&id=p45163948136&a=191116053&listNum=2&listNum=2

    Funny thing about the long term log chart, that gold in the same space appears to be rising very steadily and evenly.

  • rjvanro February 11, 2010, 4:42 pm

    I agree with the posters above….Rick….were you smoking something last night?

    &&&&&

    Not to worry, RJ. Those who actually believe the Fed can “save” the financial system are still classified on my imbeciles scale somewhere below tapeworms. The point I was trying to make is that it was most unusual for the stock market to have failed to react to news of a major policy shift by the Fed. RA

  • coolsaint February 11, 2010, 4:27 pm

    WHEW DUH Where did you wake up this am ? If you believe Big Ben…………

  • Mark Loeffler February 11, 2010, 4:00 pm

    I disagree with the Feds response. As it stands tightening of the banks rate at which they can borrow money to lend will not have the desired affect that they have hoped for since the banks are currently being extra careful already with how there money is being used. At best it will stop businesses from accessing cash flow, send millions of home owners int foreclosure, and eventually crash the system completely.

    At this point it doesn’t matter any longer what will be done with the Fed or treasury funds since none of it will ever be repaid anyway. The fed (criminals) are buying their time and hoping they will survive this but it is unlikely that the current Fed will be with us much longer, one way or the other.

  • Andy February 11, 2010, 3:13 pm

    Question to Occdude:

    In a credit based economy if most people or businesses are unwilling or unable to borrow, where does the inflation come from? Short of Physical money printing, Which the Fed does not control.

    All those reserves are meaningless if they are not loaned out. And they won’t be. Not for a very long time. So where does the inflation come from?

    Andy

  • Alain February 11, 2010, 2:55 pm

    “What you say was flatlining was not the pulse of the market but the EEG” -> lol

    How will the Fed get rid of all that non-performing paper on it’s balance sheet? It’s one thing to contain monetary growth, but where’s the incentive for the banks not to do it all over again? In an indirect way, Americans are slaves of the Fed and the Rothschilds of the world consolidated their power grip a little more, once again. The end doesn’t bode well fo rthe rest of us.

    AL

  • Edward0 February 11, 2010, 12:02 pm
  • Senor Cuidado February 11, 2010, 10:32 am

    At this late date, I have simply had it with the Fed, and all of the Fed’s bells & whistles, such as these posturing speeches by the Chairman, which mean very little in the big picture. It’s a grotesque charade. An unfunny witch doctor ceremony.

    1. We did the Industrial Revolution thingy without the damn Fed.

    2. The Fed is the biggest rent seeker on the planet.

    3. The Fed is a (proudly) non-transparent quasi government entity. That is flatly absurd and totally un-American.

    4. The Fed caused the Great Depression and they are causing GDII.

    I could go on with 96 more bullet points… but you get the idea.

    There was recorded in the annals of history a very nasty, but short-lived, economic depression in America right after the WWI ended (1920). That particular depression is rarely analyzed or discussed by economists because it involved no “modern” government initiatives and programs (interference). And, because the government didn’t respond with “stimulus”, most all of the non-performing deadwood businesses were flushed out, and the economy began growing again quickly. That is real capitalism.

    This modern, mature Federal Reserve is totally opposed to real capitalism. The Fed is a crony capitalist’s dream come true, where ill gotten profits are privatized and the losses are nationalized.

    To add insult to injury this last Fed Chairman has been wrong on all of his calls. His record just stinks. And the last straw is Bernanke’s Grand Unified Theory of Japan Syndrome Avoidance, which is, of course, ironically leading us down the very same economic road as Japan.

  • Dusty February 11, 2010, 8:32 am

    The banks get free $$ what is so smart about that ?

    Nigel,
    It makes a lot of sense. The Federal Reserve’s primary purpose is to take care of the banks, at the expense of the taxpayer. The Federal Reserve must ensure the banks are fat and healthy and is why the Federal Reserve was created in the first place. The Fed is a conduit from the gov’t coffers (taxpayer’s money) to the Wall St. banks. The Fed has never ever rewarded the taxpayers at the expense of the banks.

    The Fed is the primary cause of prolonged inflation. The Fed will print more money when the economy contracts and when the economy expands, it prints more money to keep it expanding when it should be decreasing the money supply. I suspect this is why the gov’t no longer releases data on the M3 money supply because this can be used to calculate the real inflation, and not the made up inflation figures put out by the gov’t.

    Dusty

  • Occdude February 11, 2010, 7:41 am

    What you say was flatlining was not the pulse of the market but the EEG. If you’re smart enough to figure out the implications, whats the diff? We could be talking about how many angels can dance on the head of a pin for all the likelyhood of this being ennacted in the near future. This is just window dressing for all those pesky inflationist out there who are mumbling and grumbling about frivolous CPI spikes. Yet another example of breaking something and then using bubble gum to put it back together. On one hand you give with yield and on the other you take from liquidity and thats IF and WHEN you start this mechanism. What will the economy do? Well crash of course, because the net effect will be that liquidity is drained as the beer goggles come off, while the banksters ride off into the sunset on money made from ether.

    So mixed emmotions on this brainstorm of Bernankes. The banksters relize they aren’t going to make a killing just a very good living leveraging up and getting a risk free yield, but the overall economy is going to absolutely tank because the underlying problems of too much debt are not going away but are magically being converted from deflation to inflation, yes, I said it here and now, Bernanke is a genius and he will figure out a way to reflate. Bernankes money bombs are going to come from some very ingenious aircraft, but he is hell bent on taking us from this deflationary hell to an inflationary one, which means we’ll probably get an equal dose of both episodically.

  • Dr Rocket February 11, 2010, 7:34 am

    Maybe the market doesn’t yet realize he meant tightening afterall.

  • Edward0 February 11, 2010, 5:56 am
  • Brian February 11, 2010, 5:23 am

    More reasons for banks not to lend. What is so smart about that? I give him the same grade I always give him: F.

  • Terry S February 11, 2010, 5:18 am

    Really! When I go to bed at night, all I worry about is the US economy overheating… we should be so lucky.

  • Nigel February 11, 2010, 4:18 am

    The banks get free $$ what is so smart about that ?