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VodkaPundit

The Invisible Bitch-Slap

March 27th, 2013 - 10:13 am

I wish I were kidding, but I’m not — that’s ZIRP and Operation Twist. Cheap borrowing is how our federal government has managed to operate at all these last five or six years, and it’s how the Fed has tried to juice the economy in the private sector. Keep housing, commodities, and equities expensive, but keep borrowing cheap. The solution to a giant debt bubble is another giant debt bubble.

We tried something similar back in the Great Depression, when every Smart Mind in the Countryâ„¢ was utterly convinced that the cure for spreading poverty was to make everything more expensive. And again I wish I were kidding, but I’m not — that’s why FDR allowed labor unions to run wild, and why he had perfectly good food and farmland destroyed. The result: what should have been a temporary dislocation of a stock-market crash was turned into a lost decade of bread lines, needless labor strikes, dust bowls, and general human suffering.

Bernanke earned his chops as a so-called expert on the Great Depression. But here he is, repeating nearly the very same mistakes as FDR. And those younger & poorer folks who are caught in the squeeze of high prices and unobtainable debt? Bernanke’s policies are explicitly rigged against them, because they don’t (and now probably can’t) ever own enough assets to benefit from the Fed’s long-promised wealth effects. And Obama? He already got their low-information votes — twice — so he is unmoved by seeing them immolated to the Gods of Goldman-Sachs.

It makes amazing economic sense.

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Top Rated Comments   
Invest in companies that produce lampposts and rope. There will be a shortage. My boss was not a happy camper when I let that slip at work.
1 year ago
1 year ago Link To Comment
This article recounts what I've always called the Democratic version of the trickle-down economics. They tax the hell out of everyone, then feed the money to their cronies, who in turn employ union members, who spend the money among the proles, and a trickle comes out for the "common man." You don't get into the union without knowing someone, and it's very hard to become a crony, so most of the rest of you will have to be equally poor so that those with power have enough people to be magnanimous towards. If you're nice to them they'll give you back a little bit of your money!

As for the new censorship on PJM, when it won't let you use words that are in the title of the article, something's rotten in Denmark, or here, or wherever...
1 year ago
1 year ago Link To Comment
I'm confused, dizzy, and disoriented, and that's without my daily ration of bourbon:

I thought the "Light Bearer/Lord and Savior" was the "peoples' president" who was going to put the evil bankers and other capitalists in their place and transform America into the fairest place on Earth or something. Why is it working out exactly the opposite? Why has banker wealth not been redistributed to us pee-ons as promised?

Could it be that The Smartest President Ever is indeed the monumental fraud I said he was back in 2008?
1 year ago
1 year ago Link To Comment
All Comments   (50)
All Comments   (50)
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Thank you for pointing out the obvious, that most of the deficit Obama has been burying us under has gone to trying to re-inflate the real estate bubble, along with paying off cronies, i.e. GE, and snipe hunting successful "alternate energy" winners. Over six trillion in debt to accomplish absolutely nothing meaningful, other than paying off his supporters, which is only meaningful to the left.
1 year ago
1 year ago Link To Comment
Back in 1939, after 6 years of the New Deal ( which also included the Recession of 1937-38 ), Henry Morganthau, Franklin D. Roosevelt's Secretary of the Treasury, informed the House Ways and Means Committee that "after 8 years of this Administrationwe have just as much unemployment as when we started...And enormous debt to boot!" Recognizing this, what does the American public believe awaits us at the end of 8 years of the present Administration? Another World War to relieve it? Let's hope not.
1 year ago
1 year ago Link To Comment
Something that is completely overlooked by Obama and other liberals such as the Democratic party is that income disparity (e.g., having rich paople, poor people and middle class people) is essential to a work capitalistic society. If there are rich people, it will make those who are poor many cases motivated to better their positions in life. When there is no income disparity or when there is a robust welfare program, it robs the poor of any incentive to improve upon their position and they become lazy. I hesitate to write this because it seems so self evident.
1 year ago
1 year ago Link To Comment
How much of this is people who simply aren't bothering to get married?
1 year ago
1 year ago Link To Comment
Not bothering? Well, maybe the menfolks. They are getting the sex they need and keeping their money for themselves. The womenfolks are finding the process very difficult, because the men are no longer interested, and the many of the women are no longer so appealing.
1 year ago
1 year ago Link To Comment
The men have also caught on to the reality that modern "family" "law" makes marriage a categorically insane proposition for them.
1 year ago
1 year ago Link To Comment
Longtime fan Steve, couple issues with this post though.

First off, monetary stimulus doesn't make people feel richer, it makes the future expectation of the value of cash smaller. That means it makes more sense to buy things now, so people spend more.

Second, while it's true Bernanke is buying MBS to push down mortgage rates, this is a relatively small effect relative to what the government was already doing, and both are dwarfed by the colossal new pile of loan restrictions. The bubble cannot be re-inflated because investors will not get fooled into buying mispriced MBS again.

The real problem right now is that money is too tight (nominal interest rates are low because the environment is deflationary from the perspective of many economic actors; that's why companies are hoarding cash -- don't be fooled by the patchwork of guesses called CPI). How do we know that? Because the bond markets are still rallying and the stock market has developed a historically unusual correlation to monetary policy -- stocks are screaming "LOOSER MONEY MEANS GROWTH!!" right now to anyone who's listening.

Why is this happening? Because the Fed is still fighting the last war, inflation. They haven't changed the target. That's why despite all the QEs and Operation Twists, every long-term debt instrument still assumes low inflation as far as the eye can see.

The 2% inflation targeting policy no longer works. We need something like NGDP level targeting, which targets a real number rather than trying to boil down a multivariate, multidimensional largely subjective concept into one number, calling the result "inflation," and basing monetary policy on it, and naturally ameliorates bubbles and busts both.

/end MM rant
1 year ago
1 year ago Link To Comment
The idea that we're under 2% inflation is another lie. (Figures don't lie, but liars figure a lot). At least for those at $50K a year or less, who spend a majority of their income on necessities- food, fuel, heating, rent, inflation is already well over 2%.
1 year ago
1 year ago Link To Comment
Stephen, back in Jan 2009, I was earning 5.0% interest on my online savings. I called it my vacation account. It has gradually dropped thanks to the Bernanke, so now I earn 0.1%. I call it my 12-pack account. When QE ends, the sharp correction will be devestating on a scale that I cannot fathom.
1 year ago
1 year ago Link To Comment
Invest in companies that produce lampposts and rope. There will be a shortage. My boss was not a happy camper when I let that slip at work.
1 year ago
1 year ago Link To Comment
I'm emigrating later this year. Won't say where I'm going at this point, except to say that it's definite.

Suffice it to say that I know why the politicians refuse to allow industrial hemp to be grown on US soil, even though its THC content is too low to be noticeable. The idea of hemp brings up too many associations in the minds of those who have so much to fear from long overdue and well deserved public retribution.
1 year ago
1 year ago Link To Comment
This article recounts what I've always called the Democratic version of the trickle-down economics. They tax the hell out of everyone, then feed the money to their cronies, who in turn employ union members, who spend the money among the proles, and a trickle comes out for the "common man." You don't get into the union without knowing someone, and it's very hard to become a crony, so most of the rest of you will have to be equally poor so that those with power have enough people to be magnanimous towards. If you're nice to them they'll give you back a little bit of your money!

As for the new censorship on PJM, when it won't let you use words that are in the title of the article, something's rotten in Denmark, or here, or wherever...
1 year ago
1 year ago Link To Comment
They fixed the Dick Morris 'problem'. I think.
I hate censorship. Why not just let us post? I can't recall anything very offensive when they used the moderator edit.
PJM conservative? Hardly!
1 year ago
1 year ago Link To Comment
What bothers me is that I'm on a cell-phone dialup connection and it takes ten minutes for the page to load, if it does at all. Pathetic.
1 year ago
1 year ago Link To Comment
Why all this babbling about idiocy. Plan your places of exile.
1 year ago
1 year ago Link To Comment
I don't consider it exile. I consider it gracing a more deserving country with my presence.
1 year ago
1 year ago Link To Comment
I'm confused, dizzy, and disoriented, and that's without my daily ration of bourbon:

I thought the "Light Bearer/Lord and Savior" was the "peoples' president" who was going to put the evil bankers and other capitalists in their place and transform America into the fairest place on Earth or something. Why is it working out exactly the opposite? Why has banker wealth not been redistributed to us pee-ons as promised?

Could it be that The Smartest President Ever is indeed the monumental fraud I said he was back in 2008?
1 year ago
1 year ago Link To Comment
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