Posts Tagged ‘Ben Bernanke’

Notes From Underground: Which Spark Will Start the Prairie Fire?

September 27, 2017

In several blog posts over the last eight years I have used the words of Mao to relate to the potential issues that could cause severe disruption to the global financial system. If you listen to the narrative propagated by the mainstream financial media your concerns would revolve around North Korea, the Trump tax and healthcare plans, the FED starting QT (or else citing the Fed’s ridiculous dot plots), concerns about the potential shutdown of the U.S. government, the economic implications of Brexit, etc. The bottom line is that all the forecasters have been wrong for long as Phillip Tetlock revealed in his wonderful book, Superforecasting. The FED has been worshiped as all-knowing fonts of wisdom when nothing they have forecast has proven correct. Yesterday, Fed Chair Janet Yellen admitted that the FED is as confused about the lack of inflation as most of the prognosticators on Wall Street. This confirmed my theory that what the FED peddles IS NOT ROCKET SCIENCE.

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Notes From Underground: Ben Bernanke Channels Karl Marx

June 26, 2017

Set your way back machines to and visit the philosophy of the Young Marx in his famous musings, The Economic and Philosophic Manuscripts of 1844. Read the concerns that Marx raises about the ALIENATION of LABOR. In the book edited by Dirk J.Struik, I am citing pieces from the chapter, “Wages of Labor.”

  1. “Wages are determined through the antagonistic struggle between capitalist and worker.”
  2. “The demand for men necessarily governs the production of men,as of every other commodity. Should supply greatly exceed demand, a section of the workers sinks into beggary or starvation.”
  3. “The worker need not necessarily gain when the capitalist does,but he necessarily loses when the latter loses.”

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Notes From Underground: In Preparation For Things To Come

September 6, 2016

On the Santelli Exchange, me and Rick discussed the very weak ISM non-manufacturing and its impact on the FOMC. The surprise weakness sent PRECIOUS METALS soaring, the DOLLAR lower, BONDS AND EUROPEAN SOVEREIGNS HIGHER and EQUITY MARKETS moderately higher. The FED is under the microscope from so many analysts but the surprise of the day was the OP-ED piece by Professor Larry Summers in the Washington Post. Summers put an academic gloss on the erudite review of Jackson Hole but this sentiment is key: “My second reason for disappointment in Jackson Hole was that Fed Chair Janet Yellen, while very thoughtful and analytic, was too complacent to conclude that even if average interest rates remain lower than in the past, I believe that monetary policy will, under most conditions, be able to respond effectively. THIS STATEMENT MAY RANK WITH FORMER FED CHAIRMAN BEN BERNANKE’S UNFORTUNATE OBSERVATION THAT SUBPRIME PROBLEMS WOULD BE EASILY CONTAINED,” [emphasis mine]. This is a harsh assessment from  a fellow academic, but more importantly it is a stinging criticism of the FED’s forecasting history.

Yra & Rick, Sept. 6, 2016(Click on the image to watch me and Rick discuss weak U.S. data, the Fed and G-20)

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Notes From Underground: Old Friends Sat On A Park Bench Like Bookends (Simon & Garfunkel)

April 10, 2016

I’ve been staring at this image and keep thinking about the three living Fed Chairmen that sat on the stage April 7 and the fourth that was teleported from Washington, D.C. I was thinking about the replies to weak questions posed by the  moderator and better questions from the audience. I thought about the question I would have asked first. I would have asked each Fed Chair what they had thought about the role of GOLD in the post-Bretton Woods global financial system. Ben Bernanke famously opined that he didn’t understand GOLD but seemed very comfortable visualizing a role for BITCOIN. Yellen has never openly stated her concern about the barbarous relic. Back in the 1960s, Alan Greenspan wrote a serious paper for the Ayn Rand society on the important role of GOLD in a global system and more important for the impact of  GOLD for a democratic capitalist world.

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Notes From Underground: Bernanke, Summers and Fischer, OH MY

January 6, 2016

Everybody is talking at me and I can’t hear a word they’re saying, only the echoes of mismanaged policy. The academics are out and about, making the case as to why they are right and markets are WRONG, although Professor Summers gives much more credibility to the wisdom of markets than Bernanke or Fischer. The reason that this is important for traders and investors is that in the past six years, risk pricing has been based on the positive outcome of Fed policy.

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Notes From Underground: The King of Hearts Syndrome Dominates the Markets

November 2, 2015

One of the great movies of the 1960s asks who is more insane: Those in the asylum or those who create wars? The present state of central banking can lead one to ask the same question about the overseers of FIAT CURRENCY and those who make investment decisions based on the policies of those academics so in love with their economic models. As the Bernanke victory tour rolls on, the fallback position of the recent anointed savior of the global financial system poses the counter-factual of, “What if we hadn’t acted by embarking on a massive liquidity injection? Aren’t you all satisfied that the unemployment rate is hovering around the defined level of full-employment?”

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Notes From Underground: The OATS Prove a Better Sale

June 14, 2015

In late April I wrote a blog post titled, “Why Bill Gross Is Right and Wrong.” I noted that Bill Gross’s call on selling German bunds was inherently correct but the French OATS–the French 10-year note, would be the more profitable sale. The yield differential at the time was 23 basis points but with the news out of Europe on Friday, the differential widened to 38 basis points. The area of concern for me is that with Germany maintaining twin surpluses–trade and budget–the ECB QE program would enhance the demand for German assets in a world of diminishing supply. The French budget and current account deficits, as well as a trade deficit, means the underlying fundamentals of the French economy are much weaker than Germany’s.

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Notes From Underground: It’s An Infamnia

May 21, 2015

As we come to the Memorial Day holiday, the markets are still focused on Greece; the Fed’s desire to raise rates (or not); the ECB and its new policy of front loading its bond purchases to deal with the low volume of the summer months; China’s slowing growth; and the regular array of global macro concerns from politics to the continued role of central bank liquidity programs and the continued impact of QE on global asset prices. Tonight, the Bank of Japan will announce its interest rate decision and it seems that Governor Kuroda will keep the present policy in place: NO RATE CHANGE AND NO INCREASE IN ASSET PURCHASES.

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Notes From Underground: Is There Something Bigger Bothering the Bond Markets?

May 13, 2015

UPDATE: Congress has added a new mandate to the Fed’s responsibilities. Every Sunday during the NFL season the FED will have control of the official balls for all NFL games because the central bank has proved it will never let anything deflate.

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Notes From Underground: Let’s Make Sense of Bernanke Making Cents

May 4, 2015

Last Thursday, former Fed Chairman ” surprised” the investing public and announced he was adding a second quiver to his “bagged trophies” and taking on a consultancy with PIMCO to complement his other consultancy with Citadel. Mr. Bernanke claims he can work for investment funds because it does not conflict with his previous role as the key supervisor of too big to fail banks. The former chairman is an active blogger but I assume his blogging will cease when he becomes active with his new employers. Yet on April 30, Ben wrote a post on the WSJ’s Editorial Page Watch. The BLOG was criticizing the WSJ for its editorial, “The Slow-Growth Fed.” In the BLOG Bernanke takes the WSJ editorial board to task for criticizing the Bernanke Fed for overdoing QE and its failure to stimulate GDP. Bernanke takes cover by arguing that the WSJ has been wrong in its forecasting because it has argued on its op-ed pages that the FED’s QE policies were going to cause a “… breakout in inflation and a collapse in the dollar since 2006….”

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