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religion, ideology, partisanship are delusional
10:48 PM on 08/26/2011
Bernanke is easy to interpret, unlike his predecessor the inscrutable Greenspan.
10:25 PM on 08/26/2011
It is all blather, and besides, the insiders got the tip off days ago.
10:21 PM on 08/26/2011
When the FED was created, it was given a mandate to do two things- control inflation and keep unemployment low.  The Greenspans and others have been killing the nonexistent inflation monster for years. In current conditions, it is impossible for demand to outstrip supply, so inflation is impossible.
So this leaves  fighting unemployment. The only things that will work are a massive infrastructure and jobs program ( yes, taxing and spending!), and a massive debt restructure.
Personal and real corporate taxes are at 50-year lows, and how is that working out?
I am so tired of the Free Market is God people who can't see that there God is a FAIL!
religion, ideology, partisanship are delusional
11:03 PM on 08/26/2011
Spot on, good analysis. But having bought a house in early '80s when inflation was 10% and I took out a 14% mortgage, I can understand why the US became inflation hawks. Reagan had to kill the economy to stop inflation, he had 10.8% unemployment in 82, and higher unemployment than now for 18 months. People wore "WIN" buttons for "Whip Inflation Now".

Inflation can work out well for workers, bad for the rich, but it's scary and unnerving to live under. I can understand why the Fed became paranoid.
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09:30 AM on 08/27/2011
Inflation works well for debtors, which is what you are with a mortgage, because you are paying back in dollars that are worth less than the dollars you borrowed.

It also works well for the US govt. In fact, inflation is frankly called a form of default by a few economists (not by politicians.)

White and blue collar workers are the losers, because your union contracts or pay raises are always a year or two behind, so you feel you are always playing catchup.

Inflation is also called a hidden tax because it reduces the value of US bonds (which most most of us own through retirement and mutual funds) and takes that money out of our incomes.
Freedom Lives
Do you wonder, watch, or make it happen?
10:14 PM on 08/26/2011
Bernanke has already implemented more FED monetary policy.

Stealth QE3 was effectively introduced when Bernanke declared that interest rates would essentially be at zero into at least mid 2013.
Truth is stranger than fiction
07:33 PM on 08/27/2011
Excellent point.
09:45 PM on 08/26/2011
I thought all these fat cats were Ayn Rand fans; survival of the fittest types who believe in the magical powers of greed-driven self-healing systems.

Now they are crying that "somebody should do something (but not me)".

The so-called economic "system" has fallen and it can't get up. But let's keep using euphemisms and code phrases like, "pull a rabbit out of the policy hat" and "he differentiates between the cyclical and structural/secular role of monetary policy", and let's observe that "the Fed is less effective when it comes to the latter role".

You can't spend years telling us your laissez-faire economy is an unsinkable ship, and then start flailing and pointing fingers when it turns out to be the Titanic.
Freedom Lives
Do you wonder, watch, or make it happen?
10:12 PM on 08/26/2011
It is NOT the economic system which has "fallen".

It is the heavy load of taxation and government interference in sectors such as housing and massive entitlement and transfer payment programs which have BURDENED the economic system.

When you pile on trillions of entitlement liabilites and mandate millions of regulations-

economies are negatively impacted.

Expensive social policies ARE the problem-

NOT the economy.
Russell Masingale
weary I am of the Astroturf.
07:34 AM on 08/27/2011
lowest tax rate in years, regulations rolled back to the 1910's, and you yell about SS which pays for it self, and medicare, that would bring costs down if allowed to negotiate rates and drug prices like the VA? dear god cant you see there is no invisable hand of the market to save you? do you really want corporations to take the place of the gov and regulate themselves? down that road lies enron and bear stearns. and citibank, lehman, lynch,and sacks.
Misanthropic economic and political shaman
09:27 PM on 08/26/2011
At the risk of being called rude. Bernanke said two things
1 ) I am out of tools
2 ) That monkey troop called congress better gets its act together!
Read Walter Williams!
09:25 PM on 08/26/2011
We could have more vigorous community and discussion if the free speech filters weren't on absolute lockdown most evenings.

Then we could enjoy debating the merits of top-down vs. bottom-up policy structures without the perpetual waiting.
09:24 PM on 08/26/2011
Wall Street doesn't like the outcome of the Feds actions. They should stop bribing our politicians to push these same policies.
08:46 PM on 08/26/2011
I think Bernanke's comments are an only slightly subtle swipe at some candidates who "hinted" that they would like to bring the Fed under more political control, as they have for years. In echoing S&P's slap at the political process (Yes, I know, S&P should have known better), Bernanke is reminding us why bankers will NEVER let Washington take more control of the Fed. And in this case, I agree with the banking ne'er-do-wells: someone besides Congress needs to have some say over the financial health of the nation.
Viet Vet 67
From being raised in poverty in a ghetto to being
09:05 PM on 08/26/2011
" . . . someone besides Congress . . ."
My god, Thor, has told me he's willing to take up the cudgels. And nobody messes with Thor and that giant hammer of his.
08:34 PM on 08/26/2011
Mr. El-Erian, While I salute your good intentions, nothing on earth will move the right wing to cooperate with President Obama on rebuilding the economy - their goal is to end his Presidency, not grow America's economy. Further, their economic policies are anti-thetical to economic growth - they are pushing for austerity, laying off millions more workers, unraveling Social Security, Medicare and Medicaid, destruction of unions and the environment. None of these nostroms will help our economy, only push millions more into poverty.