The FOMC met today to discuss monetary policy and after its one day meeting, it decided that all was well. There was no need to change interest rates; there was no need to change its QE policy; in fact, everything was so perfect, there was no need to even change the wording of the prior statement. How grand they must all feel, for they are the masters of the world – the masters of US monetary policy.
Given the bravado of today’s FOMC stance and The Ben Bernank’s recent 60-Minutes puff-piece, one might think the Fed is always consistent…and always right. Truth be told, nothing could be further from the truth. (In case you missed it, “The Ben Bernank” moniker comes from this http://www.youtube.com/watch?v=PTUY16CkS-k)
In the past I have listed numerous outrageous statements by Fed officials, Treasury Secretaries, and Presidents but this list is special. I ran across this record of quotes this morning that is quite appropriate, since today was an FOMC day. Will the lame-stream media ever connect the dots?
You can read the whole piece here http://dailyreckoning.com/who-am-i-what-is-money-the-fed-is-here-to-help/ from Frederick Sheehan.
12/13/10 North Weymouth, Massachusetts – “I am a macroeconomist rather than an historian. My focus will be on broad economic issues rather than details.”
Professor Ben S. Bernanke, “The Macroeconomics of the Great Depression: A Comparative Approach,” 1995
“These days central banking is my line of work as well. Before that, I was an academic economist and economic historian.” Federal Reserve Chairman Ben S. Bernanke, “Economic Policy: Lessons from History,”April 8, 2008
60 MINUTES: “You’ve been printing money?”
BERNANKE: “Well, effectively, and we need to do that.”…“60 Minutes” interview, March 15, 2009
CONGRESSMAN JEB HENSARLING, (R-TX.) “Will the Federal Reserve monetize the debt?”
CHAIRMAN BERNANKE: “The Federal Reserve will not monetize the debt….”
Federal Reserve Chairman Ben S. Bernanke, Testifying before Congress on June 3, 2009
BERNANKE: “One myth that’s out there is that what we’re doing is printing money. We’re not printing money.”…“60 Minutes,” December 5, 2010
“New research shows that one of the first signs of impending dementia is an inability to understand money and credit, contracts and agreements.”…New York Times, “Money Woes Can Be an Early Clue to Alzheimer’s,” October 31, 2010
“It would be fair to say that monetary and credit aggregates have not played a central role in the formulation of U.S. monetary policy since [1982], although policymakers continue to use monetary data as a source of information about the state of the economy.”…Federal Reserve Chairman Ben Bernanke, Open Opportunity Economic Forum, Washington, D.C., November 1, 2006
Response to Federal Reserve Chairman Ben Bernanke:
“…Is it really possible for a policy described as ‘monetary’ to be formulated and implemented without money playing a central role in it? Indeed, the suggestion that monetary policy can be conducted without assigning a prominent role to money seems like an oxymoron – a statement containing apparently contradictory terms, if not worse: for the literal meaning of the Greek word ‘oxymoron’ is ‘pointedly foolish.’”…Lucas Papademos, Vice President of the European Central Bank, Open Opportunity Economic Forum, Washington, D.C., November 1, 2006
“The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”…Federal Reserve Chairman Ben S. Bernanke, Bloomberg, June 9, 2008
“We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”…Federal Reserve Chairman Ben S. Bernanke, speech at the Federal Reserve Bank of Chicago, May 17, 2007
“[T]he recent capital inflow [has shown up in] higher home prices. Higher home prices in turn have encouraged households to increase their consumption. Of course, increased rates of homeownership and household consumption are both good things.”…Federal Reserve Governor Ben S. Bernanke, speech before the Virginia Association of Economics, March 10, 2005
“Today, most measures of underlying inflation are running somewhat below 2 percent, or a bit lower than the rate most Fed policymakers see as being most consistent with healthy economic growth in the long run.”
Federal Reserve Chairman Ben S. Bernanke, Washington Post, November 4, 2010
“The unwarranted assumption that ‘creeping’ inflation is inevitable deserves comment. This term has been used by various writers to mean a gradual rise in prices which, they suggest, could be held to a moderate rate, averaging perhaps 2 percent a year….Such a prospect would work incalculable hardship….Even if it were possible to control it so that prices rose no more than 2 percent a year – the price level would double every 35 years and the value of the dollar would be cut each generation. Losses would thus be inflicted upon millions of people, pensioners, Government employees, all who have fixed incomes, including those who have their assets in savings and long-term bonds….”
Former Federal Reserve Chairman William McChesney Martin, Senate testimony, 1957
“If a policy of active or permissive inflation is to be a fact, then we can rescue the shreds of our self-respect only by announcing the policy. That is the least of the canons of decency that should prevail. We should have the decency to say to the money saver, ‘Hold still, Little Fish! All we intend to do is gut you.’”
Malcolm Bryan, President of Atlanta Federal Reserve Bank, 1956
EXPLANATION OF THE FEDERAL RESERVE’S “QUANTITATIVE EASING” OBJECTIVE:
60 MINUTES: “Do you anticipate a scenario in which you would commit to more than $600 billion?”
BERNANKE: “Oh, it’s certainly possible”
“60 Minutes,” December 5, 2010 [Note: $600 billion is the amount of money Bernanke has stated he will to print to buy Treasury securities during "QE2" - Quantitative Easing, Part 2.]
The Fed “could theoretically buy anything to pump money into the system” including “state and local debt, real estate and gold mines – any asset.” (…and the Mini-ES?) Unnamed Federal Reserve official to the Financial Times, 2002
“Hello, young man. I’m with the Federal Reserve. Today, we’re buying baseball cards.”
Cartoon in Grant’s Interest Rate Observer, 2010; Federal Reserve official is speaking to a boy at his front door.
“The truth is the current Fed governors, together with their crack staff of Ph.D. economists and market analysts, are as close to an economic dream team, as we are ever likely to see…. The best Congress can do now is to let the Bernanke bunch do its job.”…Professor Greg Mankiw, Harvard University, New York Times, December 23, 2007. Mankiw was chairman of President George W. Bush’s Counsel of Economic Advisers
“We have been living in a fool’s paradise.... [If] the central bank creates money or if you like the phrase better, prints money, I think it can only do one thing, depreciate the currency.”…Former Federal Reserve Chairman William McChesney Martin, before the American Association of Newspaper Editors, 1968
"We are in the wildest inflation since the Civil War."...Former Federal Reserve Chairman William McChesney Martin, from his farewell speech, 1970
"Inflation is a means by which the strong can more effectively exploit the weak. The strategically positioned and well-organized can gain at the expense of the unorganized and aged."...Federal Reserve Governor Henry C. Wallich, Commencement address at Fordham University, 1978 [Note: Wallich was born in Germany in 1914. He was nine years old, living in Berlin, during the 1923 German inflation.]
"Lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment."...Federal Reserve Chairman Ben S. Bernanke, Washington Post, November 4, 2010
Bernanke simply assumed his QE2 operation would drive down interest rates (the bold will). Just the opposite has happened. Federal Reserve Chairman Martin understood the foolhardiness of such a quest when professors prodded him to do the same: “It has been suggested, from time to time, that the Federal Reserve System could relieve current pressures in money and capital markets without, at the same time, contributing to inflationary pressures. These suggestions usually involve Federal Reserve support of the Unites States Government securities market through one form or another of pegging operations. There is no way for the Federal Reserve System to peg the price of Government bonds at any given level unless it stands ready to buy all of the bonds offered to it at that price. This process inevitably provides additional funds for the banking system, permits the expansion of loans and investments and a comparable increase in the money supply – a process sometimes referred to as monetization of the public debt. This amount of inflationary force generated by such a policy depends to some extent upon the demand pressures in the market at the time. It would be dangerously inflationary under conditions that prevail today. In the present circumstances the Reserve System could not peg the government securities without, at the same time, igniting explosive inflationary fuel.”…Former Federal Reserve Chairman William McChesney Martin, 1957.
Given the bravado of today’s FOMC stance and The Ben Bernank’s recent 60-Minutes puff-piece, one might think the Fed is always consistent…and always right. Truth be told, nothing could be further from the truth. (In case you missed it, “The Ben Bernank” moniker comes from this http://www.youtube.com/watch?v=PTUY16CkS-k)
In the past I have listed numerous outrageous statements by Fed officials, Treasury Secretaries, and Presidents but this list is special. I ran across this record of quotes this morning that is quite appropriate, since today was an FOMC day. Will the lame-stream media ever connect the dots?
You can read the whole piece here http://dailyreckoning.com/who-am-i-what-is-money-the-fed-is-here-to-help/ from Frederick Sheehan.
12/13/10 North Weymouth, Massachusetts – “I am a macroeconomist rather than an historian. My focus will be on broad economic issues rather than details.”
Professor Ben S. Bernanke, “The Macroeconomics of the Great Depression: A Comparative Approach,” 1995
“These days central banking is my line of work as well. Before that, I was an academic economist and economic historian.” Federal Reserve Chairman Ben S. Bernanke, “Economic Policy: Lessons from History,”April 8, 2008
60 MINUTES: “You’ve been printing money?”
BERNANKE: “Well, effectively, and we need to do that.”…“60 Minutes” interview, March 15, 2009
CONGRESSMAN JEB HENSARLING, (R-TX.) “Will the Federal Reserve monetize the debt?”
CHAIRMAN BERNANKE: “The Federal Reserve will not monetize the debt….”
Federal Reserve Chairman Ben S. Bernanke, Testifying before Congress on June 3, 2009
BERNANKE: “One myth that’s out there is that what we’re doing is printing money. We’re not printing money.”…“60 Minutes,” December 5, 2010
“New research shows that one of the first signs of impending dementia is an inability to understand money and credit, contracts and agreements.”…New York Times, “Money Woes Can Be an Early Clue to Alzheimer’s,” October 31, 2010
“It would be fair to say that monetary and credit aggregates have not played a central role in the formulation of U.S. monetary policy since [1982], although policymakers continue to use monetary data as a source of information about the state of the economy.”…Federal Reserve Chairman Ben Bernanke, Open Opportunity Economic Forum, Washington, D.C., November 1, 2006
Response to Federal Reserve Chairman Ben Bernanke:
“…Is it really possible for a policy described as ‘monetary’ to be formulated and implemented without money playing a central role in it? Indeed, the suggestion that monetary policy can be conducted without assigning a prominent role to money seems like an oxymoron – a statement containing apparently contradictory terms, if not worse: for the literal meaning of the Greek word ‘oxymoron’ is ‘pointedly foolish.’”…Lucas Papademos, Vice President of the European Central Bank, Open Opportunity Economic Forum, Washington, D.C., November 1, 2006
“The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”…Federal Reserve Chairman Ben S. Bernanke, Bloomberg, June 9, 2008
“We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”…Federal Reserve Chairman Ben S. Bernanke, speech at the Federal Reserve Bank of Chicago, May 17, 2007
“[T]he recent capital inflow [has shown up in] higher home prices. Higher home prices in turn have encouraged households to increase their consumption. Of course, increased rates of homeownership and household consumption are both good things.”…Federal Reserve Governor Ben S. Bernanke, speech before the Virginia Association of Economics, March 10, 2005
“Today, most measures of underlying inflation are running somewhat below 2 percent, or a bit lower than the rate most Fed policymakers see as being most consistent with healthy economic growth in the long run.”
Federal Reserve Chairman Ben S. Bernanke, Washington Post, November 4, 2010
“The unwarranted assumption that ‘creeping’ inflation is inevitable deserves comment. This term has been used by various writers to mean a gradual rise in prices which, they suggest, could be held to a moderate rate, averaging perhaps 2 percent a year….Such a prospect would work incalculable hardship….Even if it were possible to control it so that prices rose no more than 2 percent a year – the price level would double every 35 years and the value of the dollar would be cut each generation. Losses would thus be inflicted upon millions of people, pensioners, Government employees, all who have fixed incomes, including those who have their assets in savings and long-term bonds….”
Former Federal Reserve Chairman William McChesney Martin, Senate testimony, 1957
“If a policy of active or permissive inflation is to be a fact, then we can rescue the shreds of our self-respect only by announcing the policy. That is the least of the canons of decency that should prevail. We should have the decency to say to the money saver, ‘Hold still, Little Fish! All we intend to do is gut you.’”
Malcolm Bryan, President of Atlanta Federal Reserve Bank, 1956
EXPLANATION OF THE FEDERAL RESERVE’S “QUANTITATIVE EASING” OBJECTIVE:
60 MINUTES: “Do you anticipate a scenario in which you would commit to more than $600 billion?”
BERNANKE: “Oh, it’s certainly possible”
“60 Minutes,” December 5, 2010 [Note: $600 billion is the amount of money Bernanke has stated he will to print to buy Treasury securities during "QE2" - Quantitative Easing, Part 2.]
The Fed “could theoretically buy anything to pump money into the system” including “state and local debt, real estate and gold mines – any asset.” (…and the Mini-ES?) Unnamed Federal Reserve official to the Financial Times, 2002
“Hello, young man. I’m with the Federal Reserve. Today, we’re buying baseball cards.”
Cartoon in Grant’s Interest Rate Observer, 2010; Federal Reserve official is speaking to a boy at his front door.
“The truth is the current Fed governors, together with their crack staff of Ph.D. economists and market analysts, are as close to an economic dream team, as we are ever likely to see…. The best Congress can do now is to let the Bernanke bunch do its job.”…Professor Greg Mankiw, Harvard University, New York Times, December 23, 2007. Mankiw was chairman of President George W. Bush’s Counsel of Economic Advisers
“We have been living in a fool’s paradise.... [If] the central bank creates money or if you like the phrase better, prints money, I think it can only do one thing, depreciate the currency.”…Former Federal Reserve Chairman William McChesney Martin, before the American Association of Newspaper Editors, 1968
"We are in the wildest inflation since the Civil War."...Former Federal Reserve Chairman William McChesney Martin, from his farewell speech, 1970
"Inflation is a means by which the strong can more effectively exploit the weak. The strategically positioned and well-organized can gain at the expense of the unorganized and aged."...Federal Reserve Governor Henry C. Wallich, Commencement address at Fordham University, 1978 [Note: Wallich was born in Germany in 1914. He was nine years old, living in Berlin, during the 1923 German inflation.]
"Lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment."...Federal Reserve Chairman Ben S. Bernanke, Washington Post, November 4, 2010
Bernanke simply assumed his QE2 operation would drive down interest rates (the bold will). Just the opposite has happened. Federal Reserve Chairman Martin understood the foolhardiness of such a quest when professors prodded him to do the same: “It has been suggested, from time to time, that the Federal Reserve System could relieve current pressures in money and capital markets without, at the same time, contributing to inflationary pressures. These suggestions usually involve Federal Reserve support of the Unites States Government securities market through one form or another of pegging operations. There is no way for the Federal Reserve System to peg the price of Government bonds at any given level unless it stands ready to buy all of the bonds offered to it at that price. This process inevitably provides additional funds for the banking system, permits the expansion of loans and investments and a comparable increase in the money supply – a process sometimes referred to as monetization of the public debt. This amount of inflationary force generated by such a policy depends to some extent upon the demand pressures in the market at the time. It would be dangerously inflationary under conditions that prevail today. In the present circumstances the Reserve System could not peg the government securities without, at the same time, igniting explosive inflationary fuel.”…Former Federal Reserve Chairman William McChesney Martin, 1957.
Trade Date: 12/14/10
E-Mini S&P Trades*
(before fees and commissions):
E-Mini S&P Trades*
(before fees and commissions):
- No “Secrets” trades filled today.
- Algorithm positions (5)
- “Reading the Tape” positions (3) …combined Secret’s, Algo, & “Reading the Tape” total… +3.50
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