That Ben Bernanke and so many others think that the Central bank can and must prevent and stop and rectify economic downturns is foolish. It says more about the political imperatives surrounding the policy makers than about economic truth. IMHO, the Austrian economists have it right: you get a recession when mal-investments are recognized and what you’ve been doing has to change. Lowering interest rates (below market rate) or buying govt. debt does nothing to fix mal-investment. (If anything does it prolong the mal-investment?)
RonJ
4 years ago
“Low inflation can be dangerous,” Bernanke wrote in his blog.
Inflation causes deflation. What is dangerous is excess. There is 250 trillion in global debt.
Six000mileyear
4 years ago
Bernanke keeps earning failing grades. If ANY tools were available, they would have prevented 10+ recessions in the 100 years of the Fed’s existence. The Fed has learned nothing in 100 years about economics, but it has mastered thievery and deceit.
There are plenty of tools around – many of them inhabit the Eccles building.
Tony Bennett
4 years ago
Mish, you left out one item. From CNBC:
“The Federal Reserve should consider negative interest rates as a potential weapon to fight future economic downturns, former central bank Chairman Ben Bernanke said.”
He joins Greenspan with green light on NIRP … at odds with Powell’s reluctance (for now) for going there.
Only a matter of time before Powell folds … completely.
Maximus_Minimus
4 years ago
In summary, the deranged professor gives himself a pat on the back for job well done. Judging by some comments, this view exists (prevails?) in the corridors of power.
In one comment, Bernanke said, the public doesn’t understand the FED can create money cheaply (no need to print banknotes). Scary times.
Forward guidance: place your chips, we will print so much, you cannot lose.
CautiousObserver
4 years ago
Bernanke sure is fond of telling people the Fed’s printing press in all its various guises is good for everyone and that everyone should be happy the Fed is working on even more subtle ways to steal capital from savers.
Bam_Man
4 years ago
A well-paid bankster shill.
Casual_Observer
4 years ago
He is right that the same thing wont work to get lower interest rates. The real story line which everyone has missed is more debt requires lower interest rates.
Not really. Debt has been increasing since 1980 and things have been quite functional. That’s the other story line people keep missing. This can go on for a lot longer than any of us might be alive.
Credit quality has been deteriorating. WSJ ran an article a week or so ago on vehicle lending (well over a $trillion) … pure sausage making. Dealers filling in necessary income to qualify, lying about refinancing, etc. Easily could have inserted “housing circa 2006” when reading.
Delinquencies / defaults ARE beginning to spike (not just auto loans) … as they ratchet higher credit spigot will tighten. Then game over (for this cycle).
Yes but the system has been functional. It is being held together with duct tape. We will become zombies like Japan in the 2020s. This may be the end of the debt supercycle that started in the 1930s but that remains to be seen. Japan has shown papering over everything can go on for longer than thought possible.
Not really disagreeing. Japan has had 8 recessions since 1990 and still hanging around. Just referring to current cycle about ending … much belated and needed.
SOMETHING will have to change re costs of major source of debt incurrence (housing/education/health) for it continue past this decade.
The change wont be noticeable. It will be a flat trend of slow to no growth for decades.
Jackula
4 years ago
Bernanke makes my blood boil…there is asset inflation everywhere one looks.
aqualech
4 years ago
Look to the only explanation that makes sense:
These guys are all liars. Paid to be public liars.
The real goal of the Fed (private banks, keep that foremost) is to maximize indebtedness to themselves and these days also to maximize the value of equities as a bone thrown to politicians to allow the indebtedness thing to keep expanding.
The bubbles are somewhat collateral damage and they need to pretend not to see that or they could not justify continuing to expand the indebtedness, which is the main driver.
They are certain (and have been proven to be correct in this several times over) that the public will bail them out and make them whole should their assets (loans made to others) go bad, even though that loaned money was from thin air.
Did I mention that the Fed officials are liars?
mkestrel
4 years ago
Central banks are confidence men. No truth will be ever heard from these morons.
magoomba
4 years ago
Why not establish a second currency?
One for the non producing investors, and one that can only be earned by work and is uninflatable.
Get rid of all activity taxation, which effectively forces productive, working people to work for, hold and transact in paper notes their designated slave masters can simply print up at their idle, leeching and illiterate leisure; and you’ll have your wish granted.
Ebowalker
4 years ago
Only in the corporate press can someone who was wrong so horribly still be considered an expert. Look at fox news trotting our ari Fleischer last week on iran
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That Ben Bernanke and so many others think that the Central bank can and must prevent and stop and rectify economic downturns is foolish. It says more about the political imperatives surrounding the policy makers than about economic truth. IMHO, the Austrian economists have it right: you get a recession when mal-investments are recognized and what you’ve been doing has to change. Lowering interest rates (below market rate) or buying govt. debt does nothing to fix mal-investment. (If anything does it prolong the mal-investment?)
“Low inflation can be dangerous,” Bernanke wrote in his blog.
Inflation causes deflation. What is dangerous is excess. There is 250 trillion in global debt.
Bernanke keeps earning failing grades. If ANY tools were available, they would have prevented 10+ recessions in the 100 years of the Fed’s existence. The Fed has learned nothing in 100 years about economics, but it has mastered thievery and deceit.
There are plenty of tools around – many of them inhabit the Eccles building.
Mish, you left out one item. From CNBC:
“The Federal Reserve should consider negative interest rates as a potential weapon to fight future economic downturns, former central bank Chairman Ben Bernanke said.”
He joins Greenspan with green light on NIRP … at odds with Powell’s reluctance (for now) for going there.
Only a matter of time before Powell folds … completely.
In summary, the deranged professor gives himself a pat on the back for job well done. Judging by some comments, this view exists (prevails?) in the corridors of power.
In one comment, Bernanke said, the public doesn’t understand the FED can create money cheaply (no need to print banknotes). Scary times.
Forward guidance: place your chips, we will print so much, you cannot lose.
Bernanke sure is fond of telling people the Fed’s printing press in all its various guises is good for everyone and that everyone should be happy the Fed is working on even more subtle ways to steal capital from savers.
A well-paid bankster shill.
He is right that the same thing wont work to get lower interest rates. The real story line which everyone has missed is more debt requires lower interest rates.
…..while a functional economy, as well as a functional society, requires less debt.
Not really. Debt has been increasing since 1980 and things have been quite functional. That’s the other story line people keep missing. This can go on for a lot longer than any of us might be alive.
Credit quality has been deteriorating. WSJ ran an article a week or so ago on vehicle lending (well over a $trillion) … pure sausage making. Dealers filling in necessary income to qualify, lying about refinancing, etc. Easily could have inserted “housing circa 2006” when reading.
Delinquencies / defaults ARE beginning to spike (not just auto loans) … as they ratchet higher credit spigot will tighten. Then game over (for this cycle).
Yes but the system has been functional. It is being held together with duct tape. We will become zombies like Japan in the 2020s. This may be the end of the debt supercycle that started in the 1930s but that remains to be seen. Japan has shown papering over everything can go on for longer than thought possible.
Not really disagreeing. Japan has had 8 recessions since 1990 and still hanging around. Just referring to current cycle about ending … much belated and needed.
SOMETHING will have to change re costs of major source of debt incurrence (housing/education/health) for it continue past this decade.
The change wont be noticeable. It will be a flat trend of slow to no growth for decades.
Bernanke makes my blood boil…there is asset inflation everywhere one looks.
Look to the only explanation that makes sense:
Central banks are confidence men. No truth will be ever heard from these morons.
Why not establish a second currency?
One for the non producing investors, and one that can only be earned by work and is uninflatable.
Get rid of all activity taxation, which effectively forces productive, working people to work for, hold and transact in paper notes their designated slave masters can simply print up at their idle, leeching and illiterate leisure; and you’ll have your wish granted.
Only in the corporate press can someone who was wrong so horribly still be considered an expert. Look at fox news trotting our ari Fleischer last week on iran