dagblog - Comments for "Bernanke is Easy"

If Ben ever goes out there

Michael Maiello — Sat, 15 Sep 2012 18:41:20 +0000

In reply to Could be. But I think that

If Ben ever goes out there and says, "We're out of bullets," I'm suing him for malpractice and the present value of my 401(k) account.

Could be. But I think that

Dan Kervick — Sat, 15 Sep 2012 16:42:44 +0000

In reply to Good points, but... Bernanke

Could be. But I think that perpetuating the view that the Fed still has moves to make is itself one thing that removes pressure form Congress. I know Bernanke has consistently called on the political branches to do more, in the subtle way central bankers do, but maybe the best move would be for him to say, "We're out of bullets, and unless Congress and the President act, we will see continued stagnation or worse."

Not entirely sure I follow

AnonymousPS — Sat, 15 Sep 2012 16:40:53 +0000

In reply to Before or after closing

Not entirely sure I follow you on this...

We'll be paying "that much" less per month.

Costs are rolled into principal.

Good point. I thought about

Dan Kervick — Sat, 15 Sep 2012 16:39:05 +0000

In reply to A lot of good stuff there

Good point. I thought about using priests or medicine men, but knew I would offend some people either way, and decided to ruffle the New Agers rather than the Catholics and Native Americans. My understanding is that some kinds of shamans did rain dances. Sorcerers, brahmins and wizards would have worked too, but I've overworked the wizard analogy in other pieces. The idea was to invoke any kind of religious leader who controls people's behavior by making them think he controls nature.

Good points, but... Bernanke

AnonymousPS — Sat, 15 Sep 2012 16:36:52 +0000

In reply to the Fed is signaling to us

Good points, but...

Bernanke has repeatedly said that Fed actions are not a panacea or all that should be done.

I'm not sure he even thinks that keep rates down is the best course of action out of all of them.

He has urged fiscal action from Congress and the president. But since the GOP are simply not going to do anything, someone has to do something. And this move is better than nothing.

As far as % rates go, I can tell you that we are refinancing now because of low and dropping rates. That will leave us more money at the end of the month. What we do with that extra is another matter, but some of it will get spent, I'm sure.

(Others will pay down debt, which is something else holding back the economy.)

And I'm sure that low rates will break loose a few more house buyers than if rates were higher. That's good.

So bottom line: It's not the ideal move, but the ideal move is being blocked by the GOP. In lieu of the ideal move, Fed action is the next best move.

A lot of good stuff there

Sat, 15 Sep 2012 16:09:47 +0000

In reply to http://neweconomicperspective

A lot of good stuff there Dan, but you might want to swap out "shaman" for "priest." Priests more often operated in groups, shamans often alone... priests often came closer to "ruling," shamans not so much... shamans tended to live on the edge of bands, priests at the center... priests more often got people to build grand monuments to their gods/nonsense.... plus, you usually didn't see shamans in agricultural cultures, but more in hunting ones... and imho, there was always more direct democracy and honesty in how a shaman operated than in the world's priesthoods.

An odd point to pick, I know, but I found the shift put me off your point.

Maybe want to look again at

Sat, 15 Sep 2012 15:56:32 +0000

In reply to Very good piece, destor. I

Maybe want to look again at the data from 73-81, DF..... Was surprised at the view that inflation has been under control since 1970, because, being an old goat, I can remember it pretty much not being under control during the 70's and early 80's. The chart you link to shows it roughly between 7% and 14% during those years, so maybe doublecheck the entries?

That's the best thing you've

EmmaZahn — Sat, 15 Sep 2012 06:20:50 +0000

In reply to http://neweconomicperspective

That's the best thing you've written that I've read.

"Something must be done. This is something. This must be done." was one of the first things that occurred to me when I read the announcement of QE3, too. Not surprising considering how much clamoring there has been for the Fed to 'do something!' nor that what they did would be seen primarily in conventional retail investor terms. Not that there's anything wrong with that. Kevin Drum had a good take on that aspect:

The Man Behind Ben Bernanke's Policy Announcement Yesterday Was Probably...

Although I have many more questions than answers, I think there is more to it, especially its timing.

Both the FRB and SEC have expressed concerns that continuing negative real rates could cause Money Market Funds' net asset value to fall below $1, aka 'break the buck', which in turn could cause a run on the Funds as bad or worse as what happened in 2008. Their concerns seem reasonable.

Europe's Zero-Rate Headache - WSJ.com

Money market funds look to pass on losses - FT.com

The SEC proposed new regulations that include increased capital requirements but these were strenuously opposed by industry lobbyists.

In light of all this, I wondered if QE3 might not offer the FRB/FOMC a way to backstop its MMF counterparties whose capital they consider insufficient at present.

That would make QE3 a twofer for the Fed in soothing uncertainty and managing expectations.

Just thinking out loud.

There's a lot of meaningless

Michael Maiello — Sat, 15 Sep 2012 03:30:02 +0000

In reply to the Fed is signaling to us

There's a lot of meaningless money masturbation out there, mostly produced by those who would convince others that they can't manage their own finances and need paid help. And, I think you know, I do not hang out with a better class of people than you do.

But, the US Fed and US Treasury are two rare institutions that can influence both supply and demand in dollar currency and dollar debt markets. Generally, when people start in on "supply and demand" talk, I assume they're unsophisticated. But when the Fed is involved, different rules apply. Those institutions really are "of the matrix" and they can bend reality, when they want to.

Honestly... so much of our suffering is intentional.

the Fed is signaling to us

Dan Kervick — Sat, 15 Sep 2012 01:13:29 +0000

In reply to I think there's more to this

the Fed is signaling to us that it wants growth and that we shouldn't worry about it shutting off the lights and music on this party anytime soon.

The thing is, I can't remember a single conversation I have had with a real human being over the past four years, in the flesh or online, in which that person said to me that they were thinking about buying something, or investing something, but were holding back because they were worried that the Fed was going to shut down some kind of party. But you probably hang out with a better class of people than me.

The Fed has been holding interest rates way down, and has signaled before they planned to hold them down through 1914. Apparently that's not good enough for all the supply-siders who think everything hinges on the exquisite tuning of Fed signals, and that the money guys are still not feeling enough security. So now the Fed is saying they are going to hold rates down for some more undefined period, until they see something. Whatever.

I think this is just more of the neurotic, hypochondriacal, manufactured reality of the "The Street" - which people can see bubbling over every day on one of the financial channels. For every guy who thinks the latest Fed "signal" means he should buy something, there is always some other guy who thinks it means he should sell something. It's all meaningless money masturbation.