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Caught In A Lie: Bernanke Promised Congress The Federal Reserve Would Not Monetize The Debt But Now That Is Exactly What Is Happening

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On June 3rd, 2009 Federal Reserve Chairman Ben Bernanke promised the U.S. Congress that the Federal Reserve would not monetize the debt of the U.S. government.  On November 3rd, 2010 the Federal Reserve announced a massive quantitative easing plan which will involve the purchase of 600 billion dollars of U.S. Treasury securities by the middle of 2011.  Creating 600 billion dollars out of thin air and using them to buy up U.S. government securities is monetizing the debt.  So Federal Reserve Chairman Ben Bernanke has been caught in a lie.  Will we ever be able to trust a single word that he says ever again?

Monetizing the debt is a desperate act.  It is a signal that we are rapidly reaching the end of the game.  Slamming interest rates all the way to the floor did not revive the U.S. economy.  Hundreds of billions of dollars in extra government spending did not do the trick either.  The U.S. economy is still dying and the U.S. government is now beginning to find it very difficult to locate buyers for all the debt that it is constantly issuing.

So the Fed apparently hopes that this new round of quantitative easing will be a way to finance the exploding U.S. government debt and spark an “economic recovery” at the same time.

But didn’t Bernanke promise that the Fed was not going to do this?

Didn’t he pledge to Congress that the Federal Reserve would not monetize the debt?

Yes, he did.  The following is video footage of Bernanke from June 3rd, 2009 promising that the Federal Reserve would not monetize the debt….

So much for keeping his promises.

But what else can Bernanke do?

The truth is that we are reaching the end of the economic rope and the Federal Reserve has already played all of the other tricks that they have in their bag.

Buying up massive amounts of U.S. government debt and showering the U.S. economy with money is a desperate attempt to keep the shell game going for a few more rounds.

Once upon a time, the U.S. dollar was the strongest currency on the planet.  The rest of the world loved to use it as a reserve currency and they were more than glad to buy up U.S. Treasuries.

But now the mood has changed dramatically.  The rest of the world does not intend to keep lending us well over a trillion dollars each and every year.  The market for dollar-denominated debt is not what it once was.

In fact, Peter Schiff, the CEO of Euro Pacific Capital, believes that the primary reason for this new round of quantitative easing is that the U.S. government is having an increasingly difficult time financing its debts….

At the end of the day, all this deflation talk is a red herring. The true purpose of QE 2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem.

But the markets are not populated by a bunch of idiots.  They are going to see what is going on.  The Federal Reserve is monetizing the debt.  This is going to make U.S. government debt even less attractive to foreign investors as I wrote about yesterday….

As foreigners begin to balk at all of this nonsense, the U.S. government will either have to start paying higher interest rates on government debt in order to attract enough investors, or the Federal Reserve will just have to drop all pretense and permanently start buying up most of the debt.  Either way, once faith has been lost in U.S. Treasuries the financial world will never, ever be the same.

If there comes a point when China and Japan realize that the game is up, they are going to start bailing out of U.S. Treasuries faster than you can say “panic”.  That could create a crisis of unprecedented proportions.  Of course the Federal Reserve could just keep whipping up increasingly large batches of dollars out of thin air to soak up all the excess debt flooding the market, but that kind of a Ponzi scheme would not work for long, and it would likely set off horrific inflation.

In order for the current world financial system to maintain stability, there must be faith in the U.S. dollar and in U.S. Treasuries.  Once faith in those two pillars is gone, it is inevitable that the whole system will come crashing down.

Most Americans have no idea that the entire global financial system is hanging by a thread.  They have no idea that their futures could be radically altered if things go badly.

We like to think that we live in such a “democratic” society, but the decisions on which our economic future rest are in the hands of a group of unelected, unaccountable central bankers.

The truth is that the Federal Reserve is about as “federal” as Federal Express is.  The Fed is not part of the U.S. government.  If you watch interviews with top Federal Reserve officials, they love to talk about how “independent” they are.  In defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve objected by declaring that it was “not an agency” of the U.S. government and therefore it was not subject to the Freedom of Information Act.

The institution that has the most power by far over the U.S. economy does not answer to the American people, and the American people are so “comfortably numb” that they don’t even realize it.

In fact, most Americans do not even know that the Federal Reserve, in association with their buddies on Wall Street, caused the first Great Depression.

But Ben Bernanke does.

At a November 8th, 2002 conference to honor Milton Friedman’s 90th birthday, Bernanke actually confessed that Milton Friedman and Anna J. Schwartz were right when they wrote that the Federal Reserve caused the Great Depression….

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.

So does that make you feel better?

Ben Bernanke says that the folks over at the Federal Reserve are very sorry that they caused the Great Depression of the 1930s and they promise not to do it again.

Of course we have already seen how much Ben Bernanke’s promises are worth.

With people like Bernanke in charge, there is not a lot of reason for optimism.

Meanwhile, Bernanke and his fellow central bankers are heading down to Jekyll Island this weekend for a grand celebration.

That’s right.

The Federal Reserve is holding a conference this weekend entitled “A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve” to celebrate the 100 year anniversary of the infamous 1910 Jekyll Island meeting that spawned the draft legislation that would ultimately create the U.S. Federal Reserve.

They will surely be congratulating themselves on doing such a fine job of running the U.S. economy.

Yeah, they are doing a fine job of running it – right off a cliff and into oblivion.

  • VegasBob

    Since we are now living in some kind of Kafka-esque nightmare, perhaps Bernokio should shave his beard and dress up as Dr. Frank-N-Furter from the Rocky Horror Picture Show…

  • unknown

    so obama in india, ben b and buddies in mystical jeckell island, all our money people and most of the major political players plus military out of the country, umm whose is babysitting the unwashed, whose gonna protect us from a possible terrorist attack

  • Ivan Lesiv

    The part about Bernanke referencing Milton Friedman and Anna Jacobson Schwartz is completely taken out of context. In 1963, when Friedman and Schwartz wrote their “Monetary History of the United States,” they specifically stated that what caused and then exacerbated the Great Depression was that the Fed did not keep interests rates LOW enough to create sufficiently large expansions in the supply of money and credit via Fed policy in conjunction with the fractional reserve process. In other words, while it is true that the Fed is greatly responsible for the Great Depression, it’s not for the reasons being here insinuated. This article is right, but for the wrong reasons.

    The Fed was very expansionist and lax with monetary policy during the ’30s, and after the United States emerged from the Great Depression, economists finally had some sense knocked into them amid the turmoil and realized that the standard Keynesian proscription in which the government takes the place of consumers and raises “aggregate demand” via deficit financing, is manifestly faulty in at least some way, as precisely that course of action was pursued, but to no avail. It was not until Friedman and Schwartz came along in 1963 that this interpretation of that period of history was overturned and precisely the opposite outlook was substituted for it. When Bernanke referenced Friedman and Schwartz, he was in effect saying, “The Fed caused and worsened the Great Depression by not keeping interest rates low enough, by not monetizing enough debt induced by deficit financing, by not propping up aggregate demand enough, and by not inflating and devaluing the dollar enough. The Federal Reserve will not make that mistake again.

    Yeah, right… some “mistake.” It all just further goes to show how topsy-turvy things are.

  • First of all we did monetize the debt prior, it was called QE1, and it really upset China. Now we have QE2 and the 900 billion is just for starters, over the coarse of 2 years it will rise to 2 or 3 trillion. One way you can tell this whole Ponzi scheme is coming to an unpleasant end is this fact I just realized. Remember about 3 or 4 years ago the Fed would try to disguise the fact they were buying their own debt! They would set up elaborate fake companies in the Caymens and other offshore islands to buy U.S. Treasures and bonds, remember that! Now the Fed is “blatenly” announcing it’s going to buy it’s own debt. Translation? End game baby, the dollar is nearly finished.

  • First, the headline news:

    ” Ben Bernanke boosts the US space conquest!
    In an historic act of patriotism, the Fed’s president send equities and commodities in orbit around the Sun!
    Only one small glitch in this otherwise fantastic achievement, the dollar was sent orbiting around Pluto, a minor issue that Ben Bernanke blames on some ‘force of repulsion’…”

    Then, the question:

    Could Ben Bernanke become the first man ever to be named Time Magazine’s person of the year, 2 years in a row?

    Here is a man who is on his way to send the price of oil to 100 dollars per barrel, maybe in a matter of days! An event that would probably crush the non-recovery.

    Here is a man who is on his way to send the SP 500 back to, or even over, its pre-crisis level, even though the country is in economic depression and a majority of states and major cities are bankrupt, not to mention households.

    Here is a man who is on his way to help gold and silver beat their historic price records (adjusted for inflation) simultaneously!

    Here is a man who is on his way to bring the demise of the world reserve currency and help his country getting rid of its monstrous national debt in one sleight of hand!

    Now, I am asking you, Time magazine editors: WHO has done more than this man in 2010?

    Click on my name to visit my blog.

    Sent from my iPad

  • mondobeyondo

    Bernanke has been lying all along. Who knew!!

  • Kevin

    Here is a clue. The Australian dollar is going through the roof because the economy is based on commodities like iron ore and a lot of real commodities. The bankers are already aware the US dollar is headed for disaster so they are putting their money into real things which explains the rise. Plus interest rates in Oz are over 6% on accounts. We chat here but all over the world the serious, hard headed bankers and traders are not fooled by Ben’s announcement that it is to create jobs in the US. It is to enrich the banksters and is a massive transfer of wealth from the US middle class. When it all hits the fan I want to be holding real assets, not the US dollar which has entered Dreamworld. They can and will fool most of the people but one more trillion out of thin air might be the end. Who knows? When the majority of people around the world wake up to this fiasco the end is nigh. I have no idea when this tipping point will be but when it comes I think the US is in for hell. How can the US continually sell trillions of debt and expect that it will be alright? At some point it won’t. As once economist once said “That which can;t continue doesn’t”

  • mondobeyondo

    In 1957, a silver 1957 dime would buy you a gallon of gas.

    In 2010, a silver 1957 dime will still buy you a gallon of gas.

    Some things never change…

  • Maria

    How many recessions and depressions do we have to go through to realize the Federal Reserve cannot do what it was designed to do?

    This list of four responsibilities is from the Fed’s own website…

    1) influence money and credit conditions in the economy in pursuit of full employment and stable prices

    2) maintain the stability of the financial system and contain systemic risk that may arise in financial markets

    3) ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers

    4) play a major role in operating the nation’s payments systems

    ARE THEY D-E-L-U-S-I-O-N-A-L!!!

    #1 Our currency has been devalued over 90% since the Fed’s inception.

    #2 We have record numbers of unemployed, homeless, and subsistence-reliant people in this country.

    #3 Prices of basic necessities like food, utilities, and fuel are skyrocketing while our home values are falling off of Mt. Everest.

    #4 The stability of the financial system is on the brink of collapse…if not beyond.

    #5 The systemic risk of the financial markets is beyond reason…beyond comprehension.

    #6 The safety and soundness of the nation’s banking and financial system is on death’s door.

    #7 The protection of consumer credit rights has turned into the feast of cannibals.

    The Fed’s one success…mastering (or should we say hijacking) the operation of the nation’s payments systems. Now there’s something to brag about.

    Let’s face it, the Fed experiment has failed…MISERABLY. SO WHY ARE WE KEEPING THE FED ALIVE?


  • Mickey Mouse

    I wonder how many countries the USA is going to be divided into when all is said and done.

  • Another very informative article!!! It’s all true!! Our government has come to the end of their financial rope!!! Now, in the following months, rioting and chaos will be taking place in cities all across America!!! It’s a shame, the American people have been asleep far too long and haven’t run this country like our forefathers intended it to be!!! Move over Titantic, we are sinking at un uncalculaterd rate, we are just about ready to hit the bottom!!!

  • NadePaulKuciGravMcKi

    The same group of people
    that find it so easy
    to lie about 9/11.

  • Matt

    SOLUTION: TAX THE HECK OUT OF THE RICH. TAKE 80% OF THEIR MONEY. GIVE IT TO THE POOR, UNEMPLOYED, HOMELESS, ETC!!! There Gary, you happy now? Problem solved – take the day off man – pop open a cold one and r-e-l-a-x!!

  • Larry in CA

    Can we get rid of the federal reserve when the dollar becomes worthless. What will be the Fed’s next play when there are no more dollars?

  • Scott in SC

    I hope they enjoy their trip to Jekkyll Island–the only remaining resort island in the low country that isn’t bankrupt and basically shut down. Maybe they can take a tour of the crumbling Daufuskie Island and Sea Island resorts (nearby formerly popular “exclusive” islands) or head into Savannah to see 3rd World American poverty at it’s saddest (of course that poverty is nothing new to Savannah and this economy). Maybe they’ll wander up to visit some of their retired CEO buddies in Hilton Head (which is only 50% bankrupt thanks to the Gulf oil spill which drove in enough tourists this summer to keep some snack shacks and T-shirt shops from going under).

    I hope each and every one of them freezes (it’s COLD this weekend) and/or gets bedbugs.

  • OhioBob
  • Before the depression comes the inflation>high inflation>hyperinflation. See It is really important to be prepared for inflation first, and then be ready to switch gears rapidly when hyperinflation comes to an end.
    The sad part is we could get out of this – see the two-part cartoon on YouTube: “Obama Fires Bernanke.”

  • What will be the FED’s next play? Let me tell
    you: the ‘FED’ is currently buying up all of
    those ‘useless’ treasuries, Fannie and Freddie
    bonds, and who knows what else?

    The way I see it, soon, when the ‘U.S.’ is
    bankrupt, the ‘FED’ will OWN THE ENTIRE U.S.!

    All purchased with monopoly money. And trust me, you’ll get to pay ’em plenty of rent to
    reside anywhere even near “Boardwalk”.

  • Mike


    1) Buy Food
    2) Buy Silver, gold, platinum, any medal that is worth something
    3) Help others do the same
    4) Pray

  • Does being “caught in a lie” mean anything to anyone anymore? And, please, let’s not act surprised about it at this point.


    Kennedy issued his US Notes for much the same reason. On June 4, 1963, Kennedy signed Executive Order 11110, which authorized the US Treasury to issue a new form of silver certificate.
    Kennedy issued $4,292,893,825 of cash money; free of interest. It was a sufficient amount to allow the nation to operate without the private Federal Reserve. Just 5 months later, JFK was shot by the “crazed lone nut” Lee Harvey Oswald. Almost immediately after Kennedy’s death, the US Notes were pulled out of circulation and destroyed except for samples in the hands of collectors.

    A telling clue lies in the fact that the Warren Commission, now widely understood to have been a cover-up, counted among its seven members John J. Mc Cloy, who had served as head of the World Bank and President of Chase Manhattan Bank. A rather odd resume for a man charged with investigating a murder, in hindsight!

    Subsequent examination has shown that Kennedy’s Executive Order 11110 was never rescinded. That would have taken an act of Congress, and in the atmosphere of near deification of JFK following his death, that would have brought more public attention to what Kennedy had wanted to do. So, the E.O. still stands.

    I have written this commentary for two purposes. First, to remind President Obama that he already has all the authority he needs to order the US Treasury to start issuing currency. He just needs to pick up the phone or stroll through that tunnel and tell them to carry out Kennedy’s EO 11110. Obama has that authority. He does not need Congress or anyone else’s permission.

    My second purpose is to send a message to the Federal Reserve. and that message is that if Obama does start issuing currency INTEREST FREE in accordance with the Constitution and Kennedy’s EO 11110, and anything happens to him (or for that matter to Mike Montagne, (mathematically perfected economy), the owners of the Federal Reserve will be our first and most likely suspects.


    Across earlier history, it was possible at least for truly free implementations of barter to impose no imperfection upon their subjects. Free, unimpeded barter allowed people to produce to natural capacities, and to obtain for our own production whatever we deemed to be equal, undiminished measures of the production of others. These core objectives comprise the standards of any monetary “economy” which truly serves humanity, because contrary to the intended faults of imposed monetary systems, it is possible and obviously desirable to trade by universal tokens of wealth, without involuntarily sacrificing ever more to irreversible multiplication of debt by interest, and without suffering systemic collapse as an inevitable consequence of irreversible multiplication of debt.

    Virtually all modern “economies” have been imposed upon the subject societies; and we know this at least because in every case it would have been impossible for the subject people to have approved veritable, justified principles, because the means of taking from them is irreversible, unjustifiable multiplication of debtin proportion to the people’s means. That is, merely to maintain a vital circulation subject to interest, it is necessary to re-borrow whatever the people pay toward interest and principal obligations, which thus perpetually increases the sum of debt so much as periodic interest. Incontrovertibly then, any monetary system subject to interest imposes upon its subjects an ever escalating dispossession which inevitably culminates in collapse: because debt is multiplied in proportion to means, ultimately a sum of debt is engendered which the system can no longer afford to service.

    So the faults of modern purported economies are intended to take from us exceedingly and without justification; and all of us can know this with certainty from the further obvious facts that we are persistently refused representation even while mathematically perfected economy™ is demonstrated to be the only prescription for perpetual full, unimpeded, undiminished, sustainable prosperity.

    Thus representative governments have been usurped by the central banking systems of the world; and representation can only be restored by establishing mathematically perfected economy™, because mathematically perfected economy™ alone removes the usurpers and means of usurpation from the subverted political equation.

    Interest is eradicated in mathematically perfected economy™. Thus there is no artificial multiplication of debt in proportion to the circulation, or inevitable collapse; and so, rather than dedicating the circulation ever moreso to servicing debt, the entire circulation is persistently available to the original purpose of sustaining intended commerce.

    As all production can be financed by mathematically perfected economy™, it is not even necessary to borrow money at interest, because mathematically perfected economy™ makes interest free obligations available to sustain payment for all wealth. Contrary to debts subject to interest, the obligations of mathematically perfected economy™ simply require that we pay for the related asset as we consume of it.

    Because mathematically perfected economy™ finances all wealth, and because the obligation is to pay at the rate of consumption, everyone pays for everything with whatever they deem to be an equal measure of their own production; there is no inflation or deflation; there is no multiplication of debt; there is always sufficient circulation to pay all debts; the system is perpetually sustainable; and, just as in perfected barter where the quantity and state of wealth represent the wealth, the circulation and rate of payment in mathematically perfected economy™ endow the currency with perpetually persistent value, because every unit of the circulation is always redeemable in the very state of the wealth it is intended to represent.

    For example, a EURO 100,000 home with a 100-year lifespan would be paid for at the overall rate of EURO 1,000 per year or EURO 83.33 per month; and the earnings this alone would immediately free should we implement mathematically perfected economy™ immediately, reflect the degree to which we would prosper further, without any other improvement whatever.

    But at the same time we would be financially enabled to develop and succeed in far more industry and employment, with far more tolerance for earnings and success. Even college students for instance could afford new homes during their education for far less than they might presently pay for far less substantial accommodations.

    The general method of transitioning to mathematically perfected economy™ is re-financing all debt without interest, subject to a schedule of payment equivalent to the rate of consumption. It is possible therefore to immediately avoid economic collapse, or further economic injustice, by transitioning to mathematically perfected economy™.

    I originally published mathematic proofs that any purported economy subject to interest inevitably terminates itself under insoluble debt, and that there is one and one only solution to 1) inflation and deflation, 2) systemic manipulation of the cost or value of money or property, and 3) inherent, irreversible multiplication of debt by interest (altogether which comprise mathematically perfected economy™) in 1979.

    Many people adopt the mistaken disposition that alternatives can serve us, or that we are served by pursuing typical, incremental patterns of change. Largely, these attitudes only pave the way for persistence of the imposed systems, because one and one only proposition solves the breadth of issues, and because we need to solve them immediately.

    The recommended course of action is 1) to proliferate our understanding of mathematically perfected economy™; and 2) to adopt a constitutional amendment immediately transitioning to mathematically perfected economy™. We can only secure economic justice by spreading this information ambitiously, and thereupon, by asserting our right to proper, true economy.

    Our necessary achievement of perfected economy therefore depends on you: It depends on your bringing everyone you can to this material; it depends on your understanding and prolific discussion of this material; and finally it depends on your asserting your right to it.

  • Cristian

    im just glad i went down to the comment section ……i thought this whole entire country was asleep. were getting f’d from behind and i cant believe no one realizes

  • Jim Shores

    He asked Obummer before he did it. Obummer said; “Hell, I lie all the time, it is ok, we got the guns and we’re going to get America’s. What are they going to do, VOTE, we conrol the damned voting machines. Let them eat dog food”.

  • So, it seems Helicopter Ben isn’t content with just doing the Charter flights business ??

    Now he wants Regularly Scheduled flights ?!?

  • Michele

    Have no fear ladies and gentlemen,
    your mansion awaits you after the Rapture.
    If you were smart enough to bank on the bible.
    It’s the only hope we have left.

  • alice

    Are we being mislead by the FED? QE1,2,3,4 will devalue our currency and savings at warp speed, increase our debt, deficits, create hyperinflation that will impoverish Americans faster than anything else can,,, it will create jobs that produce nothing, so that we can spend borrowed money on products made else where. If this is the solution to our problems, then we were doing just fine before the crisis hit, we just weren’t doing it fast and hard enough! The QE monies are going to Wall Street, Bankers, etc… to invest overseas, and the owners of those investments are going to jump ship when it all over in the USA! We are speeding as fast as we can toward the end of our raped country by the titans of finance.

  • Nancy

    This is for unknown-There is a reason that Obama and his cohorts are in India, I mean aside from fact that he is performing some kind of SICK RITUAL. Also that Bernanke and his ilk have taken off to Jekyl Island. They are getting the “HECK OUT OF DODGE” before the last SHOE FALLS, so to speak. I’m telling you, “SOMETHING WICKED THIS WAY COMES!” There is no doubt in my mind.

  • Caught in a lie. Bernanke also promised that the Fed wouldn’t cause inflation. But QEII will certainly cause imbalances, bubbles and inflation.

    The Fed has recently announced QEII (quantitative easing two, named like this in fond memory of QEI, which has saved us from a re-run of the Great Depression at the onset of this financial crisis). Could this be a hint at China’s growing reluctance towards investing in U.S. treasuries? Given current low yields, it seems reasonable to assume the Chinese aren’t thrilled.

    Our biggest trading partner China has been by far the biggest investor in long-term U.S. government debt, as it needed a safe haven to bank its mounting trade surpluses. Should China seriously shift its focus towards buying up natural resources such as energy, rare metals (needed to manufacture technology products) and commodities, we would be looking at inflation at some point down the road.

    If we do contract inflation, the Fed will be forced to resort to a contractionary monetary policy with higher interest rates.

    This would bring the stuttering U.S. economy to an instant halt.

  • Jesse

    I never trusted him or any of the others. There job is to bankrupt this country and his doing it.

  • There is a lot of conjecture in this article. Besides taking Bernake’s comments out of context, the writer implies it is wrong for the FED to be independent. Also, there are populist economists who would disagree with the classicist Austrian slant of this article. I recommend people read a lot more diverse perspectives before jumping to conclusions. Find opposing sources and Get educated. The ruling elite have a easier time manipulating the ignorant.

  • zack

    “Will we ever be able to trust a single word that he says ever again?”

    We could never trust Bernanke to begin with. This was the same dolt that told us that there was no housing bubble in 2006, and that the economy was fundamentally sound in 2007/2008. He’s an incompetent crook, and here’s the video to prove it!

    We help Americans find jobs and prosperity in Asia. Visit for details.

  • hallicom

    Well I am so tired of hearing that the American people having been asleep when 99% of the worlds population are in financial trouble.

  • The Fed is doing exactly what it was installed for, and that is to DESTROY THE AMERICAN ECONOMY. Well, they’re actually destroying the economy while making obscene profits. They’re also buying up all of the real, tangible assets of the country. And the People will get the bill…

  • Uncle B

    Usury!Big fat great hulking American neanderthals, good natured but dumb beasts, bred by over 200 years of corporatist seeking and breeding from best European stocks, an animal for the exploitation of North America’s treasures! Now the treasures are all gone! New mechanical means of exploitation are in place and we witness the final stages of the eradication of the once very profitable great hulking American neanderthal – even his doctors through their Medical insurance cartels refuse him and his progeny basic medical care for survival if they can brand him as unemployed!
    The new semi-slave Chinese labor unit, armed with modern factories are the laborer of choice now for the Capitalists, Corporatists of the world and America will suffer decline from this time forward as long as Asians are willing fuel for their cannons! Bernaki is a bullshitting corporatist foil, fooling some of the people all of the time as the American paradigm out dates itself and fails in the shadows of the Asian factor. The gold has gone to Asia What America suffers today is only the after-shock!

  • BenBenson

    Remember, it is 100% legal to pay your tax liability at the end of the fiscal year without using inflation adjusted accounting under GAAP. Thats right, you just might be able to cover your taxes at the end of the year by selling some goods (a carton of cigarettes, etc) the week before. If you avoid holding FRN for any lengthy period otherwise (JIT, etc) then you could come out ahead by conducting your business nearly tax free. This is why capital controls are looming (that 1% transaction tax)

  • > So Federal Reserve Chairman Ben Bernanke has been caught in a lie.
    > Will we ever be able to trust a single word that he says ever again?

    The FED’s current unease about QEII can prove prophetic. Not that this unease is going to impact the monetary policy in any significant way.

    QEII (quantitative easing, part two) is no shot in the arm for the real economy. The reason why quantitative easing will not have the desired effect this time around is that the underlaying problem has evolved. The challenge we are facing now is not a lack of liquidity. It is a lack of credit. More cash will only fuel new bubbles.

    John M. Keynes’ Depression-era General Theory of Employment, Interest and Money was aligned with the policies of the New Deal and delivered results, but is largely misunderstood today. It is not about big government mindlessly going on a spending spree with borrowed money. Keynes actually suggested that the government should run a surplus in good times to pay off the debt acquired in bad times. He also suggested the government should borrow and redistribute money in bad times to stimulate the economy by increasing aggregate demand. It should channel the spending through the hands of consumers who have the highest propensity to spend so that they actually do spend and prop up demand in the process.

    We didn’t follow the Keynesian model but we like to criticize it for “not working”.

    Well. Bernanke wants to avert a Great Depression 2.0, no matter what, even if he crashes the value of the US Dollar in the process.

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