The Beginning Of The End
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Helicopter Ben Bernanke Says Everything Is Going To Be Okay

Don’t worry everybody. Federal Reserve Chairman “Helicopter Ben” Bernanke says that the U.S. economy is going to be just fine, and that if it does slip up somehow the Federal Reserve is ready to rush in to the rescue. That was essentially Bernanke’s message to an annual gathering of central bankers in Jackson Hole, Wyoming on Friday. Bernanke insisted that even though the Federal Reserve has already cut interest rates to historic lows it still has plenty of tools that could be used to stimulate the U.S. economy if necessary. Well, considering Bernanke’s track record, the “don’t worry, be happy” mantra is just not going to cut it this time. After all, if Bernanke and his team were such intellectual powerhouses the “surprise” financial crisis of 2007 and 2008 would not have caught them with their pants down. The truth is that just before the “greatest financial crisis since the Great Depression” Bernanke was telling everyone that the economy was just fine. So are we going to let him fool us again?

But Bernanke insists that this time is different.  This time the Federal Reserve really has got a handle on things.  During his remarks at Jackson Hole, Bernanke said that the Fed will adopt “unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.”

Unconventional measures?

Could that be a thinly veiled way of saying that Helicopter Ben and his pals will do as much “quantitative easing” as they feel is necessary to keep the economy moving forward?

Unfortunately, most Americans have absolutely no idea what quantitative easing is.

Basically, when quantitative easing takes place the Federal Reserve creates money “ex nihilo” (out of thin air) and uses that money to buy stuff like U.S. government bonds and mortgage-backed securities.  By pumping money into the economy like this, the hope is that banks will start lending more and people and businesses will have more money to spend. 

As far back as 2002, Bernanke has been openly advocating “easy money” policies as a way to stimulate the U.S. economy out of troubled times….

“The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.”

Now, before we go on and discuss some of the problems with quantitative easing, it must be noted that the statement by Bernanke above is absolutely rife with errors. 

It is absolutely frightening that someone like Bernanke has more power over the U.S. economy than any member of Congress or even the president of the United States.

First of all, the U.S. government does not issue our dollars.  They are issued by the Federal Reserve.

Just pull out a dollar bill right now.  It says “Federal Reserve Note” on it right at the top.

Secondly, the U.S. government cannot produce as many dollars as it wants.  Whenever it wants more U.S. dollars it has to give U.S. Treasuries to the Federal Reserve in exchange.

If the U.S. government could produce as many dollars as it wants, it could just print up $13 trillion and pay off the national debt tomorrow. 

But under the current system, it cannot do that.  The Federal Reserve controls the currency, and the truth is that the Federal Reserve is a private central bank that is about as “federal” as Federal Express is.

Thirdly, there is always a cost for producing more dollars.  We’ll talk about inflation in a moment, but first it must be noted that any time “the printing presses are fired up” the U.S. government goes into more debt, and every time the U.S. government goes into more debt, more interest must be paid on that new debt.

So there is a very high cost involved in the creation of more dollars.

In addition, every time a new U.S. dollar is created, every other U.S. dollar becomes a little bit less valuable.  Essentially, the more dollars there are in existence, the less purchasing power each dollar is going to have.  This phenomenon can be masked or delayed for a while, but inflation will always triumph in the end when the money supply is constantly expanded.

The U.S. dollar has lost over 95 percent of its value since the Federal Reserve was created in 1913.  This has not been a mistake.  The Federal Reserve system is designed to slowly but surely inflate the U.S. dollar.  What they do want to avoid, however, is doing it too quickly.

And this is exactly what is in danger of happening in the years ahead.  As the U.S. money supply dramatically expands in response to the exploding U.S. national debt we are eventually going to be dealing with some very, very serious inflation.

Right now, the Bush and Obama administrations have been getting the United States into so much debt that there aren’t enough buyers in the world to absorb it all (at least at the current super low interest rates on U.S. government debt).  So, instead of raising interest rates to a point where U.S. debt would be suitably attractive to investors, the Federal Reserve is stepping in and is “buying” (once again with money created out of thin air) all the excess U.S. Treasuries that don’t sell.  This is essentially a Ponzi scheme and it keeps interest rates on U.S. Treasuries artificially low.

In addition, the Federal Reserve has been handing gigantic sacks of cash to very large banks and financial institutions such as Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup at almost zero percent interest and those big banks and financial institutions have been turning around and investing a large percentage of that cash in U.S. Treasuries.  This has created a gigantic U.S. Treasury carry trade bubble, and it has enabled many of these giant financial monsters to make massive piles of essentially risk-free cash.  This is another Ponzi scheme.

But these Ponzi schemes are not sustainable and they cannot last forever.  Right now Bernanke and his cohorts have been able to finance trillions in U.S. government debt and still keep interest rates on U.S. Treasuries and inflation very, very low.  At some point, their juggling act will come to an end and we will have a gigantic mess on our hands.

But for right now, Bernanke seems quite please with himself.  The following is how Bernanke concluded his speech at Jackson Hole….

As I said at the beginning, we have come a long way, but there is still some way to travel. Together with other economic policymakers and the private sector, the Federal Reserve remains committed to playing its part to help the U.S. economy return to sustained, noninflationary growth.

In Bernanke’s fantasy world, the U.S. economy is going to roar back to life and will soon be stronger than it ever has been.

But don’t you believe him.

The truth is that every single month the U.S. economy is seeing large numbers of jobs leave the country.

The truth is that thanks to our exploding trade deficit, the U.S. economy is poorer at the end of every single month than it was at the beginning.

The truth is that every single month the U.S. government (along with the vast majority of state and local governments) gets even deeper into debt.

The United States economy is not on the road to prosperity.

The United States economy gets poorer and deeper in debt every single month and is slowing bleeding to death.

Ben Bernanke can run around all he wants and try to convince us that “the sky isn’t falling”, but at some point the American people are going to wake up and simply not believe him anymore.

  • TnAndy

    Honestly, the guy is delusional. If you couldn’t see his forehead so prominently, I’d swear he had been given a lobotomy.

  • ParLay

    Is this the Federal Reserves’ last stand which is to print massive amounts of money. Right now they are Custer and the Indians (debt / derivites / Wall Street) have surrounded them. All they can do is continue to shoot lead (money) and hope for a outcome where most survive.

    All of the other response teams (0% interest, bailouts, stimulus packages) have been shot.

    This is truly a dire situation..

    If there is a nuclear option then right now is time to push that button.

  • Mel

    The scary thing is that nobody is stopping him. What’s the hell is happening in America?

  • Sherlock

    It will not be possible to pay off the debt, deal with an energy crisis from peak oil and transform the economy into a low carbon one.

    Services will be cut, taxes will rise, environmental standards will be relaxed and all the military spending that has been occurring for years will have to be cut back as well. It won’t stop the petrodollar falling along with the standard of living in America.

  • http://WBDM Joe in JT

    Remember playing the board game Monopoly? When you start the game, someone yells out “I’ll be the banker”! So you are the banker, and your job is to give the other players some ones, some fives, some tens, hundreds and so on. That about trashed your bank, now there is only half the money left. But suppose your mommy came over with a sack full of extra cash! Mommy is weird, she is dressed like Ben Bernanke today, high forehead and all. Just imagine if Ben rrrrr Mom just passed out twenty’s and hundred dollar bills to any player that wanted some more! Soon, everyone would lose interest in the game and quit, like China quiting the greenback.

    Funny thing is you have to play the stupid game a little while to understand it sucks. It’s like tic tac toe, you can’t win. But suppose we played Monopoly over our neighbors house! The neighbors are called the Chang’s, they are Chinese and we don’t play with dollar bills we play with the Yuan. And Mrs. Chang isn’t dressed up in drag looking like helicopter Ben giving away free Yuans. You only play with the money we started with. Everyone say’s “Yeah”!! Let’s go play at the Chang’s.

  • Stevo

    If Bernanke told us the the truth there would be a total societal collapse. He and others are saying what is necessary to maintain order. We the people must now trust our eyes and not our ears.

  • Bob

    For a moment there, I thought we were in trouble!

    Move along. Back to sleep all you good sheeple. Nothing to see here. Ignore those dark ominous clouds on the horizon…

    Yeah… And I’m of the opinion that this site is actually fairly optimistic in it’s outlook…

  • http://pixzen.blogspot.com/ Damian P. Gadal

    How long does “the man behind the curtain” think he can continue to fool the public?

  • Maria

    Remember the nurse telling you when you were a kid, “It will just hurt a little.” Then you get jabbed with the worst burning pain you ever remember in your short little life.

    Ben Bernanke is the nurse. I think he knows exactly what is coming, and he knows it is going to hurt. Really, really bad. His job is to try to keep everyone as calm as possible for as long as possible. It is deceitful at best…evil really.

    I think the “powers” behind the Federal Reserve know EXACTLY what they are doing. This whole process has been perfected over centuries of banking. We the sheeple have just been too dumbed down to see it until it was too late.

  • Joey

    Also,if this quantitative easing was to spook the bond market,you’d see a rush to the sell window. Everyone would dump their dollar backed bonds,which could cause hyper inflation faster than you can say Alan Greenspan.

  • http://www.infowars.com dead_squirrel

    There’s no difference between a vampire and him. The problem is that there’s a bunch of them working ’round the clock to bury their crime.

  • Progressive Ed

    “The surest way to destroy a nation is to debase its currency”, Lenin.

  • Vic Anderson

    As much a SIMP as Alan; maybe more, addressing his assessment to the Grand TETONS than US 310M titsuckas!

  • http://Theeconomiccollapse Dang

    I see more of the same. The usa gov is going to continue taking your assets an not by simple taxing. It wants you to foreclose on your home. And the land that it is on. Freddie an Fannie are the new under cover IRS agents. Now owned by the federal gov, they make over 85% of all home loans in the usa. An also saying who can get a loan an who cant. So when the usa gov does go bankrupt they will get to sell all the forecloser home. To who is the question?? All is my thoughts on this. true or untrue you do the math.

  • Greg Pinelli

    This may come as a shocker to Ben..but he’s only the face of the Fed..there are a host of Governors and they don’t all agree with him. At the end of the day the Fed is a profit making organization..and if it holds tons of garbage (lousy Bank loan paper) there are real doubts it will take on tons more…

    Going to ease?? So what! Ease to WHO..at WHAT rates..WITH what prospect of being paid back??

  • Grumpy

    Benron is right – if the US economy consists of banks that can create or receive ‘money’ by punching a few zeroes into a computer terminal, thereby increasing the means of stealing productive labor and real property from the rest of us.

    And as for the rest of us – we get meager scraps from the table when the banksters are feeling generous. And they’re not feeling generous at all these days…

  • Danno

    Sure glad Bernanke is on the job, and everything is better. Guess I can give all my supplies to the the homeless now.

  • http://colonelgirdle.wordpress.com/ colonelgirdle

    We the American people already do not believe Bernanke but what good does it do? He and the rest of the incompetent & crooked who have run our nation into the ground still have their jobs. Ordinary citizens have no more influence over the actions of the corporate-owned government of the U.S. than the Iraqi people had over Saddam Hussein. Our “leaders” pretty much do whatever they want & count on the corporate-owned mainstream media to convince the average people that getting screwed is best for us.

  • markytom

    As other bloggers have pointed out massive inflation already occurred over the past decade or so – in the housing market. Time for deflation for a while. In many areas (e.g southern CA) houses went up in value by 2, 3, even 10 times in a few years. Housing ain’t coming back anytime soon, regardless of what Bernanke does. With record low mortgage rates nobody is buying new or existing houses. There is a huge over capacity of housing. Prices can only drop, and drop by a lot. All the different attempts by the government and the Fed to prop up housing are failing. The long-term slow crash of housing is going to continue to rip the heart out of the US economy (along with the myriad of other issues like unemployment, trade deficits, public pensions, you name it).

  • VegasBob

    Only a complete fool would believe a word that Bernokio utters.

    Bernokio and his predecessor Greedscam should both be tried for economic treason against the United States, convicted and summarily executed.

    There will be no recovery as long as the lying, cheating, embezzlement, fraud and outright theft are tolerated. These activities will continue as standard operating procedure until it becomes apparent that there is severe punishment for these activities.

  • http://WBDM Joe in JT

    Dang above is right. Our government and corporations want to take your land and home and put you out to pasture. I never realized it before but if you do not pay your credit cards and decide to stiff a mega bank, they can actually force you to sell your home, your car, your boat, whatever assets you have. I found out it’s a two step process. First they sue you in court, get a judgement, then the collection agent files a few more papers in court and the sheriff comes out and takes all your stuff. I never though it possible just for not paying credit cards, but this is the police state we now live in. My point is this, don’t go into debt, the corporations and banks have it rigged so they can grab all your stuff.

  • Not so Mad Max

    I don’t see where this is going to have a happy ending. Another reason interest rates are low is with the rise in rates it’s more money to pay on the debt. I don’t Chopper Ben is quite the dimwit most people think he is that said I’m not so sure about Barry O and his gang of lefties.
    Once the Fed starts with QE the bond markets will get spooked eventually, same with a rise in interest rates.

  • Owen

    We are being led by blind guides and this is their way of saying “Goodbye nation-states, hello New World Order.” They will lead us into a ditch and this planned transformation will prove to be a very disasterous event for all mankind. Our history has been foretold, choose your side very carefully.

  • ParLay

    Everyone on this forum should google and watch: The Secret of Oz

    A truly must see film about money, gold, silver and depression. Who knew the writer of the Wizard of Oz was a lifelong political activist who helped William James Bryan’s Presidential Bid. Just follow the Yellow Brick Road..

  • Lennie Pike

    The plan of the Fed’s complete takeover of the world’s financial system so that every one can be enslaved with their debt – not only the West, is perfectly on schedule. They are not incompetent. One step back by destroying the West, so that many steps can be taken forward by controlling the entire World. You have to spend money to make money, except they know how to make money even while taking a step backward.

    Money = work. Work is the definition of money. With no work, money does not exist. It’s your work they want, all of it – as a slave gives. They believe they are higher beings and deserve to be in the position of slave master so that we won’t have the means to mess up their existence. Have we up till now? We have done nothing but help them.

    We have to stop believing that the Fed is trying to help us. It is the opposite and they even try to tell us that just for fun through their actions and even by what they say, knowing they have programed and distracted us into not being able to see or hear it. But there’s nothing wrong with being gullible enough to fall for it, and we should be allowed to be innocent imperfect sheep without being attacked by the very very smart people behind the Federal Reserve.

    They are of the same type as the ones who control China, Russia, etc. as I have said before – thugs who have no problem with killing. They already have – JFK the perfect example. They have joined forces already with the East already, why wouldn’t they? Do you really believe the media reports about saber rattling and brinksmanship between the Navies of China and the U.S.? I have seen fighter jets with a red star on the tail landing at the naval air station in Beaufort, SC. They own our economy. Go to the airports in Washington, DC., you will think you are in China – nothing but Chinese businessmen and probably lobbyists writing our laws.

    Timothy Geithner himself has said that a one world currency is a good idea. Lloyd Blankfein said they are doing “God’s work”.

    They say there will be no more war or serious problems afterward. It will take the total confiscation of individual liberty and a lot of killing during and afterward to accomplish it. What I said sounds like it just came from a paranoid conspiracy theorist. No, nothing but past history, the truth, and a good ability to perceive B.S.. Absolutely no fear here – just concern for others suffering. These people at the Fed are dirty robbers. It would be very easy to stop them if they were not such good liars. All it will take is what we try to do here – let sufficient amount of people know.

  • http://www.bullcrap.com whitewash

    That right baby “PRINT BABY PRINT” not………

  • sonnyboy

    The faster this deleveraging process takes place the better. The current economic system is disadvantageous to the average person and needs to collapse so that a new system without all of this destructive debt can take its place. Otherwise, most everyone is going to be pulled into a vortex of unemployment and homelessness. Complete failure of the economic system could very well lead to the political breakup of this great country. In the long run, that just might be the right medicine.

  • GoneWithTheWind

    I swear I saw Bernanke on TV and there were strings attached to his arms and legs and it all reminded me of a puppet show. But think about it; when the economy is doing fine we don’t usually hear from from the Fed Chairman. Just the fact that the economy is not doing fine and the Fed Chairman comes out to tell us not to worry is reason to worry. Of course he is whistling in the wind, that’s his job. To question his honesty would be like asking a prostitute if she faked an orgasm. DUH! Of course he is lying.
    P.S. I really have no idea about prostitutes…

  • Something Wicked This Way Comes

    Time’s Many of the Year. Ben Bernanke.

    Nobel Peace Prize Winner, Barack Obama. Our country has never been this fractured, disillusioned, marginalized.

    I used to think that all of this was over done. That somehow, this “pain body” of ours was all make believe. But it’s not. It is real.

    The government is going to steal your freedom and then your money. It will do this in incremental steps. It has to- to survive. Eventually, there will be a giant push back. One by one, everyone will arrive at the same conclusion. We are the early ones. Hordes will follow. Ten years from now, when 75% of your money has been stolen from you and a small remainder is all that you’ll be given to live on- we are going to take back our country. And those in power and those with wealth are going to resist that.

    It’s not going to be pretty. Too bad for them.

  • Joey

    This week is going to be interesting,many key indicators are set to be released. You’ll hear quantitative easing thrown about!

  • http://WBDM Joe in JT

    In 1964 an amazing man named Dick Prennake went to Alaska, built his own log cabin, lived off the land, grew his own garden, shot one ram per season to live on, fished for graylings, and filmed his adventure. He actually ended up staying there for 35 years! Wow! The program is called “Alone in the Wilderness” and is shown on PBS. My point is this.

    You try to live alone in Alaska today, build your own cabin and live off the land and the government goon squad, the federal park rangers, the cops will all throw you in jail. The show with Dick Prennake is so amazing because he really lives a free man.

  • Jack Williamson

    Saudi Arabia, India, China etc. are increasing their gold reserves. The USA and the EU still have large amounts of this precious metal, but the ratio is declining.

    There is a very good chance that the next world reserve currency will be based, in some way at least, on gold and its functional equivalents. The USA and the EU will be important players in this new monetary order, but they won’t be running the show the way that they do now.

  • Pangea

    Joe in JT — I too am a big fan of “Alone In The Wilderness”. What’s missing in today’s world, is more people like Prenneke. Just a bunch of spoiled brats, turned adults, and trying to UP one another. My friend told me, his wife said she’d rather die, rather than to not be able to buy what she wants, when she wants it. Yet Dick Prenneke was content and happy, sleeping in -60 nights. “-60″!

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