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The Bernanke Speech

When Federal Reserve Chairman Ben Bernanke gives a speech about the U.S. economy, it gets a whole lot more attention than when Barack Obama gives a speech about the U.S. economy.  Why is this true?  Well, it is because Bernanke has a whole lot more control over the U.S. economy than Obama does. It is the Federal Reserve that controls monetary policy and interest rates. It is the Federal Reserve that can create money out of thin air. It is the Federal Reserve which is going to have the most influence over whether there will be inflation or deflation. So when Bernanke gives a speech, world financial markets listen. On Friday, news of the Bernanke speech sent gold and silver soaring towards new highs and send the U.S. dollar tumbling once again.  This new Bernanke speech was yet another very strong indication that Helicopter Ben is getting ready to fire up the printing presses in an attempt to get the U.S. economy moving.   

So is it a good thing for an unelected, virtually unaccountable private central bank called the Federal Reserve to have more power over the U.S. economy than the president of the United States?

Of course not.

But that is the way our system works.

So what did Bernanke say during his speech in Boston that was so earth shattering?

Well, you can read a full transcript of what Bernanke said right here.  The following are a few key excerpts from Bernanke's remarks....

*"Although output growth should be somewhat stronger in 2011 than it has been recently, growth next year seems unlikely to be much above its longer-term trend. If so, then net job creation may not exceed by much the increase in the size of the labor force, implying that the unemployment rate will decline only slowly. That prospect is of central concern to economic policymakers, because high rates of unemployment--especially longer-term unemployment--impose a very heavy burden on the unemployed and their families. More broadly, prolonged high unemployment would pose a risk to consumer spending and hence to the sustainability of the recovery."

Clearly, Bernanke feels as though unemployment is way, way too high and that lowering unemployment is now the number one policy priority of the Federal Reserve.

So how will this be accomplished?  After all, interest rates are already kissing the floor and that hasn't brought the U.S. economy back to life.

Well, as most financial analysts are anticipating, the Fed could launch a substantial new round of quantitative easing.

But wouldn't that cause a rise in the inflation rate?

Well according to Bernanke's speech, the U.S. economy is supposed to have a certain amount of inflation....

*"Similarly, the mandate-consistent inflation rate--the inflation rate that best promotes our dual objectives in the long run--is not necessarily zero; indeed, Committee participants have generally judged that a modestly positive inflation rate over the longer run is most consistent with the dual mandate."

Do you understand what Bernanke is saying there? 

He is actually saying that the goal of the Federal Reserve is not to have a zero inflation rate.  Rather, he says that we should expect to always have at least some inflation and that this is normal.

In fact, in his speech Bernanke said that inflation in the United States is currently too low....

*"...inflation is running at rates that are too low relative to the levels that the Committee judges to be most consistent with the Federal Reserve's dual mandate in the longer run."

Inflation is too low?

Is he joking?

No, sadly he is not.

Instead, he seems ready to break out the money hoses and start showering dollars from every street corner....

*"Given the Committee's objectives, there would appear--all else being equal--to be a case for further action."

"Further action" being code words for the "quantitative easing" that we have all been anticipating.

The funny thing is that in the nearly 4,000 word Bernanke speech there was not a single word about the value of the U.S. dollar.

This month the U.S. dollar has been plummeting like a rock, but apparently it is not an important consideration for Bernanke.

In essence, Bernanke's message is that the focus is on trying to "fix" the U.S. economy and if it is necessary to jack up the rate of inflation and to radically devalue the U.S. dollar then that is what we are going to do.

Bernanke also did not mention the foreclosure fraud crisis which threatens to throw the entire U.S. mortgage industry into a state of absolute turmoil.

But the rest of the financial world is definitely starting to take notice of this crisis.

All of this uncertainty is already starting to take a huge toll on U.S. bank stocks.  Several of the largest U.S. banks have seen their stock prices significantly decline in recent days.

The truth is that this could be the biggest challenge for big U.S. banks since the 2007 financial collapse.  Just consider the following very troubling signs....

*JPMorgan announced on Wednesday that it has boosted its reserves by a billion dollars in order to cover faulty mortgages that it was obligated to repurchase from Fannie Mae, Freddie Mac and private insurers.  In all, JPMorgan has set aside approximately 3 billion dollars for potential mortgage repurchases.

*But a few billion dollars may not be nearly enough for many of these big banks.  According to an estimate by Branch Hill Capital, Bank of America could be forced to repurchase up to $74 billion in mortgages.

*The losses from this crisis could be absolutely staggering.  Analyst Dick Bove is projecting that U.S. banks could lose a combined 80 billion dollars as a result of this foreclosure fraud crisis.

The truth is that it would be hard to understate just how much of a financial mess this foreclosure fraud crisis could possibly become.  A recent article by Nomi Prins did a great job of discussing some of the potential implications of this crisis....

If foreclosed homes couldn’t be sold because of fraudulent paperwork or had to wait for more detailed inspections, you can imagine how difficult selling assets stuffed with faulty loans might be. If it’s tough to find a title for a foreclosed home, think how tough it is to back the related loan out of a pyramid of securities sitting on top of it.

See, the loan that might be analyzed in a foreclosure situation could be part of a chain connecting the underlying home to 20 or 50 different securitized assets, all depending on it for either the interest payments the loan was supposed to provide, or the value of the foreclosure property if those payments stopped (in Wall Street speak, the "recovery value"). If a foreclosed property isn’t selling, it’s not recovering any money back to any asset waiting for it. Think what that can do to the value of toxic assets living at the Fed and the Treasury Department.

This foreclosure fraud crisis is extremely complicated, but the reality is that this could be the thing that breaks the back of the U.S. financial system.  For much more on the specifics of this crisis, please check out the following articles that I have previously posted....

#1 Foreclosure-Gate

#2 Foreclosure Fraud: 6 Things You Need To Know About The Crisis That Could Potentially Rip The U.S. Economy To Shreds

#3 The Real Horror Story: The U.S. Economic Meltdown

The truth is that the U.S. economy is headed for extreme danger and what Bernanke wants to do is douse it with gasoline and light it on fire.

Once the Federal Reserve starts down the road of trying to "stimulate inflation" in order to get the U.S. economy going, it is going to be really hard to turn back around again.

But the truth is that this is what the U.S. Federal Reserve has always done.  They have always destroyed the value of the U.S. dollar.  The U.S. dollar has lost over 95 percent of its value since the Federal Reserve was created in 1913, and now Bernanke says that we need to actually accelerate the pace of the destruction of the dollar in order to "help" the economy.

In the end, this whole thing is going to fall apart.  In the end, all of the juggling and fancy financial moves by the Fed are going to fail. 

The U.S. financial system is a pyramid of fraud built on a mountain of debt.  By definition it is unsustainable.  At some point it is going to dramatically collapse.  The only real question left to answer is when it will happen.

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  • DMyers

    To build an economy and create jobs, it takes industry, savings, creativity and character in the participants of the economy. It takes trustworthiness and the security of a handshake. It takes a certain quality of soul in the people. These are not things that politicians foster. These are what politicians destroy.

    We have sadly fallen into a mental paradigm of “Why isn’t the government fixing this?” That’s how buffoons, frauds and charlatans like Bernanke are able to step up with these farcical solutions. They fill the fantasy of “there’s someone, a expert, who can fix all this.”

    See how well they’ve fixed it so far. Ninety five percent devaluation of the dollar since the inception of the Fed. Arch-conservative Nixon took us off the gold standard. Arch conservative, rabidly anti-deficit, Reagan launched a military deficit driven pseudo-boom. Arch conservative GW Bush took the deficit to even greater heights and got us into foreign entanglements (oh, but he opposed abortion).

    Arch-liberal Clinton removed the very financial regulations that liberals champion. He, too, led us into foreign entanglements. Arch liberal Obama is leading us into the police and surveillance state the liberals abhor. He is as war mongering as any conservative in recent memory.

    So, Bernanke is now in the “fix-it” seat. Ha! Pardon me for that unavoidable chuckle.

  • Mel

    America has a chance to end the FED by voting Ron Paul as president in 2008..
    http://www.ronpaul.com/2008-11-23/ron-paul-end-the-fed/
    Instead the idiotic Democrat and Republican voters decided to nominate dumb and dumber to contest the presidency. The American voters will regret they have squandered their chance just like they have rejected Ross Perot 20 years ago to stop phony free trade.

  • emma

    Bernake is a joke. he knows exactly what he is doing and acts like he doesn’t know what is going on. Time to wake up.

    I woke up at the beginning of this year, thanks to the guy from http://www.forecastfortomorrow.com he knows his stuff….and quite accurate. Great blog, and post, thanks a lot keep up the great work.

  • Joey

    Hold on,this is the tipping point!

  • http://stockresearchportal.com Ian R. Campbell

    While I don’t see Bernanke’s speech yesterday in quite the same light as you (see following), I do get to the same conclusion you reach. I also think your article is well worth people reading and thinking about, and will be linking it on Monday in my e-mail to my http://stockresearchportal.com Subscribers – investors interested in investment education, macro-economic education, and Mining and Oil & Gas Stocks.

    I read Mr. Bernanke’s speech carefully as soon as it came out yesterday. I found it highly enlightening – or so I think – not so much for what it said, but for what it didn’t say. In essence, I concluded the Mr. Bernanke and his Band of Merry Men simply don’t know what they can do to get the U.S. economy meaningfully (an important word) out of the hole it is in, and likely are spending a lot of time on their knees praying to a benevolent overseer to create a ‘new circumstance’(for example, a major military confrontation) that might create long-term manufacturing jobs and jobs for young educated and uneducated Americans. I actually think Mr. Bernanke yesterday did no more or less than what he had to do by speaking in platitudes. Platitudes buy time – or at least buy some time. Imagine the result if Mr. Bernanke (or President Obama) stood up and said in an absolute bipartisan way – that is, without laying blame on anyone else for the economic place the U.S. finds itself in – ‘we are plain flat out of ideas folks, we are all going to have to ‘grin and bear it’ and let the free enterprise system our Founding Fathers and we find so dear and close to our hearts look after us all, for better or worse’?

    I expressed my views in my ‘Subscriber E-mail’ that was sent out yesterday. If interested, you can read that e-mail at http://goo.gl/cf8F.

  • Jerry

    The thing that all the policy makers (i.e. professional idiots) don´t get is that the average worker has lost faith in everything. He-she will not work harder, longer to pay off debt. He-she will not go further into debt. Debt is the anchor of the banking system. As Reich has delineated many times in recent years, the average american has used all possibilities to ¨mobilize¨ him-herself upward by working longer, putting wives to work, maxing out debt against his home, maxing out his credit cards. All this, in retrospect, was a losing strategy, particuarly in view of the fact that mostly what the average american was up to was to maximize the value of his home – which for the average american was the only asset he-she believed was under his-her control. Sad to say, the fundamental shift is that the average american now knows that it was a scam, the value of his-her home was never under his-her control, he-she busted his-her balls, let their family life go to ruin, under the illusion that he-she was ¨getting ahead¨ while only the lords of money were getting ahead, counting on the average worker to run like rats in a cage forever. The rats have stopped, they´re exhausted and they finally realized they´ve been wasting their time. The lords of finance refuse to admit that the inner engine of their world, the average american worker, has quietly changed his attitude towards life and work. What the lords of finance don´t understand is that now the average american worker expects the system to do something for them. So anything the lords of finance will come up is only to entice the worker to repeat his-her previous behavior. Anything along these lines will fail. The continuing mortgage system collapse is only further enticement for the average american worker to do nothing, spend nothing, risk nothing.

    The only rats that are doing well in the current economic model are those who get paid for violence. Just watch the average TV program in prime time – most are about some kind of violence or another. We´re being molded for the other kind of economic activity – destructive-suicidal type. If we can´t entice them with illusory wealth, we may as well entice them with the glories of rape, pillage, and revenge. Resembles more an ancient society than a modern one. Christianity was born in the ruins of the roman culture, when the average person lost faith in everything the dominant culture promised. Christianity was an underground movement that was waiting for the end of the world, but, in the meantime, trying to help each other. It took centuries before the roman model exhausted itself, and then things didn´t get better for centuries after that, not until science was reborn. The advantage the world has now is that science is still studied. Technology will not go away, the question is where it will be used to make everyone´s life better and where it will be used to control, monitor and terrorize everyone.

    So far the american-israeli coalition is interested more in the latter model, technology in order to set up a new feudal economic system. That´s the clash of cultures in the world today. How and if it will end is not certain. There is a danger that after the next expansion of american-israeli wars there may be fewer parts of the world left that will still have potable water and radioactive-free soil. A shrinking world population over the next few decades is a certainty, whether that helps or hurts the prospect for peace and prospertiy is uncertain.

    For the moment, it seems clear that all options will be exhausted before the transfer of wealth upward is shut down and the US adopts a system practiced nearly everywhere else in the world that attempts to provide for everyone, the rich included. Only after the dollar is abandoned, savings becoming worthless, the military runs out for petroleum, prisons closed, then some sort of socialist model is cobbled together from the ruins.

  • William

    Art 1, Section 8 of the US Constitution assigns to the US Congress
    “To coin money, regulate the value thereof,
    and of foreign coin, and fix the Standard of Weights and Measures”.
    Congress can NOT give its Constitutionally mandated powers to another entity. The Federal Reserve Bank is UNCONSTITUTIONAL. If Americans had any intelligence at all, they would FORCE their Representatives and Senators to ABOLISH THE FED! But, the very same interests that run the FED (foreigners)
    also control the Congress. What do YOU know of the Rothschilds???

  • Kurly

    Game over for the USA – as predicted, 20 years after 1990 collapse of the USSR.

    Sic transit gloria mundi

  • http://theeconomiccollapseblog.com Michael

    You have to keep your grass cut to keep an eye on snakes like Bernanke.

  • Gary

    This guy is a retarded dolt who should have been fired for gross failure. How can someone screw up as monumentally as him and not be run out of town? Oh, I almost forgot corporations rule our country and can even vote (by proxy) so as long as you do their and the rich will you are safe regardless.

    We are a banana republic.

  • alice

    Is the Federal Reserve interested in what is best for Globalization or what is best for our own National Security. There is a very big difference between the two! If Globalization is his priority, then we are in for a “VERY, VERY” rough ride, if it’s our National Security then we are in a “Very” rough ride!

  • http://erectuswalksamongstus.com Max Hardwood

    Foist!

  • F. Beard

    Don’t listen to me but the way to solve this mess is for the US Treasury to print money. Actually no printing is necessary. The US Treasury could send every American adult a nice big fat check of new debt and interest free legal tender fiat COMBINED with leverage restrictions on the banks to preclude serious inflation. Problem solved.

    Debt forgiveness is Biblical (Deuteronomy 15) but since FRL cheats savers too via suppressed interest rates then they should get a equal bailout too.

    However, I am enjoying the spectacle of a fundamentally dishonest money system implode. Don’t hurry on my account except there are innocents being hurt so maybe we should hurry.

  • F. Beard

    Well, maybe not. Even if people have some new money to pay their mortgages with, the problem of who they should pay it to remains.

    Never mind.

  • Laticia

    Thanks. I suspect that the Fed is not as foolish as it seems on the surface. It could be that their goal is not to save the USA, but to destroy it. That would explain the futile “war on terror,” the fraudulent health “reform” bill, the misguided efforts to salvage the economy, the handouts to the big corpporations, the partial destruction of the Gulf of Mexico and outlying coastal communities, and so much else. It could be that they are wickedly clever, and that they have a plan for us. If that is the case, it’s high time to go after the big bankers themselves. In fact, that may well be the only workable tactic–visiting destruction on the would-be architects of our own demise. They always followed J.P. Morgan’s dictum that “I can hire half the working class to kill the other half.” But what if they themselves became the direct targets of our wrath? Will they continue, or give up?

  • William

    CRY HAVOC! AND LET SLIP THE DOGS OF WAR!!!

    Or…we are so screwed.

  • http://TheEconomicCollapse dwk406

    I don’t know if you saw Sussie Orman on the NBC news tonight. Maybe she has been saying this all along in her show, but she was not pulling any punches. Rich are growing richer. Middle class is dieing. Advising us to live more frugally, live simpler. I like that from someone making 6 figures or more. I guess she doesn’t care; she’s part of the dwindling “in crowd.” My question: Do you think the American middle class will go into the dark quietly?

  • TZMhawk

    Resource based economy is a far better alternative that eliminated greed and inequality from the societal equation. We will have to abandon monetary system one way or the other after collapse….think about it!!

  • David M

    There are many points to discuss. I will bring up this absolute.

    The Government will always under report the bad news.

    I expect inflation will be higher than he indicates. In fact, his comments are a stalling tactic to keep as many people unprepared for when hyperinflation hits.

    David M

  • Maria

    We have been fools! We allowed our government to become a house of despotism. Shame on us! Are we really expecting Mr. Bernanke to fix a problem he doesn’t see? Things are going beautifully as planned for the Fed, and Mr. Bernanke is executing his role with precision. The goal is one world government…the demise of all nation states…and the annihilation of American sovereignty. Welcome to the New World Order!

  • http://www.danielrevelationbiblestudies.com Robert Stout

    Mr. Bernanke is being told by the Jesuits just what to say and do!!! Their plan is gaining ground exponentially and it will not be long until the economic collapse is final!!! Have your weaopns locked and loaded and ready to go, because we are almost there!!! To many of my friends in the military say the same thing that have a high security clearance!!!

  • aurora

    The “official” unemployment percentage (9.6?) seems way too low if you closely observe your surroundings, all the people in need. It literally feels like 45% unemployment. The “official” approval rating for Obama (45%) seems way too high if you closely observe the anger of the people in dire straits. It feels more like 15% approval. These %#@%@ have no conscience when it comes to pumping out fake percentages to placate the masses.

    Bernanke the celebrity is no doubt a shill and associate of TPTB. It must be torture for a crapload of people out there right now: the utter lack of jobs, wanting to prepare/escape but having no assets, savings, resources, nor any way to obtain these things to help them out of their financial death spiral. I know that it is for me (torture). If this sounds like you…I feel ya.

  • Mike

    Mel : RonPaul is a religous righter. He wants to reduce our personal freedom by forcing his religion on everyone. We are better off poor and free as opposed to the Ron Paul church state.
    FYI, Ron Paul is a republican and has been in poltics for decades. He is the problem.

  • http://WBDM Joe in JT

    “The foreclosure fraud is extremely complicated”??
    No it’s not. I can sum it up in one paragraph.

    Banksters knowingly gave away home loans to people who couldn’t pay it back and recieved fee’s for doing so. Then banksters bundled the worthless loans into stocks to be sold to unsuspecting investors and pension funds. Again banksters recieved fee’s for every step in the process. Then banksters “bribed” rating agencies like Standard and Poor to give thier trash triple AAA ratings. When it all crashed down around them, as planned, banksters forced our government to hand them taxpayer bailout money or riots would ensue and martial law declared. If you or I did this it would be called extortion. Now that people are forclosing on their homes the banksters want you out of your house “fast”. To do this they “robo-signed” paperwork and presented it to a judge. When the judge asked the bankster if all these documents were true and correct the bank lawyer said “YUP”. Of course that was a lie, they never even read the documents and some were falsified. For you and me this is purgery and comtempt of court. For the JP Morgans and Goldman Sachs of the world, it means another taxpayer bailout.

  • lostinmissouri

    The woman running against Harry Reid in Nevada, ask Sen. Reid, how is it, that when you were first elected, that you were a normal middle class American, and that now, you are worth over multiple millions?

    This is the question that demands to be answered by every one of our elected officials.

    These guys have all gotten rich, while giving away our economy and jobs, to the Chinese.

  • Tony

    The latest foreclosure mess is essentially a legal issue. The Wall Street lobbyist will write a piece of legislation that congress will enact that will “fix” everything by basically saying that the owner of a mortgage is whoever the bank says the owner is or something like, if the resident cant prove they have made payments to someone then we will give the home to whatever bank wants it and they can sort out who gets what among themselves.
    Everything will still eventually collapse but this wont be the tipping point. It’s too easy for congress to write a new law to fix it. The law is probably already written. watch.

  • Mike 2

    People need to realize that depressions, recessions and wars are created. Can I say that again? They are created. Why have we given the power to control our economy, thus have a huge effect on the world economy, to a private organization? Because the Fed has the power to control how much money is in the system, they have the power to decide if we go into an inflationary/deflationary state.

    Bernanke is a liar. The Fed isn’t saving the economy, they are willingly destroying it so they can feed their hunger for power.

  • Eddie

    poorly written, of course the dollar has lost 95 percent of its value it’s called inflation for a hundred years.

    this writer is probably for deflation!

    ps bias anyone “the economic collapse blog.com”

  • Jennie Walsh

    Jesus said, “Ye have sold yourselves for naught; ye will be redeemed without money and without price”.
    Liberalism is the “politically correct” (deceptive terminology) for communism and socialism. Communism and socialism are tyrannical forms of government whereby the evil rulers collect all the money and wealth of the people and then dole it out as they see fit. The problem is that the evil, corrupt rulers keep most of it for themselves and become tremendously wealthy while the people can barely survive and many don’t. Communism/socialism/liberalism create poverty, suffering, death and enslavement for the people and wealth and power for evil rulers. The people are left helpless, dependent on the rulers, and at the mercy (which the rulers have no mercy, but pretend they do) of the rulers. Communism/socialism/liberalism are Satan’s political system and method to gain power, control and dominion over the world and everyone and everything in the world. Communism/socialism/liberalism are con jobs by the international bankster gangster (murderers, war mongers, liars, thieves and servants of Satan) to gain absolute control over everything: the lives, children, minds, property, time and energy of the people. It is becoming more and more obvious that their crooked banking system, the Federal Reserve and the IRS (the oppressive,illegal, criminal, terrorist collection agency of the Kingdom of Satan) are literally stealing America’s homes, properties, money and businesses. They are poisoning us with contaminated water, food and air, toxic vaccinations, depleted uranium; using corrupt education in seminaries, law schools, medical schools, public schools and propaganda in the mainstream media to deceive, mislead and fool us; deceptively getting us into wars to kill off our young men and women and to steal more money for weapons (again, keeping most of the money for themselves); using our own police forces and military forces to enforce their tyranny and theft against us; ruling in favor of evil and against truth and justice in the courts. In a nutshell, they are hell-bent on creating hell on earth for everyone but themselves. Pray for discernment, pray that you will recognize these people because they are extremely secretive and deceptive, pretending to be upright and honest, pretending to be your friends and helpers. These deceivers are literally everywhere. The battle being waged throughout the earth is literally a battle between good and evil, between freedom and slavery, between truth and deception, between right and wrong, between the children of God and the seed of Satan. You can be certain that the “liberals” are of the seed of Satan. Pray that the victory of the children of God will be swift. Call forth the judgment of Almighty God that all the destructive creations, destructive actions and destructive intents of the Satan worshippers will be returned back upon them as quickly as possible to their own destruction. Please forward this message, this warning and this plea for the judgment of the wicked on earth.

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