Tuesday, August 31, 2010

Is Ben Bernanke Losing Sleep Over Possible Great Depression?

Federal Reserve chairman Ben Bernanke loses sleep over the possibility that the United States may suffer a repeat of the 1930s' Great Depression. Inflation hawks and opponents of President Barack Obama's Keynesian "stimulus" warn continually of a possible repeat of the 1970s' stagflation. Yet recent data is beginning to suggest a more unpleasant possibility still: that the United States could suffer both traumas simultaneously - a prolonged period of pathologically high unemployment combined with vicious and unrelenting inflation.

This grim prognostication results from recent developments that have eliminated some economic possibilities but boosted the probability of others, including the apparently unlikely outcome The possibility I thought most likely a year ago, of a relatively strong recovery accompanied by rising inflation (which might then require a Paul Volcker-style remedy to combat it, so pushing the economy into a double-dip similar to that of 1980-82) now seems relatively unlikely.

Likewise, the possibility feared above all others by Bernanke, of a bout of savage deflation sufficiently severe to choke off economic recovery, is also off the table - although in my view it was never truly on it.

The US might also, like Argentina, suffer a period of hyperinflation. 
The prospect ahead is thus uniquely gloomy. Part of the gloom is caused by a natural and unavoidable change in the terms of trade, making a reduction in US living standards inevitable. However, most of it can be ascribed to wrong-headed policies pursued by the four horsemen of the financial apocalypse, Messrs Bush, Obama, Greenspan and Bernanke. 
Long Read HERE..


  1. Wow this is becoming quite the ad and banner repository. EA I hope you are doing well with all this advertising. Its hard to concentrate on the ads/links anymore.

  2. These "Austerian economist " supporters
    always calling for "Austerity" cuts to wages and welfare to restore profitability and claiming to be morally superior to the "Keynesian" dimwit supporters of capitalism ,appear to be Austrians of the Hitlererian type,born in Austria The main thing about their Von Moses/ Mises /Mizers style Messiahs 'libertarianism" is to preserve Corporate State Profits with oportunities for gold and silver hoarders and to blame big government for any problems of profitability and economic crises on fiat paper
    Recurring economic crisis and deppressions were regular events in America even before the Fed bank was even created.
    Crises in profitability ,the inability for some capitals to continue to make even average profits ,manifest thememselves first as a credit supply crises. Where cash is king .Followed by a great desruction of fictionaly valued capital ,shares and bonds
    with unrealistic expectations of making average profits.Their P/E ratio is cut.
    Fractional reserve banking worked with Gold for the banksters ,the Rothchild types
    of government bondholders ,seizing control of governments ,by creating the national debts ,with deficit spending of the government encouraged and then privatising all the future tax revenues,long before the Fiat paper dollar system .
    "Gold plated Austrian Fascists"?

  3. 9:57 due to lack of support I had to put these obnoxious ads up. I may remove the pop ups. Although I don't get them when you use FIREFOX. Beats closing this blog?

  4. Good on you EA.

    Get as many ads as you can,to help support your costs and maybe eventualy even your hard work.

    There doesnt seem to be many donations coming in .

  5. From the article.....

    "Unemployment is unlikely to reach 25% as it did in 1933, but a prolonged period of 12-15% unemployment, more than half of which is long-term, is entirely possible."

    Well, let me just say this. The true unemployment rate is closer to 22% according to Shadowstats. That is, those who are not being counted as they no longer collect unemployment and also factoring those underemployed - or IOW working part-time.

    So this magic 25% GD1 number is IMO soon to be shattered by GDII. When you have over 40 million American's on food stamps that alone when applied against the pool of employable individuals out of 330 or so million in the U.S. in total tells you everything you really need to know about how bad things truly are with regards to jobs right now.

  6. Unemployment figures never count those in school or those that have been unemployed over a year. Being in school and then being unemployed for a year are pretty common these days.

    The government likes to pretend people are "not looking for work" when they are unemployed for a year. I'm sure they pretend a lot of other things to lower those numbers.

    Considering the fact that the government apparently can't even figure out how many people are living in a house without sending forms and then threatening people if they don't send them back, and hiring thousands just to harass these people at their houses, how can anybody believe these same inept hacks can figure out how many people are actually unemployed or underemployed?

    They probably count volunteer work as employment.

  7. This is not going to be the "Great Depression Two". Yes we are in a depression, not a recession. But where this is leading is not a depression which is what we have been in so far.

    This is not an awakening either - those who read into what is happening take four forms:

    1) Conservative Patriots
    2) Marxist Conscripts/Recruits
    3) New Age Conspiracy Theories (Jones, Icke)
    4) Neutral but aware of economic situation.

    Scary that the above is still a minority combined! The nation is 40% Conservative, but most of those people have no clue why they call themselves Conservative. "I vote Republican"... whatever.

    Talk to most young people, their entire lives are based on their next drink. Most old people are far out in space. Those who are starting to settle down with a family, in their 30s or so are even dumber than those in their 20s! I've never heard of people being this fucking dumb! EVER!

    Tell them what's happening and watch how terrified they'll become. It's pathetic to watch mature adults be more scared than a 23 year old. I can't stand it!

    Is Bernanke getting sleep over the depression? I'm sure he sleeps just fine, he is basically void of any heart/soul. Will he get sleep when the depression mutates into a black hole? I don't think anyone will get any sleep then, nor will there be time to analyze what is transpiring.

  8. http://theautomaticearth.blogspot.com/2010/08/bubble-case-studies-ireland-and-canada.html
    Will the Fed do the next round of quantative easing to prop the property markets in the US be similar to the model discussed in Ireland.by posing as A rescue for the homebuyers
    The end result being a final buy up of property from the Fed by the rich for cents in the dollar with the taxpayers left footing the bill as debt peons?
    “With the scale of the banking woes becoming increasingly obvious, the government set up NAMA (the National Asset Management Agency) in 2009, with a view to using taxpayers' money to assume ownership of troubled property assets:
    The idea is that the NAMA "will buy all of the land and property development loans of the six Irish banks of covered by the State guarantee. This means the total potential value of the loans which will be taken on by NAMA will be between €80 billion and €90 billion. By taking problem property loans off the hands of the banks, the Government hopes to put those institutions in a position where they can resume lending.

    NAMA will probably become the biggest landowner in Ireland. Developers might not yet realise it – but every single land and investment property they own which has outstanding debt could end up in the new National Asset Management Agency. Even if these debts are bought by Nama at two-thirds of their face value – the bill could be in the region of €60 billion. (Ireland’s national debt is currently €54 billion.)"

    This is a monumental transfer of public assets into private hands through a privatized-profits-but-socialized-losses model. The concentration of property ownership in Ireland is returning with a vengeance. With ordinary people having spent unpayable amounts to buy real estate, they are now likely to forfeit their property to the wealthy, who will buy it up from NAMA at a few eurocents on the euro.

  9. to 12:21--we have become stupid by design and complicity. The average person doesn't know how to find out information and facts and doesn't care anyway. The audience for Fox News consists of far-right followers who want confirmation of their nutty ideas. I don't care how religious the Bible Belt is, they remain uneducated. What's the drop-out rate for the country's high schoolers--something like 30% (more in some areas)?

    The schools no longer teach art, music, culture, literature, and critical thinking. Instead the money goes to the football team. Teachers have to teach students to pass tests or the school won't get their cut of funding--so that's how the school day is geared. Also, the school day is about half of what a school day would be in Europe or Asia.

    The corporations and politicians view us a sheeple or cannon fodder. If you look at interviews with the folks who went to the Glenn Beck rally, they are unable to articulate the problems we face. Instead we hear about socialism and a Muslim president...which is exactly how Wall Street deflects the anger away from themselves. While corporations spent the last decades stealing from us, they got people to scream about abortion and gay rights. Now they've gotten people to carry on about total crap while the corporations steal what's left.

    I see no solutions as long as Congress is corrupted and people allow themselves to be ignorant.

  10. Does anyone have a plausible explanation for today's stock market surge?

  11. 9:11 yes manipulation at it's finest. The lie today is the the Chinese Manufacturers are up. Probably way down from last year but that's another story.. (Christmas is coming..HELLO)

  12. 9:11 - Yes, pure manipulation. They want to pump the market up so it can absorb coming bad news. This is nothing more than an effort to keep the Dow above 10,000. It's easy to see the fraud in the market gyrations. The markets are totally controlled by the Hedgies and PPT and is by no means an open,free market anymore. No brainer.

  13. EA, I am a very big fan of Strider rides. I visit your advertisers as often as I can. I am unable to come to your site much anymore because of the flashing moving ads. I thought about sticking sticky notes over them so I can read. I turn the volume off the TV when the commercials come on and they have the volume extremely high. I just don't like obnoxious advertisements.

  14. 11:24 don't let the door slam you in the ass.

  15. All right, if its not bad enough with the ads my post that makes a harmless reference TO ads in general gets deleted. What kind of strong-arm tactics are you trying to pull on everyone here? Anyone that makes a comment remotely related to too much advertising on the is seen as antagonistic to your little side money-maker? BS....

  16. At least Soviet Russia pretended to have the good of the people in mind when they censored people, not personal gain. Kind of despicable really.

  17. Roger and 4:30 you're welcome to take over this site, find the articles and work full time for NOTHING, DEAL?

  18. I am very pleased to see the adverising ,it shows that the work EA does in providing information is attracting enough viewers to now making adverising worthwhile.
    The donations made in the past do not appear be enough to be able to cover the costs of running the site .
    Let alone support the research work EA has done apparently as a public service.

    But like it or not we live in a comercial world.

  19. I think that flashing ads and the like appearing will depend on how different internet browsers are set up.
    For example I cut off the live video feed from the gulf oil spill on this site by turnibg off "Flash Player" or something.
    Perhaps you can find a browser that can be set up to receive text only?

  20. All the money goes to football programs? That's the stupidest fucking thing I've ever heard.

    Americans are stupid because they avoid math and science, and instead, focus on those supercilious careers emulated by Hollywood and Cable TV reality shows.

    America sucks because it became fat, lazy, entitled, and narcissistic. Like the article says, the labor force here is not worth as much as it thinks it is. Those who have a job will suffer from wage and benefit depression while at the same time the cost of living will rise higher. This will lower the standard of living and the entire world will start to even out. America goes down, third world goes up.

    Those with a job will be taxed and fee'd to death to provide government "band-aid" benefits to those who don't have a job, securing votes for desperate politicians.

    More family members are going to have live under one roof, and live there longer, to support the household. Everyone in the family is going to have to work, support the house.

    People are angry. They read articles that support their opinions and then express a vitriol of misdirected hatred on internet forums. Truth is, few people understand what is happening and fewer really know how to prepare for it.

    Ten years from now, we'll all be pushed through the strainer. Preparing for what's coming isn't going to prepare you for what's coming.

  21. In reply to the Von Mises attacker, the Jewish Von Mises family fled Nazi occupation to relative safety in Switzerland.

    While France outlawed private gun ownership and relied on the professional military, that country fell. Swiss citizens were armed as a matter of policy and the Nazis estimated they would lose a million soldiers attempting to conquer it. The scandals regarding Nazi stolen Jewish gold in Swiss accounts have been acknowledged and reparations paid.

    As for business cycles and depressions, it's true the Austrians point blame at government distortion in the market causing or prolonging recessions because of the misallocation of resources. After all, the Fed was not the first instance of the U.S. government messing around. According to Wikipedia, http://en.wikipedia.org/wiki/History_of_the_Federal_Reserve_System#Central_banking_in_the_United_States_prior_to_the_Federal_Reserve "The Federal Reserve System is the third central banking system in the United States' history."

    The Fed was supposed to smooth out the business cycles. Failing to do that, it also has debased the value of money. A dollar at its founding is worth maybe a nickel today.

    Many libertarians (including me) support a Rothschild conspiracy theory, but their vast fortune was possible because the conspirators took over national currencies including the Fed. http://theamericandreamfilm.com/

    I'm curious what you think would solve the problem.


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