Ben Bernanke Blames Congress For Cutbacks That Cost US Economy 1½ % Growth

Let’s see if I get this right. Outgoing Federal Reserve Chairman Ben Bernanke blames Congress for federal spending cuts that cost the US economy up to 1½% growth. He says Congress cut 700,000 jobs (2) at a time when the nation’s central bank was dispensing money at low interest rates and Congress should have been on a spending spree to invest new money into growing the economy.

But, but, Ben, wasn’t Congress enacting spending cuts and reducing Federal employment rolls because our lenders (China, Japan, on the hook for about $3 trillion the US doesn’t look like it will ever pay back) were threatening to sell off their US IOUs (treasury bills) at a discount, which would have resulted in a massive collapse in the value of the US dollar in international trade? The US had to send a message to our foreign creditors that we intend to get Federal spending under control. There was really no choice, was there Ben? Or is the US economy supposed to be run just to make the Federal Reserve chairman look good?

Taking care of your banker friends

And uncle Ben, hasn’t the Fed been printing new money at the rate of $85 billion a month which is being distributed to close member banks who are gambling it on the Wall Street stock market to recapitalize themselves rather than lending it out into the economy so citizens can buy new homes, automobiles? You know, Ben, real economic growth rather than the phony speculative run up in stock values that has sent the Dow Jones stock index soaring in an artificial bubble?

It is reported (2) that trades on the New York Stock Exchange made with borrowed money now represent 2.5% of US gross domestic product, or about $400 billion. So you can’t have it both ways, falsely raising GDP by 24-7 money printing and then saying federal budget cuts cost you your reputation as you exit the Fed.

And Ben, we know you have to keep calm and fudge the numbers and not bring on undue panic or trigger bank runs with a slip of the tongue about the real US economic numbers. But you well know that the US economy is living on borrowed and newly printed money, and if that newly created money gets into circulation in the economy it will trigger out-of-control inflation. So, for now, it is best to keep new money circulating between the banksters and the stock market and let the rest of America suffer (the so-called Wall Street over Main Street argument).

Give us the real numbers, Ben

Ben, you certainly must know that all of the key US financial numbers by heart. You probably don’t need them penned on the back of your hand like those college quarterbacks. You must know US tax revenues are just $2.4 trillion, while spending is actually 6.6 trillion if you adhere to Generally Accepted Accounting Practices (GAAP). You remember GAAP accounting from your younger days, don’t you Ben?

Yes, the Federal government say it only spends ~$3.7 trillion out of its general fund, but Medicare and Social Security trust funds are partly being funded out current tax revenues and when those numbers are added in, the US is spending ~$6.6 trillion a year, not $3.7trillion (source: href="http://theeconomiccollapseblog.com/archives/it-is-now-mathematically-impossible-to-pay-off-the-u-s-national-debt">Economic Collapse Blog says, it is now mathematically impossible for the U.S. government to pay off the U.S. national debt (~$17 trillion accumulated debt) since the US government now owes more dollars than actually exist. Print your way out of that problem without fanning the flames of malignant inflation.

Isn’t government spending on the cost side of the ledger?

You must also know, book reader that you must be Ben, that John Mauldin in his book ENDGAME notes that the nation’s private GDP stopped growing 14 years ago and the Federal government grew to make up for it. The current US economy is only growing by manipulation of numbers and growth of the Federal government.

According to ShadowStats, if 1980 measures are used, unemployment is not 7-8% but above 20% and the Federal Reserve’s target inflation rate of ~2.2% is not the real rate of inflation, which is more like 9.3% ( href="http://www.shadowstats.com/inflation_calculator">John Williams shows savers who deposited $100 in banked money in 2006 would need $160 today to buy the same amount of goods and services as 5 years ago. (3) The Fed is robbing savings accounts via hidden inflation out the back door of the bank.

Paying back retirees with cheaper dollars

Oh, I get it now. The Federal government knows it overpromised and can’t pay fully inflation-adjusted pension checks to retirees. So the Fed relentlessly sneaks a certain rate of inflation into the system so that the people are paid back in diminished valued dollars. That way the obligations the Federal government can’t meet don’t look so bad.

I mean, the average social security check was $321 in 1980 and in 2011 it was $1183 (adjusted for inflation). But if that $321 pension check were to be fully adjusted for inflation according to way inflation was calculated in 1980 (cost of gasoline and food included), then that $321 should be $3636 to have the same purchasing power today. (5)

So the difference over the typical 15-20 years a typical pensioner receives Social Security checks, between $1183/month and $3636/month (not counting for inflation over that time as well) would be $2453/month or $36,795-49,060 the Fed reserve inflation policy has robbed from retirees.

Create inflation so government can pay back retirees with cheaper dollars, but tell them their pension checks are adjusted for inflation. Nice shell game you’ve got going there.

Ben Bernanke consulting, LLC

What are you going to do Ben when you leave the Fed? I mean, are you going to start a consulting company and maybe call new Fed Chairwoman Janet Yellen after hours, ahead of anticipated interest rate changes, and clue in your clients? I mean, all the rest of Washington DC does this type of thing Ben. I mean, it’s your turn to profit now. You admit you took calls and had meetings with elite insiders as to upcoming changes in Fed policies while you were in office. It will be time to return favors once you leave your desk, right Ben?

Lessons from the monopoly board game

And Ben, God bless your mother for playing the Monopoly board game with you when you were young so you could learn that play money can buy a lot of things. I mean there was a day, prior to your term at the Fed, when money represented things of value, like gold and silver. (Remember those Silver Certificates Ben?) Now it is just backed by “the full faith and credit of the United States,” which has $17 trillion of accumulated debt and must print more play money just to keep sending Social Security checks.

Getting back to that speech you really can’t deliver as it would shock the markets and bring down the whole world economy like a house of cards. Maybe given some truth serum you will spill the beans someday. You certainly knew, before the banking/lending industry fell apart in 2008, that the Securities Exchange Commission was allowing banks to have huge lending to reserve ratios, 30-1, 40-1, even 50-1. You must have known that Fannie Mae and Freddie Mac, quasi-government entities that are in existence to take bad loans off the books of derelict bankers, could no longer take on any more non-performing home loans. So the Fed decided to take those bad home loans off their accounting books and put them on the Fed’s balance sheet. (Wish I had an uncle who could bail me out like this, Ben.)

Real estate market is a false prop

It is said these bad loans on the Fed’s books are approaching $4 trillion now. So what happens when these home mortgage securities are re-valued at their mark-to-market value and are sold off at maybe half price? What happens to home values in the US when the real estate market is flooded with supply against stagnant demand? Won’t home values collapse, and then the asset values of lenders tumble and that would plunge every major home-loan lender into insolvency? So how long do you run an economy and keep the bad loans in the closet? So the whole real estate market today is a false prop, right Ben?

Imagined profits from imaginary money

Oh, another little ditty. The Fed says it returned $88.9 billion to the US Treasury Department in 2012. Let’s see how that happens. The Fed creates trillions of electronic dollars out of thin air, backs it with nothing of value, loans it out to banks at near-zero interest rates, sells off IOUs (US Treasury Notes) to foreign lenders, takes a cut off the top for itself, and pretends it made a profit for the US Treasury Department.

Didn’t the Fed print the money into existence then just pass it from its right hand to its left hand? How do you call that a profit any more than going to a photocopy machine and duplicating some Monopoly board play money to stay in the game? (4) I mean, the Fed takes credit for returning a record profit to the Federal government, but it only did so because it was printing more money!!

What will Wikipedia say about you, Ben?

But you need a legacy Ben. You know you can’t walk out the door and say things are rosier than when you first arrived. So you lay blame on Congress. Will there be a book in the works now? Maybe a $1 million advance from a publisher? Maybe a Ben Bernanke library? Maybe $500,000 fees for speeches. A movie with Robin Williams playing your part? All the paybacks for prior favors are really worth looking forward to, huh Ben.

Hey, the prior Fed chairman at least had thick glasses and said he didn’t see the financial storm coming. He was a former Presidential speech writer. But you were a student of the Great Depression. But you claim you didn’t see it coming either.

Poker-faced to the end

I’ll give you credit. You were better at counterfeiting than any prior chairman. You kept a poker face while you were there as chairman at the Fed. You didn’t let on that the US economy is a charade. You kept the bank runs from happening. Old ladies won’t see you as a bank robber who siphoned their saved money away via inflation.

“He saved America from the worst financial crisis it has ever faced.” Your mother will be proud. With that wry smile, you exhibited a commanding and humble appearance on camera. Let’s hope, for your sake, all what was stashed in the closet and thrown under the rug during your term will never see the light of day and won’t ruin your proud legacy. I’m sure a Presidential medal will be forthcoming.

Comment:

Sarcasm or Truth?

A little sarcasm and a lot of truth methinks.

"We live in interesting times"

Good Luck to all!