Anybody else see Bernanke defend monetary policy today? This discussion seemed to get a bit deep into why inflation by printing money out of thin air will not impact the economy according to Bernanke. He said the Federal Reserve has various tools to get that surplus of money out of the economy and keep it idle in bank reserves before it impacts the economy.
Can anybody show a fallacy to his argument? Secondly, a question that came to my mind is, for this is how Bernanke presented his argument, is if the banks are only holding the reserve money in the accounting books but the Federal Reserve will not allow this money to get out of the banks reserves, then why is the money in the reserves in the first place? What's the point of it merely sitting there?
The point of it sitting there is to "recapitalize" the banks in order to prevent bank runs and for them to be able to cover their debts. The problem is that even covering their debts will lead to inflation, as the transfers can be lent out again.
Knight_of_BAAWA: The point of it sitting there is to "recapitalize" the banks in order to prevent bank runs and for them to be able to cover their debts. The problem is that even covering their debts will lead to inflation, as the transfers can be lent out again.
That's what I don't get. If banks are recapitalizing to prevent bank runs, which assumes some people are demanding their money and so they are suring (spelling) up their reserves. Thus money is entering the economy. Secondly if the banks are covering their debts what are those debts tied to in the economy? Meaning if they are debts then something worthless is being propped up and that something worthless bills are being paid by this propping up. Again another way the money is entering the economy. Thirdly as you stated their books show not debt but reserves now so the banks lent out more money. Third way money is getting into the economy.
Yet Bernanke tried to say the money never gets back into the economy and sits idly in the reserves. Can debt really get to the point that it is only book marks on a piece of paper and as long as a central bank is recapitalizing banks these debts never impact the economy? But I'm thinking those debts are tied to malinvestments which leads into the bubbles and busts. Correct?
I caught a bit of the hearings as I made breakfast.
Bill Posey was great. He started off and I thought he would be a psycophant, but he was really excellent challenging Ben on inflation. If you're a Yankee, you should email that guy and give him positive feedback. I'm an anarchist, but I can get behind supporting a politician for 5 minutes if he is challenging the false premises of the state.
That junior Congressman from Florida, the Dem, he's good too. He really nailed Bernanke on the 1/2 trillion to foreign banks, and free money to the people of New Zealand. Awesome.
Ron Paul was better than usual, but I don't think his usual routine of rambling for 3 or 4 minutes is an effective style. I liked that he got 2 questions in. He has the intelligence to really ask the probing questions, I wish he would do that more. Let the tyrants squirm trying to answer!
I was disappointed that no one brought up fractional reserve. Sure those reserves sit at the FED but they are being pyramided into the economy. It is absolute BS that those reserves were created just to sit in the FED until they suck them back into the system. Those reserves are bogus, and allow the fractional process to begin.
Anyway, good to see Bernanke squirm. I love it. END THE FED.
(If anyone knows if there are book bombs planned for Ron Paul's new book END THE FED, please post that info here!)
If only Dr. Paul was more articulate.
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
liberty student:Bill Posey was great. He started off and I thought he would be a psycophant, but he was really excellent challenging Ben on inflation.
is your spelling of sycophant a typo or a pun? if its a pun, then thats pretty clever. HIGH FIVE!
typo
or perhaps a Freudian slip!
When he was younger he was much more articulate and fiery.