StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

How Big Are Ben Bernanke's Testicles?

03 Jun 2012
Posted by Stan Collender

The increasingly repeated assumption in the aftermath of this past Friday's jobs report seems to be that this is what was needed to push the Federal Reserve over the edge for another round of monetary policy-induced stimulus.

On the one hand, the thinking behind the assumption seems unassailable: With Congress unable or unwilling to use fiscal policy to give the economy a boost and businesses and consumers mostly continuing to stay on the sidelines, the Fed is the only game in town.

But, on the other hand, the Fed has been repeatedly warned by congressional Republicans over the past year not to stick to its economic knitting by focusing just on inflation and not to do anything to boost GDP. As I've posted before, having eliminated any chance that fiscal policy will be used as a tool to enhance the recovery and boost Barack Obama's reelection chances, the GOP is trying to make sure that the only other tool available to do that -- monetary policy -- also isn't available.

So...with bullseyes painted squarely between his eyes and on his back, the question is whether Bernanke with have the testicular fortitude to push for some version of monetary policy stimulus now, or will he decide that the best way to protect the Fed is to wait until after the election?

If the Fed only reverses its

If the Fed only reverses its effective tight money policies once a Republican gets elected, then Obama, as a last act of office, should have the full right to kick Bernanke in the testicles.

There's a third option: Do

There's a third option: Do nothing at all.

Thinking about Ben Bernanke and Bernard Wolfe

In one of his novels--Logan's Gone, iirc, maybe Lies if I don't--Bernard Wolfe has a scene where one of the people tortured by Batista stops everyone else from doing something stupid. The "punch line" as it were, causes one of the characters to comment "the only person in the room with anyone cojones is the one who doesn't have any."

Perhaps we could find a castrati to replace Bernanke. Even with no experience, one could hardly do worse. (Bernanke's second term compares unfavorably to G. William Miller's. Of course, if one were to compare Miller's tenure as Secretary of the Treasury to Tim Geithner's, the opening sentence would note that at least Miller's was mercifully short...)

re 3rd option

think the 3rd option is the same as the first 2 options...

how can he lower rates?? the flood of "flight to quality" money from the world is pushing our 10 year treasuries to 1%

we are in a liquidity trap, i cant imagine he has a lot of options left

"If the Fed only reverses its

"If the Fed only reverses its effective tight money policies once a Republican gets elected, then Obama, as a last act of office, should have the full right to kick Bernanke in the testicles."

After he kicks himself in his own nuts for reappointing a Republican Fed chair.

Bernanke as Republican?

Bernanke as Republican? Bernanke has backed Obama's fiscal policy from the beginning, saying that the US government should "try everything" to boost growth in the early months of the recession and warning against fiscal contraction now. He eased to the point that monetary policy has largely run out of power. Collender's argument is not that Fed easing will do much, but that it's all we can hope for, given the Congress we have.

Has Bernanke been a bad central banker? Depends on where you look. He has eased like mad, but sucked up to bankers during the bailout phase. The only time banks would have accepted effecting reductions in their threat to the financial system was when their own survival was in question. Bernanke missed that opportunity. When it comes to easy money, it's hard to see what more effective policy he could have pursued. Buy another $100 bln? Why would that do more than the last $100 bln?

When is the mainstream press

When is the mainstream press going to inform people that the Republican Party is intentionally doing everything in its power to destroy the American economy?

Watch the market

The Fed's primary interest is in keeping the stock market inflated. So far it is holding up. If it turns lower, he will act. If it stays above S&P 1250 he will hold off.

He will likely try to juice the market by talking up further action and keep his powder dry for now.

If the market slips below 1250, he will take whatever action necesselfeary Republicans be damned.

Left Right Thinking

We will be paralyzed until this Democrat Republican two headed monster is recognized for what it is. END THE FED and know the entire system is corrupt and promotes slavery. We are not free with CERTAIN PEOPLE in control.

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