The Real Story of the Day: Ben Bernanke - Slower growth, more inflation

Being the cynic that I am, I think Obama finally caved on the birth certificate issue to cover up this major piece of bad news.

CNBC: In his first regular news conference, Federal Reserve Chairman Ben Bernanke said the central bank was continuing its stimulus policy because it was projecting slower growth in the economy with only a modest uptick in inflation.

The Fed cut its growth estimate for 2011 to between 3.1 percent and 3.3 percent from a January forecast of 3.4 percent to 3.9 percent.

The Fed also raised its estimate of inflation this year to a range of 2.1 percent to 2.8 percent, taking into account a recent surge in oil prices. However, it bumped its core inflation forecasts only marginally to a 1.3 percent to 1.6 percent range.

As for unemployment, it lowered its forecast but said it would stay elevated over its three-year forecast period. For 2011, the Fed said it expects the unemployment rate to land in a 8.4-8.7 percent range, better than a range of 8.8-9.0 percent forecast in January. [MORE]

So basically we can look forward to unemployment staying at these level and finally the Fed admits to what we have long known, inflation is here. Bernanke did not take responsibility for fueling inflation with Quantitative Easing (Q.E. 1 & 2).

Bernanke said the Fed would continue with bond buying (buying our own debt).

The statement marked the conclusion — at least for now — of the massive expansion of the Fed's balance sheet that helped pull the economy out of its deep recession.

"On policy, the statement confirms that (the bond buying) is over but otherwise leaves everything on the table subject to regular review 'in light of incoming information,'" said Stephen Stanley, chief economist at Pierpont Securities.

Still, the central bank said it would continue to reinvest proceeds from maturing securities it holds to keep its economic support in place, ensuring it would remain a big buyer in debt markets.

Search across the net and you will have to do some digging to find any real discussion on this matter, even though Bernanke's first press conference was getting a lot of attention days before. You can thanks the birthers and Trump for moving this story to the back pages. Too bad, because this is the real type of issue that will defeat Obama in 2012.

Below are videos from Bernanke's Q and A.

Via: The Blaze
Via: CNBC

Palin to Bernanke on QE2:”Cease and Desist”

I remember a few days just before the elections last week, a talking head was saying that one of the sure signs that Palin would run would be her switching gears from campaign rhetoric to policy discussions.  Since Tuesday’s elections I have noticed two policy discussions from Palin.

The first was some pretty solid advice for Republicans taking over the House that appeared in the National Review the day after their big wins. The second is an upcoming speech Palin will be giving at a trade-association convention in Phoenix today.  In this speech she tells Federal Reserve chairman Ben Bernanke to “cease and desist" with the very dicey QE2 monetary policy. National Review offers a snippet from the speech.

National Review: I’m deeply concerned about the Federal Reserve’s plans to buy up anywhere from $600 billion to as much as $1 trillion of government securities. The technical term for it is “quantitative easing.” It means our government is pumping money into the banking system by buying up treasury bonds. And where, you may ask, are we getting the money to pay for all this? We’re printing it out of thin air.

The Fed hopes doing this may buy us a little temporary economic growth by supplying banks with extra cash which they could then lend out to businesses. But it’s far from certain this will even work. After all, the problem isn’t that banks don’t have enough cash on hand – it’s that they don’t want to lend it out, because they don’t trust the current economic climate.

And if it doesn’t work, what do we do then? Print even more money? What’s the end game here? Where will all this money printing on an unprecedented scale take us? Do we have any guarantees that QE2 won’t be followed by QE3, 4, and 5, until eventually – inevitably – no one will want to buy our debt anymore? What happens if the Fed becomes not just the buyer of last resort, but the buyer of only resort?

All this pump priming will come at a serious price. And I mean that literally: everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher. And it’s not just groceries. Oil recently hit a six month high, at more than $87 a barrel. The weak dollar – a direct result of the Fed’s decision to dump more dollars onto the market – is pushing oil prices upwards. That’s like an extra tax on earnings. And the worst part of it: because the Obama White House refuses to open up our offshore and onshore oil reserves for exploration, most of that money will go directly to foreign regimes who don’t have America’s best interests at heart.

We shouldn’t be playing around with inflation. It’s not for nothing Reagan called it “as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” The Fed’s pump priming addiction has got our small businesses running scared, and our allies worried. The German finance minister called the Fed’s proposals “clueless.” When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it’s time for Chairman Bernanke to cease and desist. We don’t want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings. We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.

The left and some of Palin’s distracters on the right have all been faulting her or being too light on policy.  I have a feeling they are going to be getting a whole lot more policy from Palin in the very near future.

Via: National Review

Via: National Review

Time Magazine’s Person of the Year is Ben Bernanke

It looks like Time Magazine has lost that loving feeling for Obama. Not only is Obama not the Person of the Year, he did not even make runner up! Obama did not even make the top 5 runner-ups.

Given how Time hyped Obama to death, you would think that they would have had him somewhere in the top spots for his first year in office. I guess they realize that Obama is becoming one hell of a disappointment and they would rather not remind readers that they had a major hand in foisting him on the public.  Sorry, Time but some of us remember all those cover stories too well.

From Time Magazine: 

Bernanke is the 56-year-old chairman of the Federal Reserve, the central bank of the U.S., the most important and least understood force shaping the American — and global — economy. Those green bills featuring dead Presidents are labeled "Federal Reserve Note" for a reason: the Fed controls the money supply. It is an independent government agency that conducts monetary policy, which means it sets short-term interest rates — which means it has immense influence over inflation, unemployment, the strength of the dollar and the strength of your wallet. And ever since global credit markets began imploding, its mild-mannered chairman has dramatically expanded those powers and reinvented the Fed.

Professor Bernanke of Princeton was a leading scholar of the Great Depression. He knew how the passive Fed of the 1930s helped create the calamity — through its stubborn refusal to expand the money supply and its tragic lack of imagination and experimentation. Chairman Bernanke of Washington was determined not to be the Fed chairman who presided over Depression 2.0. So when turbulence in U.S. housing markets metastasized into the worst global financial crisis in more than 75 years, he conjured up trillions of new dollars and blasted them into the economy; engineered massive public rescues of failing private companies; ratcheted down interest rates to zero; lent to mutual funds, hedge funds, foreign banks, investment banks, manufacturers, insurers and other borrowers who had never dreamed of receiving Fed cash; jump-started stalled credit markets in everything from car loans to corporate paper; revolutionized housing finance with a breathtaking shopping spree for mortgage bonds; blew up the Fed's balance sheet to three times its previous size; and generally transformed the staid arena of central banking into a stage for desperate improvisation. He didn't just reshape U.S. monetary policy; he led an effort to save the world economy.

Time’s Person of the Year runner-ups were, General Stanley McChrystal, The Chinese Worker, Nancy Pelosi (say what?) and Usain Bolt.

Via: Time Magazine

Via: Track-A-‘Crat