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Presidential Race (Respector Edition)

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Sparky is free to post what he wants, you are free to totally ignore him. I find it a lot easier (though at times it is annoying to scroll for so long).


So yeah if Sparky wants to go nuts with the Fed is fine. If you don't like just ignore it.



That's fair. I'm no moderator, it was a suggestion. Maybe not the best one. I guess I'm out of Fed debate in the context of the Presidential Election, but people can discuss what they will- thread relevant or no.


Good morning Lou...


New Yorker editor now a crazy conspiracist?


New Yorker magazine editor says Netanyahu is 'arrogant and dangerous'

David Remnick accuses the Prime Minister of endangering Israel and making himself a factor in the U.S. elections.



That's no conspiracy talk, it's just showing a war hungry jingoist for what he is. That guy's trigger finger is itchy.

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That's fair. I'm no moderator, it was a suggestion. Maybe not the best one. I guess I'm out of Fed debate in the context of the Presidential Election, but people can discuss what they will- thread relevant or no.




That's no conspiracy talk, it's just showing a war hungry jingoist for what he is. That guy's trigger finger is itchy.


Well, he does conspire with the neocons here in the US.


Good article here on the situation...


Netanyahu believes his maximum leverage over Obama, the president of the “world’s only superpower,” is just prior to the election. Israel cannot attack Iran on its own without the risk of Israel’s destruction. But Netanyahu reasons that if he attacks Iran the week before the US election, Obama will have to join in or lose the Jewish vote for not supporting Israel in states such as Florida, which has a large Jewish population and many electoral votes. If the election is close, Netanyahu, a person consumed by arrogance and hubris, might exercise his threat and attack Iran, despite the opposition of former chiefs of Israeli intelligence and military, the opposition party, and a majority of the Israeli people.


In other words, the outcome of the “superpower’s” presidential election might depend upon whether the sitting president of the “superpower” is sufficiently obedient to the crazed Israeli prime minister.


That the outcome of the US presidential election could depend upon the agenda of the prime minister of a tiny country that exists only because of US financial, military, and diplomatic support, especially the UN veto, should disturb those Americans who think that they are the “indispensable people.” How indispensable are you when you have to do what the Israeli prime minister wants?


The US media makes certain that this question never enters american minds. Americans have been told that if Iran doesn’t have nukes, it has a nuke weapons program. This is what the politicians of both parties, the media, and the Israel Lobby tell them. Americans are told this despite the facts that the CIA and the National Intelligence Estimate stick to the conclusion that Iran abandoned its flirtation with a nuclear weapon in 2003 and the International Atomic Energy Agency inspectors on the ground in Iran report no evidence of a nuclear weapons program and no evidence of any diversion of enriched uranium to a weapons program.


Moreover, what could Iran do with a nuclear weapon, other than use it against an aggressor? Any offensive use would result in Iran’s destruction.


Why do Americans believe Iran has nukes or is making nukes when the CIA says they are not? The answer is that Netanyahu says so, and the elected members of the US government in the House, Senate, and White House are afraid to contradict the Israeli prime minister, as are the American print and TV media. Some “superpower” we are! The “indispensable people” have to grovel in the dirt before Netanyahu. Americans are not even aware of their shame.


Iran, unlike Israel, signed the nuclear non-proliferation treaty. Signatories to the treaty have the right to nuclear energy. Nuclear energy requires a low level of enrichment, 5% or less. The minute Iran announced a nuclear energy program, the Israeli government and its prostitutes in Washington lied that Iran was building a bomb. For exercising its legal rights under the treaty, Iran has been painted as a rouge criminal state and demonized.


A nuclear weapon requires 95% enrichment. To get to 5% from scratch and then to 95% is a long drawn out process. I think I first started hearing Israeli government claims of an Iranian nuke back in he 1990s of last century.





WARNING!!! Pleasure scroll past this if you wish to remain clueless about the power that is destroying our economy and how our leaders do nothing about it. But be warned, the word Federal Reserve appears several times. This could be very damaging to some. So please, proceed with caution... :wave


For all you Federal Reserve fans out there...


Sadly, most Americans don't even realize that the Federal Reserve has more control over our economy than anyone else does. Most Americans that are actually concerned about politics are busy arguing over whether Obama or Romney will be better for the economy when it is actually the Fed that controls the levers of economic power...


The Federal Reserve played a major role in creating the housing bubble which severely damaged our financial system a few years ago.


....after 9/11 the Federal Reserve dropped interest rates to historically low levels. This allowed potential home buyers to get into much larger mortgages, and the big banks (which the Fed supposedly "regulates") started making home loans to almost anyone with a pulse.

When interest rates started to go back up to normal levels in 2005, many home owners discovered that their adjustable rate mortgages started to become much more painful. By 2007, we started to see a massive wave of mortgage defaults. In 2008, the financial system crashed.


In response to the financial crisis of 2008, the Federal Reserve dropped interest rates to record low levels. The effective federal funds rate is essentially at zero at this point, and the Fed has promised to keep interest rates at ultra-low levels all of the way into 2015.

But didn't artificially low interest rates cause many of our problems in the first place? The central planners over at the Fed are convinced that this is the right course for our economy, but can we really live in a zero interest rate bubble indefinitely? Won't this eventually cause even greater problems?....


The Fed is also destroying our economy by recklessly printing money.

Once upon a time, the U.S. monetary base rose at a very steady pace. But since the financial crisis of 2008, Ben Bernanke has been flooding the financial system with money and this has caused an unprecedented explosion in our money supply...


Fortunately a lot of the money from previous rounds of quantitative easing is being stashed by the big banks as "excess reserves" with the Federal Reserve, but when that money starts flowing into the "real economy" (and it will at some point), we are going to have a major problem on our hands.

But more than tripling our monetary base was not enough for Bernanke. He recently announced yet another round of quantitative easing which he says will last indefinitely.

Basically, Bernanke is taking a sledgehammer to the U.S. dollar. Our currency is being systematically destroyed, and the U.S. Congress is standing by and doing nothing...


The Federal Reserve seems to think that printing more money is always the solution to whatever economic problems we are having.

But of course the Fed has been debasing our currency from the very beginning. The entire Federal Reserve system is designed to create inflation.

From the time that the Federal Reserve was created back in 1913, the purchasing power of a U.S. dollar has declined from $1.00 to only about 4 pennies today.

And now Bernanke seems bound and determined to wipe out those last 4 pennies.

The Federal Reserve system was also designed to create a never ending spiral of government debt.

Sadly, most Americans simply have no idea where money comes from. Most Americans have no idea that money that the Federal Reserve zaps into existence out of thin air is loaned to the U.S. government at interest. Most Americans have no idea that the primary reason why we are 16 trillion dollars in debt is because this is what the system was designed to do to us.

Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was originally created in 1913. This did not happen by accident....


Not that our politicians should be off the hook for this. They have been spending money as if there is no tomorrow. Most of them have shown no concern at all about the legacy of debt that they are passing on to future generations of Americans.

If our politicians had been more responsible, the national debt would still be there, but it would be at a much more manageable level.

If we ever want to totally get rid of our national debt, the Federal Reserve must be abolished.

There is no other way.


At this point our entire financial system is based on debt, and if the debt bubble does not continue to expand the entire thing will collapse.

But no financial bubble grows forever. History has proven that to us over and over.

At some point this bubble is going to burst.

When it does, we will either experience a deflationary collapse or a hyperinflationary collapse depending on how "the powers that be" respond to what is happening.

History has shown us that financial collapse is often accompanied by social upheaval. Many times it even leads to war.





Well, you made it. It is safe to view the next post in this thread. Please exercise caution in the next few days for you never know when that heartless bastard Sparky might slip another Federal Reserve post in. If your fingers didn't cramp up scrolling past this article consider yourself fortunate. I apologize for wasting a 1/2 second of your life. This concludes the first test of the Federal Reserve warning system.

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Basically, Bernanke is taking a sledgehammer to the U.S. dollar. Our currency is being systematically destroyed, and the U.S. Congress is standing by and doing nothing...



Man, I am easy to sidetrack; the U.S. has lower inflation rates, still, than most other countries in the world. Right now Canada and Australia have us beat by .5 percent, along with ten or so others, and countries like Japan and the Ukraine which have deflation (a nasty problem too). Meanwhile countries like China, Germany, France, the UK, Chile and about a hundred others have higher inflation than we do.


The Omani Rial is worth two and a half times the U.S. dollar. Would you like to trade economies with Oman?

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Awesine quote from a book review in the NY Timesthis weekend:


"Once upon a time there was a radical president who tried to remake American society through government action. In his first term he created a vast network of federal grants to state and local governments for social programs that cost billions. He set up an imposing agency to regulate air and water emissions, and another to regulate workers’ health and safety. Had Congress not stood in his way he would have gone much further. He tried to establish a guaranteed minimum income for all working families and, to top it off, proposed a national health plan that would have provided government insurance for low-income families, required employers to cover all their workers and set standards for private insurance. Thankfully for the country, his second term was cut short and his collectivist dreams were never realized.


His name was Richard Nixon. "


Meanwhile I am not sure who is supposed to regulate money if we dispense with the Fed. Since money is an abstract concept, it is left to some central bank to give money its credence. Otherwise we are back to trading with pelts and shells.


And yes Netanyahu is a dangersous guy. Did I say otherwise? For those evangelical Christians that back Israel, Jews are just so much cannon fodder on the way to Armegedon and the second coming. Who needs THAT?












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A thought from Alexis de Tocqueville:


The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.”


“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.”


Lou, this might help with your question about who would regulate money...



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Lou, this might help with your question about who would regulate money...



More Libertarian stuff? Is Nick Sheedy this guy??


And quoting an 19th century touriist from France. Interesting in historical perspective I suppose. I do enjoy reading about historical figures and philosohies myself, a whole bunch actually, but at some point folks who wrote about issues 100 or more years ago rarely have an relevance to a complex and dramatically different world than we now live it.



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Can I throw my copy paste Fed article hat into the ring?


Chairman Ben S. Bernanke


At the Economic Club of Indiana, Indianapolis, Indiana


October 1, 2012


Five Questions about the Federal Reserve and Monetary Policy

Good afternoon. I am pleased to be able to join the Economic Club of Indiana for lunch today. I note that the mission of the club is "to promote an interest in, and enlighten its membership on, important governmental, economic and social issues." I hope my remarks today will meet that standard. Before diving in, I'd like to thank my former colleague at the White House, Al Hubbard, for helping to make this event possible. As the head of the National Economic Council under President Bush, Al had the difficult task of making sure that diverse perspectives on economic policy issues were given a fair hearing before recommendations went to the President. Al had to be a combination of economist, political guru, diplomat, and traffic cop, and he handled it with great skill.

My topic today is "Five Questions about the Federal Reserve and Monetary Policy." I have used a question-and-answer format in talks before, and I know from much experience that people are eager to know more about the Federal Reserve, what we do, and why we do it. And that interest is even broader than one might think. I'm a baseball fan, and I was excited to be invited to a recent batting practice of the playoff-bound Washington Nationals. I was introduced to one of the team's star players, but before I could press my questions on some fine points of baseball strategy, he asked, "So, what's the scoop on quantitative easing?" So, for that player, for club members and guests here today, and for anyone else curious about the Federal Reserve and monetary policy, I will ask and answer these five questions:

1. What are the Fed's objectives, and how is it trying to meet them?

2. What's the relationship between the Fed's monetary policy and the fiscal decisions of the Administration and the Congress?

3. What is the risk that the Fed's accommodative monetary policy will lead to inflation?

4. How does the Fed's monetary policy affect savers and investors?

5. How is the Federal Reserve held accountable in our democratic society?

What Are the Fed's Objectives, and How Is It Trying to Meet Them?

The first question on my list concerns the Federal Reserve's objectives and the tools it has to try to meet them.

As the nation's central bank, the Federal Reserve is charged with promoting a healthy economy--broadly speaking, an economy with low unemployment, low and stable inflation, and a financial system that meets the economy's needs for credit and other services and that is not itself a source of instability. We pursue these goals through a variety of means. Together with other federal supervisory agencies, we oversee banks and other financial institutions. We monitor the financial system as a whole for possible risks to its stability. We encourage financial and economic literacy, promote equal access to credit, and advance local economic development by working with communities, nonprofit organizations, and others around the country. We also provide some basic services to the financial sector--for example, by processing payments and distributing currency and coin to banks.

But today I want to focus on a role that is particularly identified with the Federal Reserve--the making of monetary policy. The goals of monetary policy--maximum employment and price stability--are given to us by the Congress. These goals mean, basically, that we would like to see as many Americans as possible who want jobs to have jobs, and that we aim to keep the rate of increase in consumer prices low and stable.

In normal circumstances, the Federal Reserve implements monetary policy through its influence on short-term interest rates, which in turn affect other interest rates and asset prices.1 Generally, if economic weakness is the primary concern, the Fed acts to reduce interest rates, which supports the economy by inducing businesses to invest more in new capital goods and by leading households to spend more on houses, autos, and other goods and services. Likewise, if the economy is overheating, the Fed can raise interest rates to help cool total demand and constrain inflationary pressures.

Following this standard approach, the Fed cut short-term interest rates rapidly during the financial crisis, reducing them to nearly zero by the end of 2008--a time when the economy was contracting sharply. At that point, however, we faced a real challenge: Once at zero, the short-term interest rate could not be cut further, so our traditional policy tool for dealing with economic weakness was no longer available. Yet, with unemployment soaring, the economy and job market clearly needed more support. Central banks around the world found themselves in a similar predicament. We asked ourselves, "What do we do now?"

To answer this question, we could draw on the experience of Japan, where short-term interest rates have been near zero for many years, as well as a good deal of academic work. Unable to reduce short-term interest rates further, we looked instead for ways to influence longer-term interest rates, which remained well above zero. We reasoned that, as with traditional monetary policy, bringing down longer-term rates should support economic growth and employment by lowering the cost of borrowing to buy homes and cars or to finance capital investments. Since 2008, we've used two types of less-traditional monetary policy tools to bring down longer-term rates.

The first of these less-traditional tools involves the Fed purchasing longer-term securities on the open market--principally Treasury securities and mortgage-backed securities guaranteed by government-sponsored enterprises such as Fannie Mae and Freddie Mac. The Fed's purchases reduce the amount of longer-term securities held by investors and put downward pressure on the interest rates on those securities. That downward pressure transmits to a wide range of interest rates that individuals and businesses pay. For example, when the Fed first announced purchases of mortgage-backed securities in late 2008, 30-year mortgage interest rates averaged a little above 6percent; today they average about 3-1/2 percent. Lower mortgage rates are one reason for the improvement we have been seeing in the housing market, which in turn is benefiting the economy more broadly. Other important interest rates, such as corporate bond rates and rates on auto loans, have also come down. Lower interest rates also put upward pressure on the prices of assets, such as stocks and homes, providing further impetus to household and business spending.

The second monetary policy tool we have been using involves communicating our expectations for how long the short-term interest rate will remain exceptionally low. Because the yield on, say, a five-year security embeds market expectations for the course of short-term rates over the next five years, convincing investors that we will keep the short-term rate low for a longer time can help to pull down market-determined longer-term rates. In sum, the Fed's basic strategy for strengthening the economy--reducing interest rates and easing financial conditions more generally--is the same as it has always been. The difference is that, with the short-term interest rate nearly at zero, we have shifted to tools aimed at reducing longer-term interest rates more directly.

Last month, my colleagues and I used both tools--securities purchases and communications about our future actions--in a coordinated way to further support the recovery and the job market. Why did we act? Though the economy has been growing since mid-2009 and we expect it to continue to expand, it simply has not been growing fast enough recently to make significant progress in bringing down unemployment. At 8.1 percent, the unemployment rate is nearly unchanged since the beginning of the year and is well above normal levels. While unemployment has been stubbornly high, our economy has enjoyed broad price stability for some time, and we expect inflation to remain low for the foreseeable future. So the case seemed clear to most of my colleagues that we could do more to assist economic growth and the job market without compromising our goal of price stability.

Specifically, what did we do? On securities purchases, we announced that we would buy mortgage-backed securities guaranteed by the government-sponsored enterprises at a rate of $40 billion per month. Those purchases, along with the continuation of a previous program involving Treasury securities, mean we are buying $85 billion of longer-term securities per month through the end of the year. We expect these purchases to put further downward pressure on longer-term interest rates, including mortgage rates. To underline the Federal Reserve's commitment to fostering a sustainable economic recovery, we said that we would continue securities purchases and employ other policy tools until the outlook for the job market improves substantially in a context of price stability.

In the category of communications policy, we also extended our estimate of how long we expect to keep the short-term interest rate at exceptionally low levels to at least mid-2015. That doesn't mean that we expect the economy to be weak through 2015. Rather, our message was that, so long as price stability is preserved, we will take care not to raise rates prematurely. Specifically, we expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens. We hope that, by clarifying our expectations about future policy, we can provide individuals, families, businesses, and financial markets greater confidence about the Federal Reserve's commitment to promoting a sustainable recovery and that, as a result, they will become more willing to invest, hire and spend.

Now, as I have said many times, monetary policy is no panacea. It can be used to support stronger economic growth in situations in which, as today, the economy is not making full use of its resources, and it can foster a healthier economy in the longer term by maintaining low and stable inflation. However, many other steps could be taken to strengthen our economy over time, such as putting the federal budget on a sustainable path, reforming the tax code, improving our educational system, supporting technological innovation, and expanding international trade. Although monetary policy cannot cure the economy's ills, particularly in today's challenging circumstances, we do think it can provide meaningful help. So we at the Federal Reserve are going to do what we can do and trust that others, in both the public and private sectors, will do what they can as well.

What's the Relationship between Monetary Policy and Fiscal Policy?

That brings me to the second question: What's the relationship between monetary policy and fiscal policy? To answer this question, it may help to begin with the more basic question of how monetary and fiscal policy differ.

In short, monetary policy and fiscal policy involve quite different sets of actors, decisions, and tools. Fiscal policy involves decisions about how much the government should spend, how much it should tax, and how much it should borrow. At the federal level, those decisions are made by the Administration and the Congress. Fiscal policy determines the size of the federal budget deficit, which is the difference between federal spending and revenues in a year. Borrowing to finance budget deficits increases the government's total outstanding debt.

As I have discussed, monetary policy is the responsibility of the Federal Reserve--or, more specifically, the Federal Open Market Committee, which includes members of the Federal Reserve's Board of Governors and presidents of Federal Reserve Banks. Unlike fiscal policy, monetary policy does not involve any taxation, transfer payments, or purchases of goods and services. Instead, as I mentioned, monetary policy mainly involves the purchase and sale of securities. The securities that the Fed purchases in the conduct of monetary policy are held in our portfolio and earn interest. The great bulk of these interest earnings is sent to the Treasury, thereby helping reduce the government deficit. In the past three years, the Fed remitted $200 billion to the federal government. Ultimately, the securities held by the Fed will mature or will be sold back into the market. So the odds are high that the purchase programs that the Fed has undertaken in support of the recovery will end up reducing, not increasing, the federal debt, both through the interest earnings we send the Treasury and because a stronger economy tends to lead to higher tax revenues and reduced government spending (on unemployment benefits, for example).

Even though our activities are likely to result in a lower national debt over the long term, I sometimes hear the complaint that the Federal Reserve is enabling bad fiscal policy by keeping interest rates very low and thereby making it cheaper for the federal government to borrow. I find this argument unpersuasive. The responsibility for fiscal policy lies squarely with the Administration and the Congress. At the Federal Reserve, we implement policy to promote maximum employment and price stability, as the law under which we operate requires. Using monetary policy to try to influence the political debate on the budget would be highly inappropriate. For what it's worth, I think the strategy would also likely be ineffective: Suppose, notwithstanding our legal mandate, the Federal Reserve were to raise interest rates for the purpose of making it more expensive for the government to borrow. Such an action would substantially increase the deficit, not only because of higher interest rates, but also because the weaker recovery that would result from premature monetary tightening would further widen the gap between spending and revenues. Would such a step lead to better fiscal outcomes? It seems likely that a significant widening of the deficit--which would make the needed fiscal actions even more difficult and painful--would worsen rather than improve the prospects for a comprehensive fiscal solution.

I certainly don't underestimate the challenges that fiscal policymakers face. They must find ways to put the federal budget on a sustainable path, but not so abruptly as to endanger the economic recovery in the near term. In particular, the Congress and the Administration will soon have to address the so-called fiscal cliff, a combination of sharply higher taxes and reduced spending that is set to happen at the beginning of the year. According to the Congressional Budget Office and virtually all other experts, if that were allowed to occur, it would likely throw the economy back into recession. The Congress and the Administration will also have to raise the debt ceiling to prevent the Treasury from defaulting on its obligations, an outcome that would have extremely negative consequences for the country for years to come. Achieving these fiscal goals would be even more difficult if monetary policy were not helping support the economic recovery.

What Is the Risk that the Federal Reserve's Monetary Policy Will Lead to Inflation?

A third question, and an important one, is whether the Federal Reserve's monetary policy will lead to higher inflation down the road. In response, I will start by pointing out that the Federal Reserve's price stability record is excellent, and we are fully committed to maintaining it. Inflation has averaged close to 2 percent per year for several decades, and that's about where it is today. In particular, the low interest rate policies the Fed has been following for about five years now have not led to increased inflation. Moreover, according to a variety of measures, the public's expectations of inflation over the long run remain quite stable within the range that they have been for many years.

With monetary policy being so accommodative now, though, it is not unreasonable to ask whether we are sowing the seeds of future inflation. A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature, as needed, to return its balance sheet to a more normal size. Moreover, the way the Fed finances its securities purchases is by creating reserves in the banking system. Increased bank reserves held at the Fed don't necessarily translate into more money or cash in circulation, and, indeed, broad measures of the supply of money have not grown especially quickly, on balance, over the past few years.

For controlling inflation, the key question is whether the Federal Reserve has the policy tools to tighten monetary conditions at the appropriate time so as to prevent the emergence of inflationary pressures down the road. I'm confident that we have the necessary tools to withdraw policy accommodation when needed, and that we can do so in a way that allows us to shrink our balance sheet in a deliberate and orderly way. For example, the Fed can tighten policy, even if our balance sheet remains large, by increasing the interest rate we pay banks on reserve balances they deposit at the Fed. Because banks will not lend at rates lower than what they can earn at the Fed, such an action should serve to raise rates and tighten credit conditions more generally, preventing any tendency toward overheating in the economy.

Of course, having effective tools is one thing; using them in a timely way, neither too early nor too late, is another. Determining precisely the right time to "take away the punch bowl" is always a challenge for central bankers, but that is true whether they are using traditional or nontraditional policy tools. I can assure you that my colleagues and I will carefully consider how best to foster both of our mandated objectives, maximum employment and price stability, when the time comes to make these decisions.

How Does the Fed's Monetary Policy Affect Savers and Investors?

The concern about possible inflation is a concern about the future. One concern in the here and now is about the effect of low interest rates on savers and investors. My colleagues and I know that people who rely on investments that pay a fixed interest rate, such as certificates of deposit, are receiving very low returns, a situation that has involved significant hardship for some.

However, I would encourage you to remember that the current low levels of interest rates, while in the first instance a reflection of the Federal Reserve's monetary policy, are in a larger sense the result of the recent financial crisis, the worst shock to this nation's financial system since the 1930s. Interest rates are low throughout the developed world, except in countries experiencing fiscal crises, as central banks and other policymakers try to cope with continuing financial strains and weak economic conditions.

A second observation is that savers often wear many economic hats. Many savers are also homeowners; indeed, a family's home may be its most important financial asset. Many savers are working, or would like to be. Some savers own businesses, and--through pension funds and 401(k) accounts--they often own stocks and other assets. The crisis and recession have led to very low interest rates, it is true, but these events have also destroyed jobs, hamstrung economic growth, and led to sharp declines in the values of many homes and businesses. What can be done to address all of these concerns simultaneously? The best and most comprehensive solution is to find ways to a stronger economy. Only a strong economy can create higher asset values and sustainably good returns for savers. And only a strong economy will allow people who need jobs to find them. Without a job, it is difficult to save for retirement or to buy a home or to pay for an education, irrespective of the current level of interest rates.

The way for the Fed to support a return to a strong economy is by maintaining monetary accommodation, which requires low interest rates for a time. If, in contrast, the Fed were to raise rates now, before the economic recovery is fully entrenched, house prices might resume declines, the values of businesses large and small would drop, and, critically, unemployment would likely start to rise again. Such outcomes would ultimately not be good for savers or anyone else.

How Is the Federal Reserve Held Accountable in a Democratic Society?

I will turn, finally, to the question of how the Federal Reserve is held accountable in a democratic society.

The Federal Reserve was created by the Congress, now almost a century ago. In the Federal Reserve Act and subsequent legislation, the Congress laid out the central bank's goals and powers, and the Fed is responsible to the Congress for meeting its mandated objectives, including fostering maximum employment and price stability. At the same time, the Congress wisely designed the Federal Reserve to be insulated from short-term political pressures. For example, members of the Federal Reserve Board are appointed to staggered, 14-year terms, with the result that some members may serve through several Administrations. Research and practical experience have established that freeing the central bank from short-term political pressures leads to better monetary policy because it allows policymakers to focus on what is best for the economy in the longer run, independently of near-term electoral or partisan concerns. All of the members of the Federal Open Market Committee take this principle very seriously and strive always to make monetary policy decisions based solely on factual evidence and careful analysis.

It is important to keep politics out of monetary policy decisions, but it is equally important, in a democracy, for those decisions--and, indeed, all of the Federal Reserve's decisions and actions--to be undertaken in a strong framework of accountability and transparency. The American people have a right to know how the Federal Reserve is carrying out its responsibilities and how we are using taxpayer resources.

One of my principal objectives as Chairman has been to make monetary policy at the Federal Reserve as transparent as possible. We promote policy transparency in many ways. For example, the Federal Open Market Committee explains the reasons for its policy decisions in a statement released after each regularly scheduled meeting, and three weeks later we publish minutes with a detailed summary of the meeting discussion. The Committee also publishes quarterly economic projections with information about where we anticipate both policy and the economy will be headed over the next several years. I hold news conferences four times a year and testify often before congressional committees, including twice-yearly appearances that are specifically designated for the purpose of my presenting a comprehensive monetary policy report to the Congress. My colleagues and I frequently deliver speeches, such as this one, in towns and cities across the country.

The Federal Reserve is also very open about its finances and operations. The Federal Reserve Act requires the Federal Reserve to report annually on its operations and to publish its balance sheet weekly. Similarly, under the financial reform law enacted after the financial crisis, we publicly report in detail on our lending programs and securities purchases, including the identities of borrowers and counterparties, amounts lent or purchased, and other information, such as collateral accepted. In late 2010, we posted detailed information on our public website about more than 21,000 individual credit and other transactions conducted to stabilize markets during the financial crisis. And, just last Friday, we posted the first in an ongoing series of quarterly reports providing a great deal of information on individual discount window loans and securities transactions. The Federal Reserve's financial statement is audited by an independent, outside accounting firm, and an independent Inspector General has wide powers to review actions taken by the Board. Importantly, the Government Accountability Office (GAO) has the ability to--and does--oversee the efficiency and integrity of all of our operations, including our financial controls and governance.

While the GAO has access to all aspects of the Fed's operations and is free to criticize or make recommendations, there is one important exception: monetary policymaking. In the 1970s, the Congress deliberately excluded monetary policy deliberations, decisions, and actions from the scope of GAO reviews. In doing so, the Congress carefully balanced the need for democratic accountability with the benefits that flow from keeping monetary policy free from short-term political pressures.

However, there have been recent proposals to expand the authority of the GAO over the Federal Reserve to include reviews of monetary policy decisions. Because the GAO is the investigative arm of the Congress and GAO reviews may be initiated at the request of members of the Congress, these reviews (or the prospect of reviews) of individual policy decisions could be seen, with good reason, as efforts to bring political pressure to bear on monetary policymakers. A perceived politicization of monetary policy would reduce public confidence in the ability of the Federal Reserve to make its policy decisions based strictly on what is good for the economy in the longer term. Balancing the need for accountability against the goal of insulating monetary policy from short-term political pressure is very important, and I believe that the Congress had it right in the 1970s when it explicitly chose to protect monetary policy decisionmaking from the possibility of politically motivated reviews.


In conclusion, I will simply note that these past few years have been a difficult time for the nation and the economy. For its part, the Federal Reserve has also been tested by unprecedented challenges. As we approach next year's 100th anniversary of the signing of the Federal Reserve Act, however, I have great confidence in the institution. In particular, I would like to recognize the skill, professionalism, and dedication of the employees of the Federal Reserve System. They work tirelessly to serve the public interest and to promote prosperity for people and businesses across America. The Fed's policy choices can always be debated, but the quality and commitment of the Federal Reserve as a public institution is second to none, and I am proud to lead it.

Now that I've answered questions that I've posed to myself, I'd be happy to respond to yours.

1. The Fed has a number of ways to influence short-term rates; basically, they involve steps to affect the supply, and thus the cost, of short-term funding. Return to text

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And if you believe any of what Bernanke says heaven help us. Have you ever seen Ron Paul question him at banking hearings. He destroys him.


Lou, Nixon proves that there is no differnece between the Republicans and the Democrats. They both support the statist way of solving problems and dealing with issues. They both believe government has all the answers and we should trust their hands on the wheel. Is say governemnt is what is screwing things up and that it needs to pull back gradually and let the free market help decide prices, interest rates, etc., etc. What the government is doing is not working and yet all they want to do is more of the same.

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Analysis of Bernanke's speech...




Call me crazy, heartless or a hippie I don't rightly care, Lou. I have looked through the laundry list of libertarian beliefs and philosophies and put together a list of those I can say I believe in just for you so you can stop painting me with such a broad brush. I'm not perfect and I am changing my views on issues everyday as I learn more about them. I don't know why so many are afraid of liberty? I'm sure some of you here will agree with many of these ideas. Is there something wrong with wanting a society that reflects these tenants? That's what the Constitution was all about. A document that placed limits on government power. A document that proposed a government whose most important function was to protect our rights and liberties not grant them or take them away. A rule of law not of people. Where's Jimmy Stewart when you need him? There are some aspects of the philosophy I differ with or can't quite get my head around but here goes...



To quote the New World Encyclopedia...


Most libertarians do believe in and accept some minimal government and governmental power—a view sometimes called the "night-watchman theory of the state."


Minarchist libertarians—who could also be called night-watchman theory libertarians—consider government necessary for the sole purpose of protecting the rights of the people. This includes protecting people and their property from the criminal acts of others, as well as providing for national defense.


The central tenet of libertarianism is the principle of self-ownership. To libertarians, an individual human being is sovereign over his or her own body, extending to life, liberty, and property. As such, libertarians define liberty as being completely free in action, while not initiating force or fraud against the life, liberty, or property of another human being. This is otherwise known as the non-aggression principle.


Libertarians believe that personal responsibility, private charity, and the voluntary exchange of goods and ideas are all consistent manifestations of an individualistic approach to liberty, and provide both a more effective and more ethical way to prosperity and peaceful coexistence. They often argue that in a truly capitalistic society, even the poorest would end up better off as a result of faster overall economic growth—which they believe likely to occur with lower taxes and less regulation.


Some who self-identify as libertarians are minarchists, i.e., supportive of minimal taxation as a "necessary evil" for the limited purpose of funding public institutions that would protect civil liberties and property rights, including police, volunteer armed forces without conscription, and judicial courts.


Libertarians strongly oppose infringement of civil liberties such as restrictions on free expression (e.g., speech, press, or religious practice), prohibitions on voluntary association, or encroachments on persons or property.


Libertarians generally defend the ideal of freedom from the perspective of how little one is constrained by authority, that is, how much one is "allowed" to do, which is referred to as negative liberty.


Libertarians also oppose any laws restricting personal or consensual behavior, as well as laws on victimless crimes. As such, they believe that individual choices for products or services should not be limited by government licensing requirements or state-granted monopolies.


Rights theorists hold that it is morally imperative that all human interaction, including government interaction with private individuals, should be voluntary and consensual. They maintain that the initiation of force by any person or government, against another person or their property—with "force" meaning the use of physical force, the threat of it, or the commission of fraud against someone—who has not initiated physical force, threat, or fraud, is a violation of that principle.


Similarly, many believe that the United States Food and Drug Administration (and other similar bodies in other countries like Health Canada in Canada) should not ban unproven medical treatments, that any decisions on treatment should be left between patient and doctor, and that the government should, at most, be limited to passing non-binding judgments about efficacy or safety.


Many libertarians view life, liberty, and property as the ultimate rights possessed by individuals, and that compromising one necessarily endangers the rest. In democracies, they consider compromise of these individual rights by political action to be "tyranny by the majority," a term first coined by Alexis de Tocqueville

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Don't want to talk Fed Tweedling?


How about, how does a candidate that has bashed 47% of the country get elected?


How should our nation's leaders avoid us pitching in our hat next to Israel for a war with Iran?


What do you expect to see in the debates?


Does Romney still have pull with the teaparty?


What should the Republican party, really be about in the 21st century?


I would love to hear anyone's thoughts on any of these things.

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How should our nation's leaders avoid us pitching in our hat next to Israel for a war with Iran?


That's been addressed a few times. They won't avoid it. Israel has both of them by the balls. The fun starts after the election.


How about, how does a candidate that has bashed 47% of the country get elected?


He has an interest in the company that supplies the voting machines in 6 states including Ohio and Texas.


What do you expect to see in the debates?


Two talking heads basically supporting the same policies. You mean you are going to watch them?


Does Romney still have pull with the Tea party?


The Tea Party is kaput. Been hijacked by the neocons and marginalized a while back.


What should the Republican party, really be about in the 21st century?


Statism just like the Democratic party. Why change?

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Man, no offense but this thread has been quite boring the last 3 or 4 days.


Yep, kinda of the problem when a handful of people steer a thread to something that many don't really care about. Now I said if you don't want to read about it then just skip it. But now it has generally turned me off of this thread. You know generally you [Tweedling] have been pretty reactionary in this thread (insomuch that you react to what is said rather then seeking out reactions/comments). Since it is so boring here, now is your chance. Tell us why you think Romney is better served as our next president then our current president.


I really hate it when people complain and do nothing about it to change it themselves.

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Yep, kinda of the problem when a handful of people steer a thread to something that many don't really care about. Now I said if you don't want to read about it then just skip it. But now it has generally turned me off of this thread. You know generally you [Tweedling] have been pretty reactionary in this thread (insomuch that you react to what is said rather then seeking out reactions/comments). Since it is so boring here, now is your chance. Tell us why you think Romney is better served as our next president then our current president.


I really hate it when people complain and do nothing about it to change it themselves.



Oh I'm sorry.... YOU said if we don't want to read it then just skip it? Really? OK Well thank you sir.

KevinG, has someone been mean to you and bullied you around? Have you been told what to do in your life so much that you feel like a big man getting on this board and telling other people just what to do? Hahaha

I like Romney because he's not Obama.


I hate it when smug comments expect some sort of positive change.


Oh, and you can skip this if you'd like. ;)

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I have been wondering about this for awhile and Ryan actually brought it up this weekend. The perceived liberal media bias. Ryan gave an interview with FoxNews and in it he talked about the bias that media has.


It goes without saying that there is definitely media bias, I think most people in the mainstream media are left of center and, therefore, they want a very left-of-center president versus a conservative president like Mitt Romney


But failed (or did not want) to site an example of where the media is biased.


So I am interested, do any of you think there is a true media bias out there? Other then the obvious MSNBC, FoxNews, etc. Looking at the broadcast channels, CBS, NBC, ABC, and PBS and NPR. Do you think they unfairly overly criticize one party over the other?


Here is an interesting graphic looking at media coverage from May to July 15th, which kinda dispels any media bias claims.



Also I can tell a lot of the posters on this board and this thread are pretty well read and informed. Where do you all get your news from?

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I never watch CBS,NBC, etc. Their version of the news is controlled, filtered and biased to support the corporate interests that own them. Manufactured dissent. I get my news from various alternative news sites on the internet. Used to watch Freedom Watch with Judge Napolitano on Fox Business news until they took him off the air back in the Sping for being too anti-establishment. Haven't watch TV news since. No worse for it.


Who Owns The Media? The 6 Monolithic Corporations That Control Almost Everything We Watch, Hear And Read





3 Time Emmy Award Winning CNN Journalist: Mainstream Media Takes Money from FOREIGN Dictators to Run Flattering Propaganda




Remember all that Kony 2012 bullshit earlier this year?


Obama waives sanctions on countries that use child soldiers

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I like Romney because he's not Obama.



This looks like the common praise for Romney. It's so weird to see people silently rooting for a candidate they have no passion for. I have yet to see any real defense of Romney, just attacks on Obama. It's like: I like Reagan because he's not Carter, I like David Cameron because he's not Gordon Brown.


But what does Romney really mean to do with our country? What about that sounds like a good idea?

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For the one or two of you who care...


Fed Chairman Admits His Economic Model Is Japanese Economic Stagnation


Federal Reserve Chairman Ben Bernanke said in an October 1 speech that his U.S. central bank would copy Japanese economic policy to get the U.S. economy moving, despite the fact that the Japanese economy hasn't seen significant economic growth since the 1980s



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For the one or two of you who care...


Fed Chairman Admits His Economic Model Is Japanese Economic Stagnation


Federal Reserve Chairman Ben Bernanke said in an October 1 speechthat his U.S. central bank would copy Japanese economic policy to get the U.S. economy moving, despite the fact that the Japanese economy hasn't seen significant economic growth since the 1980s




That's a ridiculous conclusion. "draw on" does not mean "copy"


Japan offers a good lesson on how easing, if delivered too late, results in stagnation. The Fed is obviously trying to avoid stagnation.


Where do you find this shit?

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That's a ridiculous conclusion. "draw on" does not mean "copy"


Japan offers a good lesson on how easing, if delivered too late, results in stagnation. The Fed is obviously trying to avoid stagnation.


Where do you find this shit?


His great "alternative" news sources run by old crazy white boys.


Started with Birch in the 50s.

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Again, the ad hominem attacks continue. (An attempt to negate the truth of a claim by pointing out a negative characteristic or unrelated belief of the person supporting it.)


Why do you folks believe these lying bastards? Are they relatives of yours? They are concerned with the welfare of the banks and the banks alone. It is a private banking cartel which has been allowed to savage our economy for decades without nary a wimper from our elected representatives who benefit from their policies of printing endless streams of money to fund their pet projects, wars, bailouts, etc. They have done nothing but fund asset bubbles which explode in our faces and create the boom and bust cylce we have been victims of since the Great Depression. If you want to argue it was created to prevent this cycle you have years of economic bubbles brought on by Fed policy that have exploded in our faces to explain away. Yet, you are all willing to see this continue? Are you expecting a different result? If you do, you are crazier than I am and according to some of you that is pretty crazy. We have had nothing but government regulation and interference in the market for nearly a century . That is what has brought us to this stage in history. You are so used to the government coming up with programs and policies to improve things that you actually think they are working. I guess that's why we need more of them. It's like hitting your kids. If hitting your kids works why do you still have to hit them? Keynesian economics is destroying this country right before your eyes and you can't see the forest but for the trees.


Now back to your regularly scheduled ad hominem attacks.


Change of pace...


Meet Mitt Romney's Mexican Mormon Family


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