Fed side by 20100810

Hat tip Andrew H.!

Category: Federal Reserve

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

16 Responses to “Comparing FOMC Statements”

  1. Chief Tomahawk says:

    I can’t do this justice because I was driving while it aired & and was unsuspecting the conversation would go where it did, but …

    Pim Fox had on a guest this afternoon (2:35 CST) on Bloomberg Radio talking about celebrity media. Pim, tying into his day job, asked whether Alan Greenspan and Ben Bernanke had crossed over into the celebrity world. The response invoked a mention of “Snooki” from “The Jersey Shore” throwing up on the beach to make her celebrity status.

    Just tried to find a web-based link to include here, but apparently they are a day behind in posting on the free Bloomberg audio podcasts.

  2. willid3 says:

    i wonder what world Mr Hoenig lives in. it doesn’t seem match up with the real one. he seems to think that every thing is just wonderful.

  3. Mike in Nola says:

    willid3: well, Hoenig is a Fed governor…

  4. Niskyboy says:

    @ willid3

    My view of Hoenig’s thinking: We can deleverage now, when it will be painful, or we can deleverage later, after yet more debt has built up, when it will be excruciatingly painful.

  5. takloo says:

    i think most market observers over analyze FOMC statements… which thankfully results in heterogeneous outcomes

  6. Are We, really, so f_____’ Stoopid?

    Should We, really, pay so much attention to “Oz”?

    CanWe understand that, given their ability, backed by our, supposed, Representative “Government”, to Create U$D, from Nothing, that they should not be held in esteem?

    But, rather, should be understood as the key mechanism that queers Price Discovery?

    And, of course, with that, the queering of Price Discovery, all else.

  7. alfred e says:

    @MEH: X 2. Simply put.

  8. willid3 says:

    Niskyboy Says:
    August 10th, 2010 at 8:07 pm

    @ willid3

    My view of Hoenig’s thinking: We can deleverage now, when it will be painful, or we can deleverage later, after yet more debt has built up, when it will be excruciatingly painful.

    really? isn’t that what they though just as the great depression hit. how did that work out? as jobs disappeared at a brisk clip and deflation took total command of the economy, they kept at that deleveraging thing. and you really want to know why they stopped doing that? because the populace had started to question whether capitalism wasn’t a broken system that was unworkable, and you know why that was? because they were getting 0 benefit from that system. and they were also beginning to question democracy for the same reason. so the government turned every thing it had every done on its head and tried to do some thing for the people. it was either that or have a revolution.
    and it took a long time, but the populace at least felt like they were being represented,
    and i am guessing that back then they would look at today’s ‘conservatives’ and think they were the most liberal people ever. and they had more patience than we have today.
    and if deleveraging is such a good idea, what to stop it from destroying the economy completely?
    the free market could care less if that happened.

  9. Detroit Dan says:

    @ Niskyboy

    QE basically liquidates the national debt at no cost, other than a push in the right direction (inflation). So your comment that:

    “We can deleverage now, when it will be painful, or we can deleverage later, after yet more debt has built up, when it will be excruciatingly painful.”

    would seem to be way off the mark. Here’s what I think:

    We can liquidate national debt now through QE, but it won’t make a big difference since monetary isn’t good for much. Either way, the national debt isn’t a real problem…

  10. Detroit Dan says:

    I should have noted that the effect of QE will be miniscule (won’t bring about the needed inflation).

    We should be thinking about the welfare of the citizenry, and jobs are pretty important right now.

    The national debt? A bogus problem which only distracts. Anyone who claims that QE increases debt doesn’t know what he is talking about. It does the opposite. At least that’s my understanding…

  11. call me ahab says:

    QE will be minuscule (won’t bring about the needed inflation) . . . . The national debt? A bogus problem

    are you a genius or something ? man- you got it all figured out- so you must be

    laugh the fuck out loud

  12. Simply-Put says:


    Only kidding…

    I have only been interested in where we are in this debt/deflation cycle according to Ben’s famous speech…

    Remarks by Governor Ben S. Bernanke
    Before the National Economists Club, Washington, D.C.
    November 21, 2002

    Deflation: Making Sure “It” Doesn’t Happen Here

    Deflation is defined as a general decline in prices, with emphasis on the word “general.” At any given time, especially in a low-inflation economy like that of our recent experience, prices of some goods and services will be falling. YES!!!!

    The sources of deflation are not a mystery. Deflation is in almost all cases a side effect of a collapse of aggregate demand–a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers. YES!!!!

    A deflationary recession may differ in one respect from “normal” recessions (AVERAGE INVENTORY RECESSION) in which the inflation rate is at least modestly positive: Deflation of sufficient magnitude may result in the nominal interest rate declining to zero or very close to zero. YES!!!!

    Deflation great enough to bring the nominal interest rate close to zero poses special problems for the economy and for policy. First, when the nominal interest rate has been reduced to zero, the real interest rate paid by borrowers equals the expected rate of deflation, however large that may be. YES!!!!

    When someone who borrows for a year at a nominal interest rate of zero actually faces a 10 percent real cost of funds, as the loan must be repaid in dollars whose purchasing power is 10 percent greater than that of the dollars borrowed originally. In a period of sufficiently severe deflation, the real cost of borrowing becomes prohibitive. Capital investment, purchases of new homes, and other types of spending decline accordingly, worsening the economic downturn. YES!!!!

    Deflation and the zero bound on nominal interest rates create a significant problem for those seeking to borrow, they impose an even greater burden on households and firms that had accumulated substantial debt before the onset of the deflation. This burden arises because, even if debtors are able to refinance their existing obligations at low nominal interest rates, with prices falling they must still repay the principal in dollars of increasing (perhaps rapidly increasing) real value. YES!!!!

    Japan in recent years has certainly faced the problem of “debt-deflation”–the deflation-induced, ever-increasing real value of debts. Closer to home, massive financial problems, including defaults, bankruptcies, and bank failures, were endemic in America’s worst encounter with deflation, in the years 1930-33–a period in which (as I mentioned) the U.S. price level fell about 10 percent per year. YES!!!

    When the short-term interest rate hits zero, the central bank can no longer ease policy by lowering its usual interest-rate target. central banks conventionally conduct monetary policy by manipulating the short-term nominal interest rate, some observers have concluded that when that key rate stands at or near zero, the central bank has “run out of ammunition”–that is, it no longer has the power to expand aggregate demand and hence economic activity. It is true that once the policy rate has been driven down to zero, a central bank can no longer use its traditional means of stimulating aggregate demand and thus will be operating in less familiar territory. YES!!!

    YES!!! we are in the 1930’s, only a modern version of a depression. The only question I have is how do we get out of it and how long is going to take? And, why can’t the over paid Quants, Wall Street Financial Wizards and PHD Economists just write equation to get us out of this.

  13. Niskyboy says:

    @ willid3, August 10th, 2010 at 9:15 pm

    I think you have a point with respect to government’s role in maintaining confidence and preventing social unrest, butthe fact is World War II is what finally ended the Depression, not the government’s various economic policies. Are you advocating for World War III, then? Because using money which really doesn’t exist to prop up prices that are already artificially high doesn’t seem like the greatest idea, no matter how good the temporary benefit of doing so may feel. At any rate, that’s what I read into Hoenig’s position. Do I have him wrong?

    @ Detroit Dan, August 10th, 2010 at 9:35 pm

    I agree that monetary policy is a pitiful tool to have to depend on right now. Do think that QE has a cost, though, in the ultimate loss of purchasing power.

  14. JustinTheSkeptic says:

    Dam it, I get sick of hearing how they stopped supporting the economy back in the great depression and that is what made it fail. They never let the system clear properly back then and they are not letting it clear properly again. Obviously because the people with/in power will lose a tremendous amount of money. But that doesn’t mean that the capitalist system cannot handle a total cleansing, it only means that everyone is too greedy and scared to try it. I keep hearing about all the trillions of dollars on the side-lines – would it not step in and buy up everything on the cheap? Would not prices adjust? Would not more people be able to take part in a new cleared system? Yes, yes and yes. The truth is, is that those in power want to stay in power.

  15. Niskyboy Says: August 10th, 2010 at 8:07 pm

    My view of Hoenig’s thinking: We can deleverage now, when it will be painful, or we can deleverage later, after yet more debt has built up, when it will be excruciatingly painful.


    Actually, I think the US has passed the point whereby no matter when they deleverage it will be excruciatingly painful


    Obviously because the people with/in power will lose a tremendous amount of money.


    No, I think they are more concerned with losing their lives from a unruly and betrayed population who paid them huge amounts of money to ‘look after these things’ (whether that was the right thing to do or not).