Category: Class War

Bernanke warns of long-term joblessness

~ susie ~ 1 Comment

Fear of imaginary inflation is the monster under the bed for the politicians — even though the bond market so far has no problem. Politicians and the corporate media are such well-trained lapdogs, they simply try to anticipate what might upset them later:

NEW YORK (Reuters) – Federal Reserve Chairman Ben Bernanke warned on Tuesday that a long period of high unemployment could exact a steep social cost, as he and other Fed officials defended the central bank against criticism of its easy money policy.

Minneapolis Fed President Narayana Kocherlakota said the Fed’s controversial bond purchase program was needed given a “troubling” slowdown in U.S. economic growth and too low inflation and employment.

The Fed said earlier this month it would buy $600 billion in Treasury bonds to support a weak economy. Core inflation has averaged well below the Fed’s informal target of about 2 percent and the jobless rate remains stubbornly high.

“There are obviously very severe economic and social consequences from this level of unemployment,” Bernanke said at Ohio State University. “So getting new jobs, getting unemployment down is of an incredible importance.”

The Fed’s purchase program has elicited an unusual amount of criticism both at home and abroad, including that it is deliberately pushing down the dollar and fueling asset bubbles. Some U.S. Republicans have warned the policy will lead to runaway inflation.

Jeffrey Lacker, president of the Richmond Federal Reserve Bank and known as an inflation hawk, said the Fed faces a delicate task of timing the eventual withdrawal of easy money to avoid a run-up in inflation, but that he doesn’t yet know when that time will be.

“We’ve increased the monetary base tremendously, and there is a lot of people that just look at that and jump to the conclusion that hyperinflation is a threat,” Lacker told a panel in New York.

“I think there’s a little bit of overreaction, a little bit of hysteria out there” on inflation.

Kill the Fed

~ susie ~ 1 Comment

Matt Stoller, who worked for Alan Grayson as a policy advisor, writes about his experiences with the Fed while working on the Fed audit legislation (the audit’s released today), and says we need to get rid of it entirely:

Liberals should stop their love affair with conservative technocratic myths of monetary independence, and cease seeing this Federal Reserve as a legitimate actor. At the very least, we need to begin noticing that these people do in fact run the country, and should not. We must also begin to internalize the new forces of openness and rethink how a monetary system can function in an internet-enabled society. This will require thinking about Fed 2.0 from the perspective of the social web, as well as building upon the increase in transparency being forced on governing elites by such groups as Wikileaks. The top-down backroom system just won’t work if it relies on retaining secrets between Bank of America and the Fed that a third party or a court can release. The Fed can’t print its way out of a public that has lost faith in the banking system and the dollar. If we rethink money creation properly, however, we will be able to remove money creation from the hands of the oligarchs, and strike deeply at the uncompetitive nature of the American political economy. I do not know how to do this, but it is possible.

Tomorrow, we’re going to see some of what the Fed did from 2007-2010. And there will be ample justifications for why the Fed needed to do what it did, just as the Treasury keeps talking about how TARP made money. But the Fed gave $13 billion to Goldman Sachs through AIG, a direct transfer of $80 from every working American to the employees of Goldman Sachs. We’re soon going to find out who else got our money. And this disclosure, and the accompanying political debate over the monetary order, is the beginning of changing the way we think about money itself.

Cynical

~ susie

Go read the rest on Main Street Liberal:

Filling in for Lawrence O’Donnell last Wednesday on MSNBC’s The Last Word, Christopher Hayes held a fascinating discussion (transcript here, video, from Ari Berman’s herdingdonkeys.com, below) with Ari Berman, Adam Green, and Roger Hodge, author of “The Mendacity of Hope: Barack Obama and the Betrayal of American Liberalism.” Midway through, Hodge commented:

But, I think that, again, going back to what made his candidacy special, it was so cynical. I mean, looking back, I just think there‘s no question that he identified his gift, he identified his angle. He came up with this beautiful rhetoric, but it was ultimately empty.

And if he does pick a fight on the tax cuts, I will be blown out of my chair. I just don‘t believe he will do it.

It looks like Hodge won’t need to get up off the floor. Arthur Delaney writes in The Huffington Post

Obama first asked lawmakers to reauthorize extended unemployment benefits at the beginning of October, but Congress has failed to prevent the benefits from lapsing at least temporarily. Now it looks as though a deal crafted by the four members of Congress tasked with compromising on tax cuts may be the only way to save the jobless aid….

One might think he decided in advance that letting unemployment lapse was protective cover for extending the millionaire tax cuts he wanted to pass, anyway!