September 23, 2007

"Ben Bernanke’s 50 basis point cuts in the Fed funds and discount rates this week may go down as the most irresponsible move in Fed history"


Peter Schiff nails Bernanke's move to the wall.

History will not be kind. Bernanke has destroyed the US dollar, and made a bad situation worse. Think mortgage rates were too high? Wait until burned foreigners start selling their US bonds, driving up interest rates even higher. Think inflation is tame? Wait until those imports you're addicted to soar in price as the dollar tanks.

When the Fed should have been raising, they lowered.

And now we're fu*cked. Here's Schiff:

Helicopter Ben Earns His Wings

Coming at a time when rate increases were needed to combat the sinking dollar and surging gold, oil and other commodity prices, Ben Bernanke’s 50 basis point cuts in the Fed funds and discount rates this week may go down as the most irresponsible move in Fed history.

To America’s creditors around the world, whose mountains of dollar reserves will be debased by lower rates in the U.S., this action amounts to the monetary equivalent of “let them eat cake.” My prediction is that rather than doing so, they will just throw it back in our faces, and refuse to continue funding our deficits.

Furthermore, a fifty basis point cut was not an act of bravery but one of cowardice. The brave thing to do would have been to raise rates and allow market forces to purge the economy of the imbalances built up during the Greenspan bubbles. It would have taken some real courage to level with the American public and let them know that our profligacy has consequences, rather than pretending it can ride to the rescue with a wave of its magic wand and a crank of the printing press.

45 comments:

MOAB said...

Forget the helicopter - it's more like the "mother-of-all-bombs" that just explodes money everywhere.

Anonymous said...

rates will go up once Hillary gets in. The GOP (who all these guys are members of) don't want to hurt their election chances more then they already are.

Anonymous said...

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All I know is Bush is giving away 1% 30 year fixed loans to anyone with an adjusting ARM. Thanks taxpayers, you rock!!

I welcome hyperinflation as it will mean my mortgage will be worth pennies on the dollar in a few years.

So you keep renting and saving. About the stupidest things you can do in an era of high inlfation as your savings are wiped out AND your housig costs increase.

Edgar said...

Notice where he is dropping the money. Fascist Manhattan.

Anonymous said...

anonamous has a good point that i have considered myself. Me and my family have been patient waiting to buy our first place. Some of this patience has been rewarded this year but if we have serious inflation homes may go up again. Didn't that happend in the seventies? In a sense a home is a commodity, like other "stuff". Still there is an issue of the mini crash going on so that comment does have some issues.

If you believe in hyperinflation than you can't pick and choose what goes up. Homes will go up if the dollar tanks alot.

Mr Mellin

SPECTRE of Deflation said...

Anonymous said...
rates will go up once Hillary gets in. The GOP (who all these guys are members of) don't want to hurt their election chances more then they already are.

Rates are up now on the long end of the curve, so you don't have to wait for anyone to come into office. Why would long rates rise in yield when the FED cut? Because our creditors are telling us they won't buy our ass wipe paper without being compensated for the added risk and the cheaper dollar.

FCB's are net sellers of all our shit paper. How much plainer can it be?

FlyingMonkeyWarrior said...

Bend over Ben and Hillary will fix everything, do not worry.

Anonymous said...

Plus this is only first installment. More rate cuts to come. Can you imagine what will happen if they continue to cut rates. Bill Gross (worlds biggest Bond fund manager from New Port Beach, california)wants rates to back to at least 3.75% !!! These guys are all in it. The wallstreet greedy crooks/criminals dont have enough money in their pockets yet. They want to hyperinflate even more !!!

de-sheeple said...

All I know is Bush is giving away 1% 30 year fixed loans to anyone with an adjusting ARM.

Ok. Let’s say this dreamland scenario came true. That would mean a person with 500,000 dollar crapbox would have a payment of $1600 and taxes of $500 with $150'ish insurance and some upkeep and maintenance. Not too bad bitter homeowner. Only $2250 a month, probably in line with rents.

The only problem is I cant find one snipet of info on this 1% claim to back it up. Do you have a link to somthing?

LauraVella said...

I welcome hyperinflation as it will mean my mortgage will be worth pennies on the dollar in a few years.

You must be joking! Is your wages going to be hyperinflated too? Watch your homeowner's insurance policy go through the roof because of all the mortgage fraud...

Almost everyone I know voted for higher property taxes because there homes were appreciating during the BOOM!

Meanwhile, my landlord REDUCED my rent. I dont pay water or HOA dues..plus I have the freedom to move if this place just doesnt suit me any longer!

You are stuck my friend in a place that will cost you more and more ever year to keep up and maintain.

Me, I'm freeeeeee!!!!!!!

SeattleMoose said...

Letting a recession happen would be a good thing because it would restore economic equilibrium.

But just like our fake war we have a fake economy run by a small but powerful group of bankers/CEOs. They are in trouble. They asked Ben to lower rates. He did. It is a fact that most of the leaders of our spook organizations come from the financial industry. The pirates have traded in their ships for office buildings and their colorful garb for drab business suits....but they are still pirates.

Without a major revolution, this country will be flushed down the toilet.

realtor headhunter said...

Like I said, this country is run by a bunch of bafoons.As inflation rises investors in bonds are going to demand a higher return for their money so long term bond rates will rise.The fed funds rate is the rate member banks charge each other for loans.Discount rate is the rate which the feds charge banks for money.So as the bafoons lowered the fed funds rate to save wall street the 10 yr note rose in yield, dropped in price.Anyone notice mortgage rates go up last week?They are makeing the situation worse people.A weak dollar also hurts us on imports.If we import something from a country where there currency is stronger than we have to pay more dollars to get the same product.Anyone notice oil above 80 last week?I wonder how long it will take the bafoons buying the stock market to figure it out?

Eric said...

Doesn't anyone get it. In an era of hyper inflation.... we're all screwed. Renters and Homeowners alike will be suffering dramatically.

BKS said...

We paid off our house and all our debts and now I'm watching the dollar implode. What to do?

I just contacted an Irish bank about converting dollars to Euros and leaving our savings there.

Anonymous said...

Anonymous said...
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All I know is Bush is giving away 1% 30 year fixed loans to anyone with an adjusting ARM. Thanks taxpayers, you rock!
-------------------------------
What are you smoking? That must be some good SH%T!

burning down the house said...

Grand Rapids Press, September 22, 2007:

Front Headlines:

HOMEOWNER CHARGED WITH ARSON

(Highlights:)

Sheryl Christman allegedly had a plan that would give her what her mortgage company would'nt - a way out.

Four days shy of losing her 3-year old home to foreclosure, Christman, 38, allegedly set the $150,000 residence on fire September 1, Kent County sheriff's officials said.

Foreclosure arson is becoming an issue across Michigan and the entire country. Foreclosures are widespread with Kent county recording 657 foreclosure filings in August 2007 alone, according to RealtyTrac.

Unemployment and the economy are hitting hard, and theres a lot of people who can't meet their debts.

Neighbors said the family and their 3 children had been seen moving items out only days earlier and had wrapped up a garage sale just hours before the blaze. Sheryl's husband was mowing his lawn when a neighbor notified him his garage was on fire. It then spread to the house and was a total loss.

Other recent arson related fires have been on the rise as well, including a jury returned guilty verdict againt a former Muskegon police officer who started his home on fire after he couldnt find a buyer.

Anonymous said...

.

Bigger hole!

Deeper hole!

Harder to get out of!

Making a bigger problem later!

Sounds like my wife!



.

amigauser said...

Warning - CRAZY GOLD BUG ALERT

Gold bugs have been saying foreigners are about to dump Dollars ever since they decided that the only way to get people to buy their relic is to tell scary bedtime stories.

raynla said...

I have been saying this for a while now.

This is all a plan to introduce the AMERO. The feds are killing the dollar so when they introduce the Amero (without a vote from Congress)the American sheepeople won't go ape SH*T. They will actually welcome the change even if they continue to hate their Mexican neighbors.

RayNLA

k.w. - southern ca. said...

The rate cut has everything to do with protecting the finances of key interest groups who support the policies of the Fed, and nothing to do with what is in the best interest of the country.

Meanwhile, tax payer dollars continue to fund a war at 12b/month, with a proposed increase to 16b/month for 2008.

realtor headhunter said...
Like I said, this country is run by a bunch of bafoons.As inflation rises investors in bonds are going to demand a higher return for their money so long term bond rates will rise.The fed funds rate is the rate member banks charge each other for loans.Discount rate is the rate which the feds charge banks for money.So as the bafoons lowered the fed funds rate to save wall street the 10 yr note rose in yield, dropped in price.Anyone notice mortgage rates go up last week?They are makeing the situation worse people.A weak dollar also hurts us on imports.If we import something from a country where there currency is stronger than we have to pay more dollars to get the same product.Anyone notice oil above 80 last week?I wonder how long it will take the bafoons buying the stock market to figure it out?

Anonymous said...

.


Warning - CRAZY TROLL ALERT
===========================

Aamigauser, who posted here at
September 23, 2007 6:02 PM

IS A TROLL!!!!!!




.

Anonymous said...

But the Fed did not see the House Bubble!

The OPS guys are still installing the first Internet connection at the Fed and Ben has not yet had his Internet Training.

George Bush is still working on his mobile phone training.

AmazingRuss said...

I've always thought it would ultimately be inflation...really the only option the government has. I still think there is a chance that other forces will override the governments' ability to pull it off...but I can't think of what those forces might be.

I'm going to protect my cash by getting it all spent. I stopped working a year ago...why bother? Why feed the beast? Inflation doesn't hurt if you are broke already.

What's crazy is housing is still tanking after this...the value of a buck is down 10%, and house prices are still falling. Unreal.

I'm lucky in that I get off on technology, and tech is dirt cheap. A little residual cash income from occasional consulting, a tiny, comfy place to sleep, a new laptop every 6-7 years, and I'm golden.

I don't have to play this silly ass game, and you don't either. People are controlled by fear...fear of not making their payment, fear of being broke when they're old... into slaving their entire lives away to enrich others.

Maybe the fear is justified, but it sure looks like the slaving isn't doing anything to make us safer. The Enron employees learned it first...bust ass, save, and be robbed blind by liars and spend your old age in poverty.

I'm cutting out the middle man. My golden years are now, and I every second I live at my leisure is a second that absolutely cannot be stolen from me. If I don't accumulate wealth, I can't have it stolen from me...by financial crooks, the taxman, or the fed devaluing it.

You don't have to be mad as hell. You don't have to take it anymore. Join the slacker revolution. Freedom is yours for the taking.

(Keith...I think I'll put this rant on my blog too...if that's a problem, please just delete it from here)

Anonymous said...

Its likely the dollar index is going to low 70s. If there is a rate cut, it will goto the 40-50s. Its unbelievable.

The foreign investors are dumping. Just wait for the Yen carry trade to blow. Last week was quite because of options expiration and asian holiday. Next week kaboom.

area 51 said...

The US dollar is/was artifically inflated. Schiff says so himself. Then letting the dollar sink is a good thing.

k.w. - southern ca. said...

If anyone has a chance to visit Southern Ca., I recommend taking a drive down the coast (PCH) and seeing all the for-sale signs tacked up along the corners and within the (poorly built) McMansions lining the coast-line.

I have *never* seen it like this within the community, and it's only going to get worse in the months ahead.

As Peter Schiff pointed out ... [...No area is safe, and we're going to see prices drop drastically ...]

Anonymous said...

GET SOME GOLD AND SILVER

Anonymous said...

Believe it or not, there are plenty of economists, journalists, and government droids who truly think everything is hunky-dory. Our local paper featured an article where some economist predicts the Fed rate cuts will ensure a continuation of the good times and steady growth for the next five years!

Meanwhile, the RE section of the paper has dozens of listings with headers like "New Price", and "Reduced!". I bought some groceries yesterday and noticed prices had jumped a few cents higher on most items from just a week ago. That's 2% to 3% increases, so you deflationists had better look again.

I think inflation is going to hit us harder than anyone knows.

k.w. - southern ca. said...

As Peter Schiff pointed out, by lowering the Fed interest rate we'll be digging an even larger hole to dig ourselves out of, and the outcome will be far worse than the inevitable recession we're now moving into across the country.

Since Bush's $200b war appropriation for 2008 will most likely be approved, lowering the interest rate actually means more tax payers (those foolish enough to keep getting into houses) will be throwing their hard earned money into financing the ever rising costs of this needless war.

Anonymous said...

The financial speculators' approach, in a nutshell: first you create the graveyard, then you whistle past it.

Anonymous said...

this won't be the only rate cut this year either........

abb said...

Look what happened to Japan. Housing prices have been falling for 15+ years amid massive inflationary efforts by BOJ (0% interest).

Houses are going to be priced by ability to pay. And not 5% of the people in my neighborhood can afford their own homes anymore. Even starter homes are priced out of reach.

Also.. while short-term interest rates are falling, long term rates look set to spike upwards. Long term rates set mortgage rates which set the prices of homes.

Ie. it's not quite as simple as: inflation = buy a house and let inflation pay off my mortgage.

Inflation is going to show up in imports, food, and energy. This will place additional strain on the ability to make large mortgage payments.

Anonymous said...

http://www.papereconomy.com/BNN.aspx?id=409 In case you missed it.
I am not suggesting a political leader here, just displaying a moment of truth, a dialogue or lack of it, between Ron Paul and Ben B. A sincere, critical question given, and an evasive, elusive, incomplete answer replied. It is worth the time to view this, if not seen yet....

Charles said...

And Greenspan admit he wanted to keep the US in debt.

http://tinyurl.com/2259nl

Un-freakin believeable!

Anonymous said...

rates will go up once Hillary gets in. The GOP (who all these guys are members of) don't want to hurt their election chances more then they already are.
_________________________________

Exactly. And why do you think we had loose lending practices, lowered interest rates, and a housing bubble in the first place? Because the Bushites wanted to stay in power so much that they didn't care in they destroyed America in the process....

abb said...

Greenspan didn't want to eliminate the national debt for one reason:

Our entire money supply is based on that debt. If the money was ever paid back, there would be no more money! Literally.

Every single dollar in every bank account everywhere was BORROWED INTO EXISTENCE.

If we paid back the national debt, the Fed would be out of business.

It's a scam of the highest order.

Charles Wilson said...

Rates are up now on the long end of the curve, so you don't have to wait for anyone to come into office. Why would long rates rise in yield when the FED cut? Because our creditors are telling us they won't buy our ass wipe paper without being compensated for the added risk and the cheaper dollar.

I think that's about the size of it. I posted an analysis that you might want to read.

Anonymous said...

The Fed is the equity markets bitch. It started with Greenspan.

corvinus said...

I have been saying this for a while now.

This is all a plan to introduce the AMERO. The feds are killing the dollar so when they introduce the Amero (without a vote from Congress)the American sheepeople won't go ape SH*T. They will actually welcome the change even if they continue to hate their Mexican neighbors.

RayNLA


Makes sense to me.

Bernanke and the other clowns running our country just killed its currency, and our killing our country along with it. They WANT a global police state, and this is how they'll get the otherwise recalcitrant Americans to give in to it.

I just hope to God that we still have our firearms by then. We'll need 'em.

Anonymous said...

Ben Bernanke was a student of the Great Depression . The history books say that the Feds made a mistake by not lowering the interest rates when the stock market crashed in Oct.1929 .

Maybe Ben Bernanke wanted to try that option of lowering in case he might be accused of making the mistake the Feds did during the Great Depression .

But , as far as I'm concerned ,the right decision would of been to raise the rates or hold them .

f'ed said...

comedy host understands monetary system better than Greenspan:

http://youtube.com/watch?v=bfuTMexCePE

Anonymous said...

China and Saudi, you are our only hope, let chinese and saudi government continue buying dollar denominated crap.

Happy Homedebtor said...

What's funny is that you guys think the depreciating dollar will cause inflation in consumer goods. This is, again, proof you're all in need of some basic common sense that's being deflected by the tinfoil hats.

As this blog points out time and time again, where do 90%+ of our consumer goods come from now? CHINA

How is the exchange rate with China going lately with the falling dollar? IT'S A FIXED EXCHANGE RATE, so the cost of the goods hasn't moved a bit. (Despite China claiming it's "flexible")

Ever think maybe this move is done to, long-term, fix all our issues? Force China to unpeg or wreck itself, increase domestic production due to absurdly unfavorable exchange rates (thus bringing back manufacturing jobs for the uneducated), and cut down on the national debt by making it trivial to payback what we owe? Nah...that couldn't be, because all that matters is GOLD! And any other commodities you own, because you know everything, amirite? :D

GT said...

i'd like to email him.

inflation control is your job. you did not do that this week. are you still getting a paycheck this biweek?

cobra2411 said...

Collapse the dollar or collaps the banking system... I think a norther rock episode was coming... He's hoping the dollar holds and that people really don't figure out he's impotent... I think the dollar will collapse and the banks too... no thanks to the fed...