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Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

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Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#221

Post by icu »

pdonis wrote: post #189
icu wrote: post #102

Earlier quoted context omitted.

In basic terms, inflation is the loss of purchasing power due to an increase of the monetary supply faster than economic growth. In plain English, this is where more currency is chasing the same number of goods and services. This means your unit of currency buys less over time. What is 'wrong' with this is that inflation is a transfer of wealth—some people even go so far as calling it theft or a 'stealth tax.' This i…

> if the creation and circulation of money was perfectly in line with the growth of the economy than there would be no inflation. While this is technically true (at least for some interpretations of "inflation"), it's important to realize that the wealth transfer effect you describe still occurs in this case. The only way it would not occur is if the newly created money was distributed exactly in accordance with the…

Yes absolutely thank you for pointing the wealth transfer effect printing money has even when monetary supply is such so that inflation is zero.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#222

Post by icu »

pdonis wrote: post #183
icu wrote: post #102

Earlier quoted context omitted.

In basic terms, inflation is the loss of purchasing power due to an increase of the monetary supply faster than economic growth. In plain English, this is where more currency is chasing the same number of goods and services. This means your unit of currency buys less over time. What is 'wrong' with this is that inflation is a transfer of wealth—some people even go so far as calling it theft or a 'stealth tax.' This i…

> the purchasing power that you had in your unit of currency isn't 'lost', it is actually transferred to the institutions creating the money. I wish I could upvote this more. If only the majority of people understood this basic fact.

Yeah I wish this was taught in public school. Also I think that part of the problem is that concepts like 'wealth', 'purchasing power' or 'the time value of money' aren't discussed at all until first year University courses in Finance.

I wish more people understood that most of the time wealth is transferred, not destroyed.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#223

Post by jsoc815 »

For those interested in the full context in which the comment was made, a video of the event is available here: https://www.youtube.com/watch?v=dnXLEaAJqno

I was in attendance and it is worth noting that Bernanke did not take any questions from the audience (apparently unexpected by some of the staffers) and that he did not remain for any of the (illuminating in my opinion) panel discussion that followed.

Suggest that people pay attention to the remarks of Mr. Warsh, who in my opinion actually should have gotten the nod to be Fed Chair -- though I understand completely why that would have been untenable for many.

Last thing I'll add: some of what is said openly during Congressional testimonies, these fora, and the like is knowingly contradicted in private conversations.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#224

Post by jsoc815 »

mindcrime wrote: post #87

“The economy is already at full employment.” I'm not sure that's actually true. Yes, the govt. reported "official" unemployment number is 3.8% or whatever. BUT... that comes with a couple of big, big caveats: 1. Those numbers by definition don't include job-seekers who have left the market and quit being job-seekers. IOW, people who became so despondent that they gave up. But, there's nothing specific that stops thes…

“The economy is already at full employment.”

I'm not sure that's actually true. Yes, the govt. reported "official" unemployment number is 3.8% or whatever. BUT...

Upvoted your post. You are correct to be skeptical here. In fact there are even people at the Fed who don't agree with the assertion. Current President of the Minneapolis Fed has publicly stated that Labor Force Participation Rate would be a better measure. As I'm sure you can imagine, that isn't a popular view w/i certain circles.

While Ben may truly believe what he's saying, I mostly get the sense that he's trying to burnish his 'legacy'.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#225

Post by ebbv »

mywittyname wrote: post #161
ebbv wrote: post #148

Earlier quoted context omitted.

Pensions are not inherently a problem any more than any other form of retirement account is. HN should be above this kind of ignorant rhetoric.

Not if they are fully funded. But the issue is that most pensions systems are woefully underfunded, thus, are a huge risk. If pension payouts floated as a percentage of overall asset value, then they would a great retirement strategy. But promising people a guaranteed (generous) fixed-income is not sustainable in the long-term.

The only reason pensions are underfunded is that they were plundered. Hold the politicians that broke them responsible, not the workers who earned their benefits.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#226

Post by [deleted] »

pjc50 wrote: post #56
Bucephalus355 wrote: post #10

Ben Bernanke’s point in his recent memoir is that central banks can only do so much. At the end of the day, monetary policy is not social change, moral evolution, or political coalition building. These things happen outside the Central Banking system and are just as important for a functioning economy. I know this sounds controversial, but at this point quite frankly the deficit does not matter. There is so much debt…

> global debt write-off This would also be a global abolition of the private pension system, FYI. People keep talking about debt write-off, but interest rates are bouncing off the lower bound. These are difficult to reconcile.

[deleted]

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#227

Post by vba »

pm90 wrote: post #152
Bucephalus355 wrote: post #10

Ben Bernanke’s point in his recent memoir is that central banks can only do so much. At the end of the day, monetary policy is not social change, moral evolution, or political coalition building. These things happen outside the Central Banking system and are just as important for a functioning economy. I know this sounds controversial, but at this point quite frankly the deficit does not matter. There is so much debt…

> It doesn’t help that China has essentially been spewing entirely fictitious accounting numbers for the last 20 years. It’s not even about padding an extra 10-15% anymore. There are journal articles out there claiming that Alibaba, a company as big as Oracle, is making up whole cloth 95% of it’s accounting statements. Ridiculous... That can't be any good. The very foundation of modern nations is built on good accoun…

What was the book?

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#228

Post by tabtab »

_dps wrote: post #188
tabtab wrote: post #177

Earlier quoted context omitted.

The "Tulip Bubble" of 1630's is arguably the first speculative bubble. No FED back then. Maybe the FED affects the timing and depth of the business cycle, but probably cannot prevent all "bubbles"...Unless, maybe you give the FED a clue-stick to use on stupid investors.

The historical view of tulip speculation has changed a lot in the last 20 years, but popular conception has not caught up. In a nutshell, it is now believed by several researchers to have been a very narrow phenomenon with minimal impact to the national economy. Per Wikipedia "While Mackay's account held that a wide array of society was involved in the tulip trade, Goldgar's study of archived contracts found that eve…

Economies ran slower in those days so it's hard to compare. But the principle of hype and me-too-ism was present in the Tulip incident even if it didn't spill over to other economic areas. Whether human nature breaks big gizmos or small gizmos, it's still human nature at play. The FED did not make people pay way too much for silly dot-coms.

But bubbles continued. I wonder if one can make a case that pre-FED bubbles were notably smaller than post-FED bubbles, factoring in the fact that the nature of modern economies may magnify bubbles. In other words, if there is a continuous upward slope to the size of bubbles from the 1600's up to now, then it would appear FED made no significant difference. But if there is a spike or jump when FED formed, it could mean they magnify them.

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