In a recent article at Portfolio.com, Megan Barnett comments on discrepancies between financial/economic data publicly available in reports from the Fed, and statements to the contrary, made by Fed Chairman Bernanke and Treasury Secretary Paulson, in recent months, and wants to know if Paulson and Bernanke Are Lying to Us.
There are … inconsistencies between what Bernanke stated to Congress in late October about consumer credit with the data made available by his own organization in the same month.
So, what gives? Celent [a consulting firm] concludes that one of two scenarios is possible: 1) Bernanke and Paulson have access to far more data than is made available publicly and that data is painting a far more grim picture of the state of bank lending. “However, it is hard to see why the Federal Reserve Bank itself would publish and continue to publish information that it knows is misleading at best, and simply wrong at worst,” the report notes.
Why would Bernanke, Paulson, et al. continue to publish misleading or deceptive information?
For the same reason that governments in general, and central bankers specifically, always rely on misdirection, deception, and outright lies. Trust in fiat money is important to the central bank, and trust in the central bank is of paramount import to the State in general, without which its power over the population is vastly diminished, or can be exercised only with open and notorious acts of violence, the likes of which rarely go unpunished.
Without fear of anarchy, government ceases to be tolerated by the populace. For this reason, those in power continue to spread the lie, that government is both necessary and benevolent, despite thousands of contrarian data points. Without continuing trust in central bank fiat money, the economic system that concentrates benefits among those in power (i.e., banks in particular, but from a broader perspective, big businesses and governments) would grind to an immediate halt.
The report also suggests an alternative:
2) The Feds are reacting to a situation at a particular set of businesses and banks and are incorrectly generalizing these to the whole economy, which would mean that the policy tools they are using are the wrong ones.
Well, this wouldn’t be terribly surprising. Just because the State has a tremendous amount of power and influence, doesn’t mean that it is capable of using those instruments effectively. And it wouldn’t be the first time that “the policy tools they are using are the wrong ones,” either.
But of course, that depends how you judge the adequacy of the policy in the first place. It’s very likely that the policies being privately pursued by the government are inconsistent and/or incompatible with the policies they claim to pursue in the interest of the public welfare. In this particular case, the government’s public goal is to “fix the economy.”
It’s entirely possible that the government’s definition of “fix” is not the same as yours, in which case they are lying. Or, they have no idea what they’re doing, in which case they’re incompetent.
Neither a liar or an imbecile is fit to wield <em>any</em> control over other people’s lives, let alone, play marionette with the structure of the economy.
[...] I said it before: Their idea of “fixing” the economy is not the same as yours. [...]
Prof. Benjamin Shalom Bernanke Exposed
“The debate about the ultimate causes of the prolonged Japanese slump has been heated. There are questions, for example, about whether the Japanese economic model, constrained as it is by the inherent conservatism of a society that places so much value on consensus, is well-equippedto deal with the increasing pace of technological, social, and economic change we see in the world today.
The problems of the Japanese banking system, for example, can be interpreted as arising in part from the collision of a traditional, relationship-based financial system with the forces of globalization, deregulation, and technological innovation (Hoshi and Kashyap, forthcoming). Indeed, it seems fairly safe to say that, in the long run, Japan’s economic success will depend largely on whether the country can achieve a structural transformation that increases its economic flexibility and openness to change, without sacrificing its traditional strengths.
In the short-to-medium run, however, macroeconomic policy has played, and will continue to play, a major role in Japan’s macroeconomic (mis) fortunes. My focus in this essay will be on monetary policy in particular. Although it is not essential to the arguments I want to make—-which concern what monetary policy should do now, not what it has done in the past—-I tend to agree with the conventional wisdom that attributes much of Japan’s current dilemma to exceptionally poor monetary policy-making over the past fifteen years (see Bernanke and Gertler, 1999, for a formal econometric analysis).
Among the more important monetary-policy mistakes were 1) the failure to tighten policy during 1987-89, despite evidence of growing inflationary pressures, a failure that contributed to the development of the “bubble economy”; 2) the apparent attempt to “prick” the stock market bubble in 1989-91, which helped to induce an asset-price crash; and 3) the failure to ease adequately during the 1991-94 period, as asset prices, the banking system, and the economy declined precipitously
Bernanke and Gertler (1999) argue that if the Japanese monetary policy after 1985 had focused on stabilizing aggregate demand and inflation, rather than being distracted by the exchange rate or asset prices, the results would have been much better. Bank of Japan officials would not necessarily deny that monetary policy has some culpability for the current situation. But they would also argue that now, at least, the Bank of Japan is doing all it can to promote economic recovery.
For example, in his vigorous defense of current Bank of Japan (BOJ) policies, Okina (1999, p. 1) applauds the “BOJ’s historically unprecedented accommodative monetary policy”. He refers, of course, to the fact that the BOJ has for some time now pursued a policy of setting the call rate, its instrument rate, virtually at zero, its practical floor. Having pushed monetary ease to 2 Posen (1998) discusses the somewhat spotty record of Japanese fiscal policy; see especially his Chapter 2.its seeming limit, what more could the BOJ do? Isn’t Japan stuck in what Keynes called a “liquidity trap”?
I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan. Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively. However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed.
My objective here is not to score academic debating points. Rather it is to try in a straightforward way to make the case that, far from being powerless, the Bank of Japan could achieve a great deal if it were willing to abandon its excessive caution and its defensive response to criticism.”
Prof. Benjamin Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For presentation at the ASSA meetings, Boston MA, January 9, 2000.
A Credit Free, Free Market Economy will correct all of those dysfunctions.
The alternative would be, on the long run, to wait for the physical destruction (through war or rust) of most of our productive assets. It will be at a cost none of us can afford to pay.
This Age of Turbulence People Want an Exit Strategy Out of Credit,
An Adventure in a New World Economic Order.
A Specific Application of Employment, Interest and Money [For Economists].
Press release of my open letter to Chairman Ben S. Bernanke:
Sorry, Chairman Ben S. Bernanke, But Quantitative Easing Won’t Work.
http://www.prlog.org/10162465.html
Yours Sincerely,
MC Shalom P. Hamou
Chief Economist & Master Conductor
1776 – Annuit Cœptis.
Is it possible to run the United States without Jewish people in finance? How is it possible that only Jews, less than 2% of the total U.S. control so many banks, the Fed, the SEC and the Treasury. Likewise 15 Jewish US senators out of 100 in the US. What kind of democracy is this? It isn’t hard to see the connections from Bernie Madoff to Sonja Kohn to Ace Greenberg to Goldman Sachs or Chase. Declare a moratorium. Let someone else run the Fed and our other financial institutions.
Your comment appears to be obviously anti-semitic. I won’t tolerate any more of it.
I don’t want *anyone* running the Fed. After that, I don’t give a damn who runs the banks.
Just got done reading a chapter in the Ron Paul book talking about this. He brought up a time where he met Greenspan and made him autograph a article he wrote describing how we needed a gold andsilver system years back. Then Ron Paul had to question him in front of Congress about this current situation some years later. RP pulled out the paper Greenspan signed and basically called him a liar.
I found that Portfolio article very interesting, too. Every time I come across something like that, I wonder how many more such pieces are out there, possibly never getting the wider audience they deserve.
[...] friend Brad G left a comment on Paulson and Bernanke Are Lying, which turned out to be a pretty popular post so far. Brad mentions Ron Pauls hard-money advocacy. [...]