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[Ed. note: This post promoted as it scrolled off the page far too quickly today and deserves far more consideration and discussion.]
Many viewers have seen a cartoon of bears discussing — and ridiculing — Ben Bernanke and the Federal Reserve’s so-called “quantitative easing.” Here’s that original. However, while amusing, the cartoon drew serious criticism from Fed observers for not providing a fair assessment of the effort.
As a result, economist and frequent FDL contributor Dean Baker and the folks at the Center for Economic and Policy Research helped revise the cartoon to deal with the criticisms. Here’s the revised version.
More: “Quantitative easing” is the wrong term: Text of Bernanke’s speech explaining the Fed’s program, November 19, 2010
John Chandley
13 Comments
makes sense to me, thanks!
Blessings,
I do love these bears.
The new vid is full of crap, so it must be someone stealing the franchise.
How does QE2 provide jobs anyway. ~~~EDITED IN MODERATION~~~ Take your derivative crap somewhere else.
We need Congress to put people back to work. Bernanke is at the end of the line w/regard to FED policy.
Or we could just keep expanding the foodstamp program. 43 million and counting…
The Benbernank strikes again!
I disagree. It was the original that was wrong. All of the statements in the revision are supported by the actual data on inflation and spending and a coherent model of how it works. And all of that is summarized in the Bernanke link I provided at the end.
This is not an argument that what the Fed is doing will be enough, or that it will significantly reduce unemployment. No one is making that claim. It may help some, so it’s worth trying. But as the ending says, we need a job-creating fiscal stimulus to go with what the Fed is attempting.
The biting humor is what made the first video funny. For sure, the economic arguments were way off base.
I happen to think the Bernanke is doing a good job. He correctly identified what needed to be done “when the sh*t hit the fan”. And he has a nice beard.
This is crap. The bears had it right the first time. We already have inflation way above the government figure. The government lies. The notion that you can create trillions of new dollars without lowering the purchasing power of individual dollars is just silly. The Bernank doesn’t want you to know how much trouble we are in. He wants you to have “confidence” in the dollar and in your leaders. So he tells you that we have no inflation which is a lie and that QE is not inflationary which is another lie.
Scarecrow, where did you find this? I’d like to post the two versions, and I couldn’t find this on youtube.
It sounds like a great policy for the simple fact that there are bonds out there to be bought, and if the Fed can buy them without any long-term bad effects, then more power to them.
Long live the Bernanke!
Sorry but this gets it wrong for wholly technical reasons, related to persistence of false asset valuations in the banking system. Bankers are not making loans normally. Banks are not acting like banks.
Instead, bankers are pumping their own bonuses. To do this they have to misstate the values of bad-paper mortgages and mortgage backed asset bonds (aka MBS’s) on their books. Bernanke’s free money is used to pump bonuses, not to pump up loans.
These “bears” do not understand the fundamental economics of Balance Sheet Recessions. The explanation misses that trillions of dollars are trapped in banks and in businesses — like a giant La Brea tar pit — because balance sheet debt overwhelms business decisions. Uncertainty and such “Second Wave debacle” paranoia as you see at zerohedge.com are also factors.
The alternative to “quantitative easing” is having The Fed do serious regulation. The righties and most economic technicians are calling for The Fed to do three things:
– Regulate the banks so that they have to clean up their balance sheets ASAP
– Regulate the banks to the ends of growth and full employment – as opposed to the mindless quantitative easing giveaways
– Submit to an audit under standard accounting principles (mostly righties, but a few technicians)
All of this is outside what left and left-center have called for. Obama included. Nicole Gelinas hammers 1. and 2. in her cookbook — After the Fall: Saving Capitalism from Wall Street — and Washington — which appears to convince everyone who reads it.
Nicole is a solid technician for macroeconomic problems. Not an ideologue. Women are apparently better at details… this gal, surely. The amazing thing, ongoing, is the extent to which she has recruited rightie economists and pundits to her program — despite that her program attacks institutions and individuals who are, to the man, members of the right wing of the Republican Party.
http://my.firedoglake.com/tuffsnotenuff/2010/11/21/considering-nicole-gelinas/
There’s something happening here. This woman is forcing a Come To Jesus Moment on the smartest, best trained financial industry people among American conservatives. Her book is astonishing.
– After the Fall: Saving Capitalism from Wall Street — and Washington
http://www.manhattan-institute.org/after_the_fall/
Nicole says that Bernanke must “teach banks to become banks again.” Similar to what had to happen during the middle 1930s, when banks had to start making normal loans again to allow recovery. Putting more money into the banks will cheapen foreign and domestic holdings of Treasuries by expanding M1, but its not going to cause big inflation (short-term anyway) or lead directly to increased lending.
Strong regulatory action by The Fed is what can lead us to normal lending performance by the banks.
What we need, applying the measures developed by Nicole Gelinas, is strong regulatory action to force the banks to clean up their balance sheets.
There is more than $2-trillion in excess “float” cash sitting in banks that are not applying it to making loans.
This is unacceptable.
Its like TARP, where the national banks used the TARP money to buy up other banks. Next to nothing went to normal loans. Bernanke’s unregulated QE2 will go to pumping bonuses, not to pumping loans.
How does a central banker become a beloved central banker and have all the usual suspect banksters proclaim him The Greatest Central Banker Of All Time ???
Regulate nothing.