Ben Bernanke

We're Deep In The March Toward Economic Socialism

Have you noticed that the world is on a creeping - some (that would be me) would say cascading - slide into socialism?

It started with one giant step in the direction of economic socialism.

Economic socialism is specifically the shared risk the public has been yoked into pulling on behalf of banks.

The unmistakable and indelible footprints of socialism's latest forward march have been made by collectivist central bankers, pushed forward (at least that's the direction for them) by their constituents, the bankers of the world.

The bankers' jackboots are filled with stinking feet itching from the fungus of greed. And sadly, the sole of those boots bears the unmistakable "Made in America" stamp.

What's flooded into all those succeeding footprints is the stagnant future we all face. The march towards global hegemony of bankers' birthrights makes that evident.

It's not ironic that bankers espouse capitalist, free-market doctrines, but under cover of their ostensible handlers - their central bankers - prosper and propagate behind a Marshall Plan whose manifesto is socialized risk; it's sickening.

The moral hazard of socialized risk, of economic socialism, is unfettered.

The United States let the biggest banks in America get bigger. We let them bridle us, saddle us, and ride us into the ground. And they are all bigger now.

How can there be any free market discipline if there is no free market? How can moral hazard be corralled if there are no fences around the risks banks are allowed to take, given their size and power?

We're facing QE4ever (that's quantitative easing) on account of the banks being subject to lawsuits and an attack on their capital.

Oh, you didn't get that?

Here's the real reason we have stimulus to the nth degree here in America...

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Fed Meeting Today: Are You Ready for QE3?

Investors have prepared for the Federal Open Market Committee (FOMC) meeting today and tomorrow to end with the announcement of a third round of quantitative easing (QE3) - and that's a good bet to make.

Today's Fed meeting will likely end with more of the same information we've been hearing for months from U.S. Federal Reserve Chairman Ben Bernanke. It's been a year and a half since Bernanke first announced that short-term interest rates would remain near zero "for an extended period." That language will likely stay the same tomorrow, and the policy timelines could be drawn out even longer.

There is also no doubt that QE3 or some other meaningful economic stimulus measure is on its way.

Maury Harris, an analyst with UBS, declared in a recent note to clients that, "We now anticipate an announcement of another round of quantitative easing at the FOMC meeting on September 13th. We expect the easing will take the form of a six-month program of at least $500 billion, primarily focused on Treasuries."

Harris also added that, "We also expect the FOMC extends their rate guidance into 2015."

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Could QE3 Really Do Less for the Economy Than the iPhone 5?

Investors are eagerly waiting to hear if U.S. Federal Reserve Chairman Ben Bernanke will announce QE3 this week. Bernanke speaks Thursday at the conclusion of the two-day Federal Open Market Committee (FOMC) meeting and many expect him to announce some form of stimulus to revive the struggling U.S. economy.

But there's another huge event scheduled this week, one that could provide a tool other than printing money for boosting U.S. gross domestic product (GDP).

Believe it or not, analysts at JPMorgan Chase & Co. (NSYE: JPM) estimate that the Apple iPhone 5, expected to be unveiled tomorrow (Wednesday) afternoon and on sale by the end of this month, will raise GDP by 0.5% in the fourth quarter of this year.

Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared on Fox Business' "Varney & Co." program Tuesday morning to discuss the possibility of this iPhone effect and what it implies.

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QE3 Risks: Why this Harvard Economist Fears More Stimulus

High U.S. unemployment and slowing economic growth have stoked hopes of a third round of quantitative easing, or QE3, from the U.S. Federal Reserve. Fed Chairman Ben Bernanke hinted that more was on the way - although failed to indicate when - in a speech Friday at the Jackson Hole, WY, economic symposium.

Bernanke repeated the Fed's recent stance that current economic conditions are still "obviously far from satisfactory" and more help would be coming "as needed."

Interest rates remain near zero, but the Fed maintains that it still has plenty of ammo in its arsenal to boost the economy. The Fed apparently doesn't want to do too little now while the economy faces high unemployment and some inflationary pressure.

On the other hand, doing too much could - if Fed policies interfere with Congress' ability to act down the road -lead to a backlash against the Fed's power.

And the farther the Fed goes with monetary stimulus measures, the deeper that problem becomes.

That's why Harvard economist Martin Feldstein is afraid of QE3. He thinks adding to the billions of dollars already committed to quantitative easing programs will hurt us more than it helps.

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QE3 Still on Table, Bernanke Says in Jackson Hole Speech

The Federal Reserve is looking at more action to prop up the lagging U.S. economy, including a third round of quantitative easing (QE3), Fed Chairman Ben Bernanke said in a speech today (Friday).

Much of the speech, delivered at the Fed's annual retreat at Jackson Hole, WY, made a case for the effectiveness of the central bank's easy-money policies since 2007, including "nontraditional" actions such as QE1, QE2, and Operation Twist.

The Fed chairman said that the stimulus purchases "have provided meaningful support to the economic recovery while mitigating deflationary risks."

And in a hint to expect more of the same -- namely, QE3 -- Bernanke said that the costs of such policies, "appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant."

Bernanke also voiced concern over the sluggish economic recovery, and in particular the "painfully slow" improvement of the U.S. unemployment rate, which has changed little in 2012.

That's the sort of bad economic news that has pushed the Fed to take action in the past.

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Stock Market Today: Markets See-Saw on Bernanke Speech

Here are the major headlines in the stock market today. Bernanke makes case for QE3- In his much awaited speech at Jackson Hole, WY Federal Reserve Chairman Ben Bernanke did not signal any new monetary easing was coming but took the Fed's well-used approach of leaving the door open if conditions worsen. He called the […]

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Today's FOMC Meeting Too Early for Action

There is little doubt that the struggling U.S. economy could use some goosing, and the U.S. Federal Reserve is in a position to deliver a good boost.


But, a move isn't likely at the conclusion of today's (Wednesday) Federal Open Market Committee (FOMC) meeting.


While a fresh spate of data suggests new steps from the central bank are warranted, many economists warn that the economy doesn't need immediate action - especially since the prior moves from the Fed haven't been very effective.


Growth has clearly slowed and unemployment remains elevated, but the sluggish pace of the U.S. economy may not be slow enough to compel the Fed to make an impactful move today, and any Fed decisions will be pushed to later in the year.

Today's FOMC Meeting: Not Ready for QE3

The U.S. Commerce Department last week reported that the U.S. economy grew at a paltry 1.5% annual rate in the second quarter, down from 2% in the first. Plus, the Labor Department reported initial jobless claims ticked up in the latest week while the unemployment level remains at a sickly 8.2%.


Fed chief Ben Bernanke maintains that his team is prepared to take further action if unemployment stays high, but he remains vague on what action might be taken.


With the reeling recession in Europe and a slowdown in stalwart China, global growth has been severely dented and is weighing on the U.S. economy. Those factors increase the odds of a third round of quantitative easing (QE3), but the Fed may not pull the trigger Wednesday.



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Four Debt-Free Companies to Own if the Markets Tank–and Even if They Don't

Many investors remain on the sidelines under the impression that every company has been stopped in its tracks by the financial crisis. Somehow they've convinced themselves there's nothing worth owning.

The problem is it's just not true. Companies that carry little or no debt are kicking butt and will continue to do so even if the markets stumble.

Not only are most of them tacking on solid numbers in very volatile markets, but over time these debt-free companies are proving themselves to be stable and reliable performers.

Take last year for example. The S&P 500 returned 2%. Yet, the top 15 firms as measured by the highest amount of cash and short-term investments as a percentage of total assets returned an average of 15% according to CNBC analyst Giovanny Moreano.

That's 650% more than their debt-laden brethren over the same time frame.

So far this year, my favorite debt-free companies have tacked on average gains of 19.82% versus the S&P 500, which was up 9% as of July 3. That's a 120% advantage over the same time period.

Going further back these same companies have done even better.

In fact, my favorite debt-free choices have returned an average of 349.16% versus a loss of -3% for the S&P 500 as a whole since the top of 2007 when the financial crisis broke.

Over the past decade that number jumps to over 2,061%. And, I'll bet you dimes to Bernanke dollars that these same debt-free companies will pull ahead further in the years to come.

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What I Wish Ben Bernanke Knew About Japan

I've called Japan my "other" home since 1989 and in that time I've seen it change in ways that ought to scare the pants off you.

I say that not to ruin your day, but because I fear we are headed down the same exact road as long as Ben Bernanke and his central banking buddies think it's easier to print money than actually stimulate real growth.

In doing so, they are re-creating Japan's "Lost Decades" here at home with years of smoldering, piss-poor growth as our destiny.

Yet it doesn't have to be that way. We can still choose a different path.

Here are 10 lessons from Japan I would share with Chairman Bernanke right now if I sat down with him:

1) All the cheap money in the world won't matter if banks hoard it and customers don't want it. You could lower interest rates to zero and it won't make a difference. Japan tried this to no avail. At this point, low rates are hardwired into the Japanese business system to the extent that any increase whatsoever is likely to cause a massive wave of corporate and personal bankruptcies. Don't let that happen here. You still have a chance to prevent this.

2) At some point somebody has to take the loss. You cannot pretend that the debt you've advanced is performing any more than the Japanese have. No matter how much money you inject into the system, the deleveraging process will continue until excess credit is bled out of the system one way or another. Defaults happened with alarming regularity before Central Banks tried to stave them off. There have been literally hundreds in Eastern Europe, Africa, Asia, and Latin America over the centuries. Spain and France failed six and eight times each in the 16th century alone.

3) Trying to manage any singular crisis will only result in a much bigger one down the road. The longer you prop things up, the worse they're going to get and the more consolidation you will see. Five of the 10 largest banks in the world were Japanese in 1990. Today the only bank to make the cut is 5th on the list (the Japan Post Bank Co. Ltd according to Bankers Accuity).

4) When politicians find it easier to borrow money than make hard policy decisions, they will because they prefer their short term re-election prospects over the long-term economic interests of the country. Japan has had 15 Prime Ministers in the last 12 years. Granted, their system works a little differently than ours, but continual reshuffling diminishes the effectiveness of any solution. Take advantage of the situation and act decisively before our elections risk a reset. You're supposedly apolitical. Prove it by acting with conviction instead of giving us more FedSpeak.



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Are We Headed Straight for Recession 2013?

Fresh reports pointing to a slowdown in the struggling U.S. economy, coupled with worries of Europe's fiscal woes, have experts warning that Recession 2013 is inevitable.

The dismal and downtrodden jobs numbers, the elevated long-term unemployment levels, the ailing housing market and the looming "fiscal cliff" are all fueling recession fears.

Just last month, the nonpartisan Congressional Budget Office reported that unless lawmakers move to avert scheduled tax increases and spending cuts at the end of this year, a recession is likely.

This marked the first time the CBO has forecast a recession resulting from the fiscal cliff.

The CBO projected that gross domestic product (GDP) will contract by 1.3% in the first half of 2013 before growing 2.3% later in the year. Annualized, GDP would grow just 0.5% in 2013.

That forecast is an about face from January when the CBO forecast a 1.1% GDP growth in 2013 (if policies are not dealt with).

The report stated, "Given the pattern of past recessions as identified by the National Bureau of Economic Research, such a contraction in output in the first half of 2013 would probably be judged to be a recession."

Now other economic experts are saying the same.

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FOMC Meeting: Will Ben Print?

Most investors expect Federal Reserve Chairman Ben Bernanke to announce more stimulus when the FOMC meeting concludes tomorrow (Wednesday).

But what if he doesn't?

Money Morning Chief Investment Strategist Keith Fitz-Gerald joined Fox Business' "Varney & Co." Tuesday to discuss this outcome with host Stuart Varney.

"Keith, what happens if Ben doesn't print any money, makes no such announcement, and the Germans don't agree to let Europe print any money," asked Varney. "What happens?"

To hear what Keith said investors can expect from the Fed, and the market reaction, watch this video.
Keith also analyzed the Microsoft Corp. (Nasdaq: MSFT) announcement that it will release a tablet to compete with the Apple Inc. (Nasdaq: AAPL) iPad.

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U.S. Economy Showdown: Krugman vs. Bernanke

Nobel Prize winning economist Paul Krugman has some critical words for how Team Bernanke is handling the U.S. economy.

The Princeton University professor suggested on Bloomberg Television's "Street Smart" program Monday that U.S. Federal Reserve policy makers, under the guidance of Chairman Ben Bernanke, are "reckless" for refusing to pursue inflation.

Krugman argues that higher inflation could lower the staggering U.S. employment rate that has lingered for more than four years.

"The reckless thing is to allow mass unemployment to continue," Krugman said Monday. "We have had a massive failure of our political system that has come to accept that 8% unemployment is the new normal and there is nothing that can be done. We're in a low-key version of the Great Depression."

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You Asked, He Answered: Shah Gilani on China, Ben Bernanke, the Fed and Much More…

Thanks for flooding my email inbox. I asked for it… Let's start off with some comments and questions about Ben Bernanke and the Fed…. Q: I see no distinguishable difference in the relationship that government has with the Fed/Banking Systemand some individual getting involved with a ruthless loan shark. ~ James M. A: The Fed […]

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Is Gold Money?… Don't Ask Ben Bernanke, Examine the Federal Reserve

If you really care about your financial future, here's something you need to know.

It's about a story that received almost zero coverage from the mainstream press. I can't say that I am surprised.

It involves gold.

Thanks to requests by Bloomberg News under the Freedom of Information Act, the Federal Reserve has revealed unprecedented details concerning the personal holdings of its regional bank presidents.

What they found is nothing short of stunning ...

Ben Bernanke on Gold

But let me back up a little.

There's an exchange between Fed Chairman Ben Bernanke and Congressmen Ron Paul you need to hear first.

During a monetary policy report delivered to Congress last summer, Congressman Ron Paul asked Bernanke if he thought gold is money.

After a clearly uncomfortable pause Ben said, "No. It's a precious metal." [By the way, if you haven't seen Ron Paul questioning Bernanke about gold, click here. It's already had over half a million views.]

Paul went on to ask Bernanke why it is then that central banks hold so much gold. Bernanke answered that it was simply a tradition.

Well, congrats Ben, you did get that one right, just for the wrong reasons. (Deep down, you surely know the true reasons).

The fact is gold has been a monetary tradition for millennia.

Nearly 2,000 years ago Aristotle laid out what characteristics make for good money. According to Aristotle:

  1. It must be durable.
  2. It must be portable.
  3. It must be divisible.
  4. It must be consistent.
  5. It must have intrinsic value.
So it's no accident that the most common basis for money - in all of human history - has been gold.

You might want to reread that: the most common basis for money - in all of human history - has been gold. It's no accident.

After all, only gold meets all five of those requirements for sound money.

It is only in the past century that fiat money has supplanted gold or gold-backed currencies on a worldwide basis.

What makes today's central bankers and their system of printing fiat currencies and setting interest rates so special? It is hubris and nothing more.

Fiat currencies are just a relatively recent, and failing, experiment in economics. So much so, it's become exceedingly dangerous to hold them of late.

Here's why.



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