Greenspan dead pool

[rapier]

OK, so I'm being morbid. I don't actually mean his demise, I'm talking about his retirement.

He is due to be reappointed, in June I think. As these things go however he and Bush must agree he will stay on and that must be made public soon. Al is old and not looking all too good. Various theories have it that Bush doesn't like him for various reasons haveing to do in the end with him not being a abject Bush family boot licker. I assume Bush will reappoint however if Al is agreeable, because there is an X factor having to do with the markets in the crucial pre election period which says that Al's leaving might upset them

That I think is very very true. If a new Chairman is appointed it must be assumed he will be just as easy as Al has been. Al has overseen the development of our bubble economy and there is no turning back from that path now. It is further mad money and credit creation or a crash. We are in a binary situation. There can be no soft landing. In any case the transition may roil the markets for a time. So for all concerned in the financial world it would be best for Al to stay. If he goes we can watch how loudly the new man, probably Bernake, shouts to the world how easy he will be.

It should be interesting to watch. Right now I say Al agrees to stay. What do others think?

There are some complicated scenarios that might involve a temporary Chairman and that might allow a Bush family retainer to take over for awhile but that won't mitigate possible market dislocations.

[On the Road]

1. Bush and Greenspan are Both in a Squeeze

with renewed inflation, a real estate bubble, and pressure to raise interest rates, it's a Catch-22 for the Fed. Add to that is the greater internationalization of the economy. The dollar is no longer king, and inflationary pressures are coming from China and Iraq as much as from US domestic demand.

I think Al Green will roll over and not make waves, but at the risk of seeing double-digit inflation by November. He wants to be reappointed. Bush wants an unrestrained monetary policy. And Bush is not very good at realizing that his policies have actual repercussions.

[leftyandproud]

2. We need this...

If Bush gets re-elected, he needs to appoint someone with the courage and forsight to get us OUT of this fiat money trap we are in, and get us back on a gold/silver standard asap. It would cause a MAJOR short term correction as the world economy adjusts, but it is the only thing that will save us from infinite amounts of inflation and devaluation of all currencies. If Kerry wins, he can't do this in his first term, so we will need to wait until 2005. Either way, it must happen eventually. We have to limit the morons in washington who want to run the printing presses night and day to pay for their latest wastes of tax money. The only way to restrain them from burying us in debt and cheap money is to get back to a gold or silver standard...something that will give our currency real value, and prevent them from trashing it.

[rapier]

3. notes

Oh sheesh. When lefties start calling for hard money you know the world has been turned on its head. Let's recall William Jennings Bryan(*), the only avowed socialist ever to come close to the presidency, whose call:

"You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold."

was the voice of OUR populism. Not the faux populism of todays know nothing racist right. The desire for credit and 'easy money', which was embodied in Bryan's ideas was a populist and progressive idea. The Fed sprang from this idea. The purpose of the Fed was initially to promote and protect the QUALITY of bank assets. This was hardly the'easy money' perscription as imagined by those plains farmers in the 1890's or Bryan but promoting a stable banking system and a stable credit system was in fact a progressive victory.

With credit however goes moral hazard. As I said, no system is perfect. As was to be expected the old boss, the Wall St. financers gained control of the new system. Not long after the job of the Fed started to be the QUANTITY of money. A fatal error. For 70 years the obsession with the quantity of money has led us into this mess where money and credit are rising in almost parabolic fashion.

Hard money isn't the answer. Hard money is reactionary. If by some chance, which there is none, that we returned to a strict metals based monetary system the new boss would be the same as the old boss, except there would be a lot fewer of them.

No system is perfect. Which is why ideology always fails. The problem now is that the credit system is broken and out of control. It doesn't have to be that way. It didn't have to get this way.

The jobless recovery and the skewing of assets to the top are the direct result of what has become the need to protect the system, not the people. (This is a complex arguement which probably doesn't make much sense in such condensed form) Be it a gold standard or pure fiat, any system can fail.

*Bryan perhaps is the greatest symbol of how political views switch over time. For all purposes Bryan was a socialist. Now he is most famous however for his Biblical fundamentalism. Displayed at the Scopes trial where he was humilitated. In failing health anyway he died shrotly after. (The Scopes trial itself was a show trial. A media event invented for the most part by HL Menken. To good effect I think but still, it was just a show) Imagine now if you can, a SOcialist Fundamentalist. You can't. A socialist fundamentalist is today an absurdity. It's a sad commentary however that an equally absurd 'lefty' progressive touts the ultimate reactionary ideal of hard money would emerge now.

To blabber on a bit more........
Additional irony is now added with the total embrace of unlimited money and credit creation by hard core 'conservative' Republicans, probably best exemplified by Kudlow. This too is upsidedownism. An absurdity really, but there it is. On display nightly on a cable channel near you. The Wall Street bank with JP Morgans name on it is now a Tower of Babble in the form of illusionary 'assets' in the form of over the counter derivatives to the tune of $50 trillion or so. NOTHING could be further from JP's hard money and yet 100 years on the world has been turned upside down.

[rapier]

4. Greenspan bashing

Since there is so damn little interest in monetary policy, finance and macro econonmics I tried this little thread to personalize the topic in the person of Greenspan. Evidently it didn't work.

The most important thing in the world, especially Bush's world and the world of all our politicians, a part of which is being played out in Iraq is economics.

Few appreciate how insane and corrupt the foundation of our and the worlds economy is. Greenspan is the poster boy for this. The chances of a serious dislocation are growing again. As they seem to regularly.

For some simple and serious Greenspan bashing go here.

http://www.prudentbear.com/internationalperspective.asp

[bemildred]

5. Yeah, but Greenspan is an obedient tool.

He only does what is required of him.
You don't think he sets policy independently,
struggling tooth and nail with the ruling
oligarchs, fighting for freedom and democracy
do you? He's an employee. I'm just trying to
figure out why they want to crash the US economy.
Was all that prosperity under Clinton that
threatening? Was the idea of a government out
of debt and running a surplus that bad? I think
it was, they set out to put an end to that right
off. But I can't see why.

[OxQQme]

6. Tell me I'm Wrong, please...

http://land.netonecom.net/tlp/ref/federal_reserve.shtml

If "The Fed" is a privately held institution, and Greenspin is an appointee, and we citizens owe "The Fed" umpteen trillion $(the deficit), how can we allow this to continue.
My impression---Joe(private sector)Worker pays income tax which pays Jane (public sector) Toiler's wages, who also pays income tax. Seems to be double taxation on the shoulders of privates. Sup wid dat ?

[rapier]

7. notes

Your sort of in tin foil hat territory there.

The Fed isn't owned in a sense, by anyone. Sure, the member banks ostensibly 'own' it, but in a manner that is so opaque and indirect as to be meaningless. Start mentioning the Rothchild's or JP Morgan and you're returning to a century ago when families did control finance. A time that has long since passed as power has diffused to corporations, which is an entirely different set of issues.

We don't owe the Fed anything. The US debt is owned by us the citizens thru the US Treasury which markets the debt securities. The Feds role in auctioning the Treasury paper is essentially that of a broker.

Taxes are a seperate issue entirely. Your double taxation description escapes me.

There are serious philosophical and let's say historical or political economic issues about the nature of the Fed. Mostly these are drowned out by the nativist reactionary rights various obsessions on the issues in terms of crackpot constitutional law or even further down the road all sorts of 'natural law' ideas. (Noteing this is your fouth post I'll suspect you've flitted in from Montana to Troll about this site)

One weird aspect of the Fed is it's quasi independence from the government. The idea being that the natural tendency of popularly elected governments, and all governments really, to debase the currency and in thet US especially to promote too easy credit. Not that the Federal Reserve system has halted that urge. To say the least the system isn't perfect. NO SYSTEM IS PERFECT.

The political system has gladly abrogated all respositility for money and credit for various reasons mostly having to do with ignorance of money itself, which is thought to be understood only by the high priests of finance. A stupid error. It has been the lack of political pressure on the Fed which has allowed it to stray far off its simple mandate. The fault is not then with just the Fed itself but with the entire political system.

Replace it with something completely different and you'll get a system in the end dominated by the financial elite, again. So it goes.

[bemildred]

8. Nice.

What the government can create it can destroy.
That is all the control you need.

[rapier]

9. notes

So anyway, here is a link for those few who are not intimidated by things financial. The case made is the one I always make in the end.

That is we are in uncharted territory mostly due to our credit and consumption binge and any meaningful rise in interest rates will be trouble. BIG BIG trouble.

Now of course the market is already setting longer term rates higher. Those are the rates the Fed has little control over, save jawboneing. Ultra short rates however, the ones they do control strongly might be raised but that too is a big problem for the leveraged financial community.

The article gives some perspective as to why. Again, this sort of thing is not from the fringe. It is becomming a strong plurality consensus.

http://www.contraryinvestor.com/mo.htm

[othermeans]

10. Read O'Neill's Book

Please read former Treasury Secretary Paul O'Neill's book "The Price of Loyalty" He credits Clinton with leaving us a 5.6 trillion dollar budget surplus. He tried to fight Reichsfuhrer Bush's economic policies and tax cuts.

He and Greenspan both had worked out a way to reform Social Security with the money but der Fuhrer put the nix on it, gave all that money away in the form of tax cuts, you know how hard it is for the rich to get by without a few extra thousand.

I really like the part in the book where after a lengthy discussion O'Neill thought our beloved Fuhrer was giving some real thought to a weighty problem when he came up with this now classic statement: "What does somebody have to do to get a hamburger in this place?"