patrick.net

Be careful what you wish for, we could get another cooky crook like Greenspan again.

Honestly, SIBA, I seriously doubt that whomever happens to be in charge of the Fed on any day cares one iota about what media commentators, worker peons or bloggers like us think about them. The only "respect" that seems to matter to elites like Greenspan & Bernanke is the respect of Wall Street and the banksters --and they get that in spades with every fresh new bailout plan, FF/discount rate-cut, or "liquidity injection".

The Fed will try to re-inflate the credit bubble and prop-up housing prices with ill advised policies that rewards bad decision making by lenders and borrowers alike. In "the end", their efforts will fail of course (as in Japan), but not before inflicting considerable damage on the rest of us blameless non-participants, and artificially extending the correction phase of the business cycle far beyond the time it would have taken on its own. And let's not forget that in the long run, we're all dead.

How far will "teaser freezers" and ZIRP-style policies drag out the correction? Who knows? It took 16 years in Japan (and still counting?), though luckily for us, their bubble was far larger. Anyone here care to wait an *additional* 5 years before you can buy a reasonably priced house? Too bad for you, you bankster freedom-hater, you.

I don't think he can be removed - per se.

Let's see, he is comes from the Board of Governenrs and

The Governors are appointed for 14 years, and the terms are staggered, with one expiring on January 31 of every even-numbered year. A Governor who has served a full 14-year term may not be reappointed, but someone who was appointed to complete an unexpired term may be reappointed to a full 14-year term. Once appointed, Governors cannot be removed from office for their policy views. The length of the terms and the staggered appointments process are intended to contribute to the insulation of the Board—and the Federal Reserve System—from day-to-day political pressures to which it might otherwise be subject.

As stipulated in the Banking Act of 1935, one of the seven Governors is appointed by the U.S. President to a four-year term as Chairman. This selection must be confirmed by the Senate. The Chairman serves as public spokesperson and representative for the Board, manager of the Board's staff, and Chairman at Board meetings. Ben S. Bernanke was sworn in on February 1, 2006, as Chairman and a member of the Board of Governors of the Federal Reserve System. He also chairs the Federal Open Market Committee, the System's principal monetary policymaking body.

So, I think Congress would have to rock the entire US Federal Reserve system to remove Bernanke by passing laws to rework its membership. Presumably the President would have to agree (he would not) to sign the changes into law, then the Supreme Court would have to agree it was constitional - and I think they would not less they lose their own 'freedom from politcal pressure' status.

Whomever thinks Bernanke is going anywhere is sadly mistaken. He gets his 4 years and I think he will use them. If he continues to devalue the US dollar I think we can bet he will only get 4 years.

Duke :

Thanks for the explanation. I did not know this.

I am still unsure how BB stands on the mess we have. He was handed this plate full of $hit by good 'ol AL and has no way out. I have an idea that BB knows the illness the US has is terminal and he is only trying to ease the pain before the inevitable happens. If we inflate the sins away, our foreign debtors may cut us off. The oil cartels may even refuse to accept dollars and instead demand Euros or Pounds. If we raise rates and try to squeeze the speculation out, we will suffer a period of deflation worst than the 1930s. There is no way out of this at all. Americans will have to accept a lower standard of living to work our way through this. On top of this oil will become more scarce as demand in China increases and supply declines.

It is not just the US economy that is screwed, the US government is bankrupt! We have made too many promises for too long and not paid for them. I get so anrgy when I see Bush celebrating the decrease in the budget deficit to only 5% of GDP. I want to scream WTF and ask how long can you keep living beyond your means at 5% per year! If I were president, I would immeadiatly decrease the size of the military 95%. I would gut all non essential programs to try and save the promises we made.

I think they are doing everything to prop up Equity markets. The only disappointment has been 1/4 point cut in discount rate. They are pumping liquidity in all directions. Eventually markets will like him, for now they are pi$$ed off that credit problems are not going away. You know when people are losing $$, they do like to blame it on some body!!

Forgot to mention "Bernanke PUT" is already floating around.

I am still unsure how BB stands on the mess we have. He was handed this plate full of $hit by good ‘ol AL and has no way out.

I do not blame BB for the current mess, however, anyone still operating under the illusion that BB is Paul Volcker should be aware this is not the case by now.

I have an idea that BB knows the illness the US has is terminal and he is only trying to ease the pain before the inevitable happens. If we inflate the sins away, our foreign debtors may cut us off. The oil cartels may even refuse to accept dollars and instead demand Euros or Pounds.... It is not just the US economy that is screwed, the US government is bankrupt!

Since Randy H is no longer with us, I'll have to repost this golden oldie of his:

"Hyper inflation is all but impossible in the US. I’ve covered this many times before. I think when most people say “hyper inflation” they mean “uncomfortably high inflation”, ala the 70s.

Hyper inflation has a specific definition which, among other things, means inflation of 1% per day, which is over an order of magnitude per year.

It has never occurred within a modern nation state that wields credible military power. Many examples of building-to-hyper inflation scenarios have been averted by this same mechanism, as in Russia in the 90s.

When presented with the option of (a) make crippling payments to foreign owners of debt at great and perilous cost to your own citizens, culture and system of government, or (b) default and tell everyone to deal with it; every single power with a credible military has chosen (b)."

HeliBen will probably *try* to inflate much of our debt (foreign, domestic, consumer & government) away, and he may even succeed at it to a large extent. We're already seeing the inevitable tightening of credit resulting from the bubble's pop; however, I seriously doubt our European or Asian creditors will completely refuse to accept dollars anytime soon. OPEC (esp. Iran) may rattle their sabers and talk tough about moving to a basket of currencies, but this is also unlikely to take place on any significant scale as long as American military bases exist in much of the Middle East (one of OBL's chief pet peeves, btw.).

He was handed this plate full of $hit by good ‘ol AL and has no way out.

I've always wondered about that - what inspired him to take the job given the fact that he -must've- known that all hell was about to break loose.

Unless he didn't. Then that would be pretty awful.