<html><head></head><body bgcolor="#FFFFFF"><div>Yeah. That DA*N Bernanke.</div><div><br></div><div>Jus' look-see what done happened to the stock Mary since Wednesday . . .</div><div><br></div><div><img src="cid:625785AD-C676-4565-88A4-333B73490957" alt="image.png" id="625785AD-C676-4565-88A4-333B73490957" width="616" height="236"><br><br>Seeya round town, Moscow, because . . .<div><br></div><div>"Moscow Cares"</div><div><a href="http://www.MoscowCares.com">http://www.MoscowCares.com</a></div><div> </div><div><div>Tom Hansen</div><div>Moscow, Idaho</div><div><br></div><div>"We're a town of about 23,000 with 10,000 college students. The college students are not very active in local elections (thank goodness!)."</div><div><br></div><div>- Dale Courtney (March 28, 2007)</div><div> </div></div></div><div><br>On Sep 17, 2012, at 10:28 AM, Paul Rumelhart <<a href="mailto:godshatter@yahoo.com">godshatter@yahoo.com</a>> wrote:<br><br></div><div></div><blockquote type="cite"><div><div style="color:#000; background-color:#fff; font-family:times new roman, new york, times, serif;font-size:12pt">I think we should be a lot more careful about printing new money and trying to inject it into our economy somewhere than we have been lately. If I am understanding this right, they are printing new money and using it to buy "securities" from banks that are backed by mortgages. I'm sure the big banks love this - they get an infusion of cash and don't have the risk of customers defaulting on those mortgages and devaluing their securities. Continually printing money and buying up shaky securities does not sound like a sound business plan to me, though, in the long term.<br><br>I don't know what the proper response should be, but printing new money and giving it to banks for risky financial holdings sounds like a bad strategy to me.<br><br>Paul<br><div><span><br></span></div><div><br></div> <div style="font-family:
times new roman, new york, times, serif; font-size: 12pt;"> <div style="font-family: times new roman, new york, times, serif; font-size: 12pt;"> <div dir="ltr"> <font face="Arial" size="2"> <hr size="1"> <b><span style="font-weight:bold;">From:</span></b> Art Deco <<a href="mailto:art.deco.studios@gmail.com">art.deco.studios@gmail.com</a>><br> <b><span style="font-weight: bold;">To:</span></b> <a href="mailto:vision2020@moscow.com">vision2020@moscow.com</a> <br> <b><span style="font-weight: bold;">Sent:</span></b> Monday, September 17, 2012 3:37 AM<br> <b><span style="font-weight: bold;">Subject:</span></b> [Vision2020] Hating on Ben Bernanke<br> </font> </div> <br><div id="yiv1690242489">
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<div class="yiv1690242489timestamp">September 16, 2012</div>
<h1>Hating on Ben Bernanke</h1>
<h6 class="yiv1690242489byline">By
<span><span>PAUL KRUGMAN</span></span></h6>
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Last week Ben Bernanke, the Federal Reserve chairman, announced a change
in his institution’s recession-fighting strategies. In so doing he
seemed to be responding to the arguments of critics who have said the
Fed can and should be doing more. And Republicans went wild. </div>
<div>
Now, many people on the right have long been obsessed with the notion
that we’ll be facing runaway inflation any day now. The surprise was how
readily Mitt Romney joined in the craziness. </div>
<div>
So what did Mr. Bernanke announce, and why? </div>
<div>
The Fed normally responds to a weak economy by buying short-term U.S.
government debt from banks. This adds to bank reserves; the banks go out
and lend more; and the economy perks up. </div>
<div>
Unfortunately, the scale of the financial crisis, which left behind a
huge overhang of consumer debt, depressed the economy so severely that
the usual channels of monetary policy don’t work. The Fed can bulk up
bank reserves, but the banks have little incentive to lend the money
out, because short-term interest rates are near zero. So the reserves
just sit there. </div>
<div>
The Fed’s response to this problem has been “quantitative easing,” a
confusing term for buying assets other than Treasury bills, such as
long-term U.S. debt. The hope has been that such purchases will drive
down the cost of borrowing, and boost the economy even though
conventional monetary policy has reached its limit. </div>
<div>
Sure enough, last week’s Fed announcement included another round of
quantitative easing, this time involving mortgage-backed securities. The
big news, however, was the Fed’s declaration that “a highly
accommodative stance of monetary policy will remain appropriate for a
considerable time after the economic recovery strengthens.” In plain
English, the Fed is more or less promising that it won’t start raising
interest rates as soon as the economy looks better, that it will hold
off until the economy is actually booming and (perhaps) until inflation
has gone significantly higher. </div>
<div>
The idea here is that by indicating its willingness to let the economy
rip for a while, the Fed can encourage more private-sector spending
right away. Potential home buyers will be encouraged by the prospect of
moderately higher inflation that will make their debt easier to repay;
corporations will be encouraged by the prospect of higher future sales;
stocks will rise, increasing wealth, and the dollar will fall, making
U.S. exports more competitive. </div>
<div>
This is very much the kind of action Fed critics have advocated — and
that Mr. Bernanke himself used to advocate before he became Fed
chairman. True, it’s a lot less explicit than the critics would have
liked. But it’s still a welcome move, although far from being a panacea
for the economy’s troubles (a point Mr. Bernanke himself emphasized).
</div>
<div>
And Republicans, as I said, have gone wild, with Mr. Romney joining in
the craziness. His campaign issued a news release denouncing the Fed’s
move as giving the economy an “artificial” boost — he later described it
as a “sugar high” — and declaring that “we should be creating wealth,
not printing dollars.” </div>
<div>
Mr. Romney’s language echoed that of the “liquidationists” of the 1930s,
who argued against doing anything to mitigate the Great Depression.
Until recently, the verdict on liquidationism seemed clear: it has been
rejected and ridiculed not just by liberals and Keynesians but by
conservatives too, including none other than Milton Friedman.
“Aggressive monetary policy can reduce the depth of a recession,”
declared the George W. Bush administration in its 2004 Economic Report
of the President. And the author of that report, Harvard’s N. Gregory
Mankiw, has actually advocated a much more aggressive Fed policy than
the one announced last week. </div>
<div>
Now Mr. Mankiw is allegedly a Romney adviser — but the candidate’s
position on economic policy is evidently being dictated by extremists
who warn that any effort to fight this slump will turn us into Zimbabwe,
Zimbabwe I tell you. </div>
<div>
Oh, and what about Mr. Romney’s ideas for “creating wealth”? The Romney
economic “plan” offers no specifics about what he would actually do. The
thrust of it, however, is that what America needs is less environmental
protection and lower taxes on the wealthy. Surprise! </div>
<div>
Indeed, as Mike Konczal of the Roosevelt Institute points out, the <a rel="nofollow" title="Blog post by Mike Konczal" target="_blank" href="http://www.nextnewdeal.net/rortybomb/romney-will-solve-crisis-exact-same-gop-plan-2008-2006-2004">Romney plan of 2012 is almost identical</a>
— and with the same turns of phrase — to John McCain’s plan in 2008,
not to mention the plans laid out by George W. Bush in 2004 and 2006.
The situation changes, but the song remains the same. </div>
<div>
So last week we learned that Ben Bernanke is willing to listen to
sensible critics and change course. But we also learned that on economic
policy, as on foreign policy, Mitt Romney has abandoned any pose of
moderation and taken up residence in the right’s intellectual fever
swamps. </div>
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