I digress…

A tweet from Daily Reckoning:

“Bernanke says one lesson from the Great Depression is to not let monetary policy get too tight.”

With a link to a BusinessInsider story:

Ben Bernanke Takes Questions On Fed Policy From Twitter At The University Of Michigan

Reminded me of a video posted by ZeroHedge from CNBC of Rick Santelli talking about ’cause/effect’ (talking about the Fed at 1:24).

…where he talks about the Fed and the actions they took during the depression and how this time it’s different. The Fed says, ‘the lesson we learned from the depression is that you have to keep printing.’ Santelli points out that there was a bank run during the depression where a cash injection was needed vs. a break down in confidence in the banking system starting in 2008 where the added cash is just pumping up the shadow banking system – doing nothing to restore confidence amongst banks – making the current problems worse.

Which brings me to Gold and the Germany’s announcement to repatriate hundreds of tonnes from New York and Paris: on the back of several other countries doing the same. Because the response to the crisis has been the wrong medicine (the zombie banks should have been allowed to die) central banks and large pools of capital are building up their positions in the only currency without counter-party risk: Gold. The Fed is losing trust and confidence, not gaining it.

The rising Gold and Silver price is telegraphing Fed (and world CB) policies are failing. Trust is breaking down and the added liquidity is making the situation worse as all its doing is cheapening the currencies. The ‘trillion dollar coin’ hoax highlighted this perfectly. Stamping $1 trillion on a few grams of Platinum and getting $1 trillion dollars in return from the Fed – and having Paul Krugman and others back this – served to make folks like the Germans even more nervous than they already are. Not to mention the Chinese and Japanese; the two biggest creditors of the US, who are now on a war footing while China ups the stakes as both the biggest miner and buyer of Gold in the world.

Bernanke is fighting the depression of the 1930′s, not the current crisis and nobody believes a word that is coming out of his mouth; and the more he prints, the worse the situation gets.

9 comments on “I digress…
  1. Goldman Sucks says:

    Amazon’s Predator Drone Toy For Kids

    http://www.amazon.com/Maisto-Fresh-Metal-Tailwinds-Endurance/dp/B004JFMOGK?

    I wonder if it comes with little plastic innocent civilians to blow up?

  2. snoop diddy says:

    ‘cost effectiveness’ as Santelli said being the keywords when talking about govt spending.

    When the 1% aren’t really being taxed this whole scare campaign of taxing the rich is preposterous nonsense. Personal income tax may be different to corporate tax but if you’re not paying corporate tax you sure do get to pay yourself a lot more money. One of the biggest shams going around, especially in UK and US.

  3. snoop diddy says:

    and it’s not very often I use the words ‘preposterous nonsense’ lol

  4. snoop diddy says:

    well it means gold is nowhere in a bubble as of yet but this will lay the foundation for a hysteria blow off top eventually. CBs saying we want to be part of the action too and make sure we have our collateral is one of the biggest signals ever that gold is the place to be.

  5. Jonathan says:

    If you were put in charge of fixing the mess tomorrow, what would you do?

    Lots of things have been done wrong in the past, and you have done an excellent job of highlighting them, but how would you get us out of the mess?

    If the banks were allowed to fail, then companies wouldn’t be able to pay their salary bills, pay suppliers and so on and many innocent people would suffer.

    Gordon Brown did nationalise The Royal Bank of Scotland and sacked Fred Goodwin who was responsible for bringing it down, but they still continued to sell interest rate swaps to small businesses, assist Barclays in manipulating LIBOR and so on, so what he did there wasn’t enough.

    You could put more banksters in jail alongside Madoff and Stamford. That might discourage them from trying it on again in the future, but it doesn’t undo the mess they left behind.

    What Iceland did worked for them, and it would work for Greece but it is difficult to see how their beggar the neighbour approach would work for a larger country.

  6. jarrollin says:

    Gee, great point Rick. Solar panels can’t drive the economy. But they CAN supply energy when the energy grid becomes inoperable. Rick has morphed from a whacko righty to a slightly pertinent and intelligible critic of this mess. But being the best of the worst still doesn’t really kick butt.

  7. Mini US says:

    Shut Up!

  8. Eric says:

    @Jonathan
    If you were put in charge of fixing the mess tomorrow, what would you do?

    Seppuku.

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