Bernanke press conference

[Pancho Villa]

(How much you want to bet this sinks to the last page while the birth certificate thread goes to 100 pages?)

Ben Bernanke held a very elusive, noncommital press conference today. Here are the two highlights:


Our view is that -- based on past experience and based on our analysis -- is that the end of the program is unlikely to have significant effects on financial markets or on the economy. The reason being that first, just a simple point that we hope that we have telegraphed today, we hope we have communicated what we’re planning to do and the markets have well-anticipated this step. And you would expect that policy steps which are well-anticipated by the market would have relatively small effects, because whatever effects you’re going to have would have already been capitalized in the financial markets.

Essentially: since they have telegraphed this move, the thought is that the market has already "priced in" whatever effect the move was going to have. He is being purposefully vague here, because the truth of the matter is that the response has been drastically negative what with commodities skyrocketing and the dollar getting weaker by the hour.

Here was the fear (ill-founded, because there was no way this was going to happen): QE2 stops, and what happens? Interest rates go up. The only reason they are as low as they are is because they keep getting sucked up - virtually all of them - by the fed. So when they stop doing that, the market willl push the rates up.

Well, that's a bit of a problem, because an alarming % of government debt is held in short-term bonds. If the interest rate jumped from 1% to 4.5%, for example, the debt service - the money we have to pay to pay the interest on the debt - begins to jump rather dramatically. So, instead of 43% of our budget being deficiet spending, things would quickly jump to some higher percentage. That has the potential to create a negative feedback loop - basically, the increasing amount of debt requires higher interest rates, which increases the debt service, necessitating more debt, and so on until your dollars are toilet paper.

So, this bit really interested me:


What’s more, Bernanke said, the Fed for now plans to keep its portfolio of Treasury securities (currently $1.4 trillion) level by reinvesting the principal received from maturing Treasuries in new bonds.

“Put another way, the amount of . . . monetary policy easing should essentially remain constant going forward in June,” he said.

Is Bernanke saying that he's going to go forward with QE3? Keeping the Fed buying up bonds like crazy solves the problem listed above - but its still, in effect, printing money.

So far the markets have responded. Treasury rates are still at historical lows, the dollar has taken (another) dump and commodities had a strong day. What this tells me is that people are realizing what's happening and moving their money out of a weakening dollar and into assets that actually exist.

Unfortunately for everyone, the borrowing can't go on forever. Drastic - half the budget drastic - cuts are needed to avoid a debt meltdown. My view on the GOP getting such budget cuts through, even if they owned house, senate and white house, are dim. That much less so with the current situation.

Anyone, just my opinion. Feel free to call BS and discuss as wanted.

[Irving]

Is now a good time or a bad time to take out a loan?

[Ridge]

Take out a loan, use it to buy a shit ton of survival gear. Inflation is coming soon, and the loan will be worthless.

[rammit]

Take out a loan, use it to buy a shit ton of survival gear. Inflation is coming soon, and the loan will be worthless.

Looks like its time to get a loan, buy a few mac10s and m16s and a few pallets of ammo, at least that will all be worth something

[streetglideok]

I'm sure too, the birth certificate thing was to distract everyone from how bad things really are, and how they cant lie good enough to fool us anymore. Its what we get, when we elected a reject, who grew up outside of the US, and has no grasp how our economy works, just how it should work under shariah law,lol

[arz]

Weimar Republic, here we come!

[ChunkyMonkey]

Is now a good time or a bad time to take out a loan?

How about this Stu, I have taken out 2nds and line of credits on pretty much all of my investment properties and bought physical silvers when it was $32/ounce on 4% rate. Silver is a tad under $50 right now.

Paying over 4% APR while getting 56% returns in less than 4 months is GREAT!!!

[ChunkyMonkey]

Unfortunately for everyone, the borrowing can't go on forever. Drastic - half the budget drastic - cuts are needed to avoid a debt meltdown. My view on the GOP getting such budget cuts through, even if they owned house, senate and white house, are dim. That much less so with the current situation.

Anyone, just my opinion. Feel free to call BS and discuss as wanted.

We would need a 20 some odd year of Reaganomic to even come close to recovery.

[Ah Pook]

(How much you want to bet this sinks to the last page while the birth certificate thread goes to 100 pages?)Anyone, just my opinion. Feel free to call BS and discuss as wanted.
Nope. The Justin Bieber thread will beat them both. [Shy]

[KevDen2005]

I'm sure too, the birth certificate thing was to distract everyone from how bad things really are, and how they cant lie good enough to fool us anymore. Its what we get, when we elected a reject, who grew up outside of the US, and has no grasp how our economy works, just how it should work under shariah law,lol


That's a good point. They waited until the "right" time to release it.

Bernanke always seems to be vague and it pisses me off that they don't come out and say what they are doing and we have to try and decipher it

[Pancho Villa]

That's a good point. They waited until the "right" time to release it.

Bernanke always seems to be vague and it pisses me off that they don't come out and say what they are doing and we have to try and decipher it

The problem with that is, if Bernanke says "Either the government is going to cut spending by at least a trillion dollars -or- we will experience severe inflation in the near-term future" there would be a huge panic, the markets would crash and everyone would flee like hell from the dollar, since everyone knows that the chances of this group of clowns cutting federal spending to something approaching what we can pay for is nil.

So he's kind of stuck trying to convey information in the vaguest way possible, because someone in his position can very easily cause a market plunge.


Is now a good time or a bad time to take out a loan?

I AM NOT A FINANCIAL ADVISOR. Neither is anyone else here. Don't go taking advice off the interbutts for serious financial stuff.

The issue is this: we know the level of spending is unsustainable. What we DON'T know is how long it can last. 6 mos? 1 year? 5 years? 10? There are arguments for a variety of timelines that I frankly do not have the economic knowledge to judge with any degree of certainty. I am pretty confident that it WILL happen, in the short to medium term future, but couldn't tell you beyond that.

I have had some pretty smart hombres tell me that they are no longer buying up commodities and have tons of cash on hand, waiting for the stock market to crash again, at which point they plan on buying into gold/silver again.

Those guys could be wrong, though. The best advice is to start learning yourself, doing research, and above all never just taking someone's word for it when it comes to investing your money.

[KevDen2005]

I completely agree that the market can depend greatly on what he says. It is always in everyone's best interest for the Fed to come out and say "we are doing well."

[Mtn.man]

Cash is worthless just paper printed to extreme.
Gold and Silver can be used as it has been for 1000's of years to buy anything.
A little can go along way.
As for Bernie he is manipulated by the powers that control the economy and will say what they want him too.
I have said it before read The Creature From Jekyll Island and see who really controls the world economy and why.

[TFOGGER]

I miss Alan Greenspan...

[ChunkyMonkey]

I AM NOT A FINANCIAL ADVISOR. Neither is anyone else here. Don't go taking advice off the interbutts for serious financial stuff.


We have 2 members who are financial advisors, at least another one in the banking that I know of. A bunch in real estates, a few including Irving at one point in insurance and so on. If there is any group to network with, I would rather work with gun owners than a stranger in a fancy office. I personally have networked and done business with at least a dozen on this site on non gun related matters.

[Pancho Villa]

We have 2 members who are financial advisors, at least another one in the banking that I know of. A bunch in real estates, a few including Irving at one point in insurance and so on. If there is any group to network with, I would rather work with gun owners than a stranger in a fancy office. I personally have networked and done business with at least a dozen on this site on non gun related matters.

No one who posted here identified themselves as an FA.

Its cool if you want to go inand get actual financial advice from a veteran expert, but I wouldn't take any advice on any inet message board.

My personal opinion. Your money is your money, do with it what you will.

[ChunkyMonkey]

No one who posted here identified themselves as an FA.

Its cool if you want to go inand get actual financial advice from a veteran expert, but I wouldn't take any advice on any inet message board.

My personal opinion. Your money is your money, do with it what you will.

Come out to a meet next time around Pancho. Noone said taking advice from the board blindly. Internet is a communication medium, so communicate [Coffee]

[Pancho Villa]

Come out to a meet next time around Pancho. Noone said taking advice from the board blindly. Internet is a communication medium, so communicate [Coffee]

Been meaning to. Taking care of debt + getting a new business off the ground has been tough on my free time and finances. But I'll get out to one of these competitions or meets sooner rather than later.

[Hoosier]

Been meaning to. Taking care of debt + getting a new business off the ground has been tough on my free time and finances. But I'll get out to one of these competitions or meets sooner rather than later.

What's your new biz?

I bought ZSL the Ultra Short Silver stock before the fed announcement, hoping that they'd say what needs to be said to forestall the drop in the dollar -- when that came out and didn't say anything, I dumped it at a loss of about $50. I'm keeping an eye on it though, I think Silver has gotten much higher than it should be, I expect a correction at some point. The dollar inflation doesn't explain how high silver has gotten.

Anyone play Forex? I've been poking around with dummy money for the last day, so much volatility in the dollar.

H.

[Mtn.man]

I've dabbled with it.
Penny stocks are more fun.

[Irving]

Thanks for the disclaimer Poncho, but the answer wouldn't matter either way. My car is about to shit the bed and we're going to need another one soon anyway.

I actually majored in Economics, but since I've hardly had to apply it to anything since school, it is all pretty much lost knowledge.

[Seamonkey]

Is Bernanke saying that he's going to go forward with QE3? Keeping the Fed buying up bonds like crazy solves the problem listed above - but its still, in effect, printing money.

So far the markets have responded. Treasury rates are still at historical lows, the dollar has taken (another) dump and commodities had a strong day. What this tells me is that people are realizing what's happening and moving their money out of a weakening dollar and into assets that actually exist.

Did you mean continuing QE2? Haven't heard about QE3 yet or am I confused? When the Fed announced QE2 various governments around the world raised a ruckus criticizing the Fed. A couple days later Bernanke named several countries and how their actions weren't helping the situation either. Most people believe that when inflation starts to rise the Fed will simply let the short term bonds expire to ease the balance sheet.

A weak dollar isn't all bad. It means our exports are cheaper for other countries and foreign investors can pour money into our economy. Of course it sucks the big one for us.





Bernanke always seems to be vague and it pisses me off that they don't come out and say what they are doing and we have to try and decipher it



So he's kind of stuck trying to convey information in the vaguest way possible, because someone in his position can very easily cause a market plunge.


I miss Alan Greenspan...

They have to be vague or, as Pancho points out they could easily cause panic, market crash and such.
Want vague? Greenspan was really vague and no one knew WTF he was trying to say. When Bernanke took the job he said up front that he was going to communicate better with Wall Street to avoid the markets swings that Greenspan caused by being so vague.
From what I understand Greenspan ruled the Fed with an iron fist and anyone who challenged him didn't last long while Bernanke, coming from an academic background is open to discussion and tries to gain consensus. Several members of the Fed don't agree with Bernanke which, to me, is a good thing because, again to me, they can do a "middle of the road" thing instead of one group charging full speed ahead.





I actually majored in Economics, but since I've hardly had to apply it to anything since school, it is all pretty much lost knowledge.

I've forgotten most subjects as soon as the finals are taken... good thing I have tons of text books that depreciated by 80% in a couple weeks to reference.


People worry about the trade deficit with China but don't worry about the underfunded pension plans. China needs to let the Renminbi appreciate but doing so will hurt their processing industry and decrease their spending power.
US markets crashed, people fled to the Euro and they ended up crashing also. There's been talk since the '70 for a global currency but no market for one. The US dollar is still the champ since it's liquid and used by everyone.


Buying metals is like buying stocks. It's a personal choice. No one knows what markets will do in the future and it's all a risk. Do your own research and make your own decisions.

[Seamonkey]

Hope nobody got hurt too badly with silvers sell off

[Bailey Guns]

Hope nobody got hurt too badly with silvers sell off

Yikes! I just looked at prices.

[earplug]

The recent sell off did not change anything economically or fundamentally.
The US Dollar is still a worthless trading paper.
The Fed will continue to inflate and Asia will still need energy.
History shows us democratic governments inflate the money supply to keep the people happy in the short term. Its screws the people long term. Long term is always happening.
Many people think others will be wanting to buy firearms when were cold hungry and in the dark. A safe full of bang sticks won't cure the problem. The price of firearms in third world nations is very cheap.
Interesting information is at Pikes Peak Economics Club web sight.