Bernanke Defends $600 Billion Shadow Stimulus
- Posted on November 7, 2010 at 8:21am by
Meredith Jessup
- Print »
- Email »
JEKYLL ISLAND, Ga. (AP) — Federal Reserve Chairman Ben Bernanke defended the Fed’s new $600 billion program to aid the economy on Saturday, rejecting concerns that it will spur runaway inflation.
Critics, including some Fed officials, fear that all the money being injected into the economy could ignite inflation or speculative bubbles in the prices of bonds or commodities.
Speaking to a conference on the Georgia coast, Bernanke said the new program, announced Wednesday, won’t push inflation to “super ordinary” levels.
The Fed will buy $600 billion worth of government bonds in a bid to make loans cheaper and get Americans to spend more. Doing so would help the economy and prompt companies to boost hiring.
The economy hasn’t been growing fast enough to reduce unemployment, which has been stuck at a high of 9.6 percent for three straight months. The Fed worries that high unemployment, lackluster wage gains and still-weak home values will weigh on consumer spending, a major drive of overall economic activity.
Because companies are loath to raise retail prices in this climate, inflation has been running at very low levels. That gives the Fed leeway to launch the new aid program.
Earlier in the week, Bernanke expressed confidence that once the economy is on firm footing, the Fed will be able to smoothly soak up all that money without harming the economy and unleashing inflation.
___
AP Economics Writer Jeannine Aversa in Washington contributed to this report.
Comments (21)
Sign In To Post Comments! Sign In
Popular Stories
MSNBC Host Snaps in Heated Segment: ‘What in the World Is Riskier Than Being a Poor Person in America?’ 693 Comments
Does Misstated Marathon Claim Prove Paul Ryan Is Dishonest? (POLL) 662 Comments
‘Jumah at the DNC’ Speaker: ‘Muslims Visited America Prior to Columbus’ & ‘It Was a Muslim’ Who Guided Him to the ‘New World’ 524 Comments
Obama: RNC Like Watching ‘Black-and-White TV’ Because Romney ‘Did Not Offer a Single New Idea’ 364 Comments
Paper Details Obama Admin’s Alleged Secret Note Sent to Iran: If Israel Attacks, We Won’t Get Involved 341 Comments
Faith
This Is the Creationists‘ Response to Scientist Bill Nye’s Viral Pro-Evolution Video Claiming They Harm Children 230 Comments- Pakistani Muslim Cleric Accused of Framing Disabled Christian Girl in Koran-Burning Case Read More
- ‘Made Up Religion’: TV Historian Enrages Muslims, Receives Threats After Producing UK Documentary Questioning Islam’s Beginnings 238 Comments
Meet the Controversial German Imam Accused of Brutally Beating His Wife & Pushing Sharia Law Read More
‘Self-Proclaimed Messiah’ & Unification Church Leader the Rev. Sun Myung Moon Has Died — Here’s His Life Story Read More
Business
President Obama Issues Major ‘Green Energy’ Executive Order Read More- Germany’s Upcoming Court Ruling Will be Huge for the EU Read More
Ford Looks to Beat Toyota for Best-Selling Car in 2012 With This Model 147 Comments
Bernanke & QE3: Here’s What You Need to Know Read More- ‘Extortion’: Why Did the Labor Department ‘Drop the Hammer’ on Oregon Farmers? 300 Comments
Technology
- This Is the Creationists‘ Response to Scientist Bill Nye’s Viral Pro-Evolution Video Claiming They Harm Children 230 Comments
‘TaserDrone’: Hackers Weaponize Quadcopter With Actual ‘Shocking’ Technology Read More
Ever Heard of the Wild ‘Burning Man’ Festival in the Middle of the Nev. Desert? Here’s Your Primer Read More
Stanford Develops Technology ‘Better Than Steroids’ for Athlete Recovery Read More
Have You Pretended to Know What ‘the Cloud’ Is? You’re Not Alone Read More
Submitting your tip... please wait!
hempstead1944
Posted on November 8, 2010 at 7:59amThe money changers are still in the temple…..don’t look for anything different …..
Report Post »Tony Nagy
Posted on November 8, 2010 at 5:59amI’m in hospital for 3 days, only to find they are still digging the hole deeper for you guys?…. WTF?…. Spooooooky Dude, enough already…. BOZ MEG!!!
Report Post »Sledgehammer
Posted on November 7, 2010 at 7:39pmHim and the yard gnome, are two guys I’d love to question with a baseball bat! I want to know where every penny went to, and why?
Report Post »OneRepublic4us
Posted on November 7, 2010 at 9:04pmSo you want to know where every penny went to. Gee, if only the constitution granted us that right. OH! Wait! It does! I think we should all call for an accounting of our money!
Report Post »justice
Posted on November 7, 2010 at 6:14pmdo they actually think we buy this crap. they want to put more money in their pockets at or expense. they are actually the smart ones , because til lately we let them get by with it. but now we are awake.
Report Post »adifftake
Posted on November 7, 2010 at 6:09pmBen you should seriously consider sueing your economics schools and profs. Either you are a monumental idiot or you are a very dangerous communist.
Report Post »Tell you what Benny. Let’s you and me play a game of monopoly. Right at the end, right before you deal me the crushing blow, I will excuse myself and return with a wad of money from another monopoly game.
Will you allow me to continue to play, or will you complain it’s not right for me to inject more money?
SilentReader
Posted on November 7, 2010 at 5:12pmBernanke is a traitor. He is doing precisely what he said he would never do!
Report Post »AmericanLass
Posted on November 7, 2010 at 5:02pmThe comment about spooky dude is correct.
Report Post »tobywil2
Posted on November 7, 2010 at 5:02pmINFLATION – STEALTH TAXATION
The tyrants (Wannabe Peers) would have you believe that taxes are only increased when the legislature passes a law increasing or creating a new tax. Actually, the tax on the economy is increased whenever the government spends money. The Wannabe Peers use the confusion over the relationship between wealth and the medium of exchange (money) to perpetuate this myth. Money, (paper money) has no intrinsic value. The dollar’s value is determined by the quantity of wealth the market is willing to exchange for the dollar.
The figure at the end of this article is a simplified representation of the relationship between the medium of exchange (dollar) and wealth. It shows that the value of the dollar is equal to the “nation’s wealth” divided by the quantity of dollars and credit in circulation. The economy is a complicated and somewhat sluggish entity. The economy can sometimes take years to respond to changes in increases in the quantity of dollars in circulation (especially when the process is complicated by government borrowing and innovation or increased productivity). However, when large increases in the medium of exchange or reductions in the wealth available in the market occur quickly, the response can be both rapid and catastrophic. This type of event can occur when the government prints large quantities of money to purchase wealth and remove that wealth from the market place or natural disasters occur, which destroy wealth. An example would be the hyper-inflation experienced by Germany in the early 1930s.
The value of the dollar can also be affected by factors other than the quantity of dollars in circulation. Innovation, which reduces the labor or material content of wealth, can increase the value of the dollar when the quantity of dollars in circulation remains constant. Conversely, government rules and regulations that increase the labor and all material content of wealth without a corresponding increase in value can reduce the value of the dollar even though the quantity of dollars in circulation remains constant.
Inflation is not a recent phenomenon. “Pieces of silver,” the medium of exchange of the Roman Empire, started out as almost pure silver. When the Roman Empire fell, the “pieces of silver” were almost pure copper. During the 19th Century the inflation rate in the United States was 12% for the entire Century. In 1800, $0.89 had the purchasing power of $1.00 in 1900, a change of about 12% in 100 years. From 1900 to 2007 the inflation rate was about 25 to 1, a change of 2500% in 107 years. A Google search lists over 20 pages of “inflation calculators.” Three of the most popular inflation calculators list the inflation rate of between 24.6 and27.71 from 1900 and 2007. In other words, one 1900 dollar had the purchasing power of twenty-five 2007 dollars.
What happened? In the late 1800’s and early 1900’s four factors emerged that caused inflation to increase. These are:
• Creation of the “Fourth Branch of Government,” the bureaucracy
• Enacting and enforcing the Sherman Antitrust Act.
• Creation of the Federal Reserve and elimination of “hard” money
• Enacting the income tax
• Wars
How did these factors cause such erosion in the value of the dollar? Chapter 9 of “21st Century Common Sense” explains in simple terms how these factors produced inflation of the dollar and aided the “Wannabe Peers” in usurping our freedom. http://commonsense21c.com/
Report Post »OneRepublic4us
Posted on November 7, 2010 at 9:00pmI have to admit I saw Glenn Beck explain this and I went shopping for dried milk, rice and other provisions. It’s easily explained as a backdoor tax.
Report Post »Juan Gault
Posted on November 7, 2010 at 4:00pmLess government spending, reduce existing taxes. That is the time tested solution. easy,as most solutions are.
Report Post »OneRepublic4us
Posted on November 7, 2010 at 8:58pmYES! I thought I was the first one to think of it but I guess we’re both smarter than the communists!
Report Post »Spokavriel
Posted on November 7, 2010 at 3:03pmSo to improve the economy they want to make more bubbles to float the egg shells people are already walking on. Yeah that won’t increase uncertainty which is the #1 thing crippling our economy at the moment.
Report Post »kathleenhenthorn
Posted on November 7, 2010 at 2:43pmOh Bullcrap!!!
Report Post »HKS
Posted on November 7, 2010 at 3:01pmA…spooky………..dude………..made………..me……………do………….it…………….aaaaaaa.
Report Post »Spokavriel
Posted on November 7, 2010 at 3:05pmYou mean you don‘t believe an economy that isn’t producing anything to spend the money on can absorb more currency than it would take to buy everything people already were not buying? Get outta here ;)
Report Post »Juan Gault
Posted on November 7, 2010 at 3:57pmBen is pushing on da string. didn‘t work QE 1 and won’t on QE2.
Report Post »uncleherbert
Posted on November 7, 2010 at 4:00pmbernacky has no brains!!!!
Report Post »grandmaof5
Posted on November 7, 2010 at 7:04pmNothing he has done so far has worked so I don’t know how he expects anyone to believe this will. When did they say he would be out of a job? Soon, I hope, and hopefully someone who knows what they are doing waltz’ in and saves the day.
Report Post »snowleopard3200 {mix art}
Posted on November 7, 2010 at 8:02pm@Kathleenhenthorn
Agreed with your post 100%
Report Post »ru12
Posted on November 8, 2010 at 5:44amCall it like you SMELL it!
Report Post »I still think a PAYROLL TAX HOLIDAY would work wonders. Everyone would have a little extra money to spend on everyday things instead of gobs of money somehow getting “INVESTED” into the commodities market, thereby pushing up the price of all our essentials. IDIOTS! Think of how many small businesses might have made it with just a few thousand dollars extra each month had they had that tax holiday. And, thus, how many little jobs would have been saved…and how much of our unemployment funds would have been saved, and how much in food stamps and so on….