Bernanke Blames American Consumer for Continuing Recession

[bobbyw24]

"Federal Reserve Chairman Ben Bernanke said he's surprised by how cautious consumers have been in the two years since the recession officially ended," Bloomberg reports, repeating the lie that the "recession" ended a long time ago. (The "double-dip recession" explanation is also a fabrication.)

"Even taking into account the many financial pressures they face, households seem exceptionally cautious," Bernanke will say in a speech to be delivered in Minneapolis.

In other words, it's your fault. If you'd only go out and buy stuff the economy would recover. Inflation - reflected in higher prices for gas, cars and other consumer goods - has nothing to do with the Federal Reserve expanding the money supply (they like to call it "stimulus"). It's a temporary phenomenon, according to Helicopter Ben.

http://silverbearcafe.com/private/09.11/blame.html

 

[Zippyjuan]

It is a major factor but that does not mean that the consumer is not justified by spending less money. It is a "Catch- 22" situation. Business won't hire more until sales pick up and people won't buy more stuff until they feel more confident- and that is related to the high rate of unemployment.

 

[rolle]

What money are consumers supposed to spend? Most people are in debt.

 

[LibertyEagle]

No one knows what the government or the FED is going to do next. Who can blame business for not wanting to spend a bunch of money.

 

[brushfire]

For such a supposedly intelligent man, its surprising that he has not been able to figure out that when you DEVALUE THE CURRENCY, YOU LOSE CONFIDENCE!

This is why central planning doesnt work...

 

[Seraphim]

FUCK YOU BERNANKE. End of rant.

 

[Mogambo Guru]

For such a supposedly intelligent man, its surprising that he has not been able to figure out that when you DEVALUE THE CURRENCY, YOU LOSE CONFIDENCE!

This is why central planning doesnt work...

Indeed. If they were to let deflation run its course we could see lower prices which would encourage people to buy.

What happens when a store has a sale? People run out and buy. If we used the modern economists logic, stores would just have regular prices, and then just announce price increases coming up to scare people into buying.

 

[jkr]

fuck u frank!

oops, wrong guy...oh well, it think it works here.

 

[LibertyEagle]

Rofl

 

[brushfire]

Indeed. If they were to let deflation run its course we could see lower prices which would encourage people to buy.

What happens when a store has a sale? People run out and buy. If we used the modern economists logic, stores would just have regular prices, and then just announce price increases coming up to scare people into buying.

Not to mention, when interest rates rise, people put more of their money into reserve. They are rewarded with higher interest. When housing bubbles burst, there is opportunity in the ensuing liquidation - people buy up those "bargains" and that stimulates recovery. The same happens when too big to fails go belly up - they liquidate.

FWIW - I'm not an economic genius, but you dont have to be to see that uncle Ben doesnt know what the heck he's talking about. Actually, I think he knows exactly what he's doing - he's just playing games.

 

[fletcher]

One More Time: Consumption Spending HAS Already Recovered
By Robert Higgs

Commentators and pundits, some of whom ought to know better, continue to harp on the idea that the recession persists because consumers are not spending. Every Keynesian seems to believe that because consumers are in a dreadful funk, only government stimulus spending can rescue the moribund economy, given (to them, at least) that investors will not spend more because the Fed, having already driven interest rates to extraordinarily low levels, cannot use conventional policies to drive them any lower and thereby elicit more investment spending.

People, please look at the data. They are conveniently available to one and all at the website maintained by the Commerce Department’s Bureau of Economic Analysis, the outfit that generates the national income and product accounts for the United States.

According to these data, real personal consumption expenditure recovered from its recession decline by the fourth quarter of 2010. Continuing to grow, it now stands (as of the most recent data, for the second quarter of 2011) even farther above its pre-recession peak.

Real government expenditure for consumption and investment (this concept does not include the government’s transfer spending, such as unemployment insurance benefits and social security benefits) is also running higher than its pre-recession level. In the second quarter of 2011, it was running more than 2 percent higher (recall that this is “real,” or inflation-adjusted spending; nominal spending has grown substantially more).

The economy remains moribund not because consumption spending has failed to recover and not because government spending has failed to increase, but because the true driver of economic growth—private investment—remains deeply depressed. Gross private domestic fixed investment fell steeply after the second quarter of 2007, and in the second quarter of 2011 it remained 19 percent below its pre-recession peak. This figure fails to show how bad the investment situation really is, however, because the bulk of the investment spending now taking place is for what the accountants call the ”capital consumption allowance,” the amount estimated as necessary to compensate for the wear and tear and obsolescence of the existing capital stock.

http://blog.independent.org/2011/09/09/one-more-time-consumption-spending-has-already-recovered/

 

[bierdegarde]

He knows his time is short. If his were told his assets would be confiscated would he say Gold is Money.

 

[TonySutton]

I have seen many CEOs go on the record stating they have money and are holding due to the chaos in Washington. It is the manipulation of the markets by Washington through regulations, health care mandates, taxes, etc which is causing business to hold onto their money. If we had a real "free market" businesses would be more willing to invest the money they have stashed away.

 

[Seraphim]

SHHHH you might send the Socialist Democrats into a frothy rage.

I have seen many CEOs go on the record stating they have money and are holding due to the chaos in Washington. It is the manipulation of the markets by Washington through regulations, health care mandates, taxes, etc which is causing business to hold onto their money. If we had a real "free market" businesses would be more willing to invest the money they have stashed away.

 

[Diurdi]

Wasn't it the rich hoarding the money? Or the evil Chinese? Maybe speculators?

 

[Brian4Liberty]

The obvious solution is to eliminate the income tax. Then the working poor will have more money to spend.

 

[Acala]

http://blog.independent.org/2011/09/09/one-more-time-consumption-spending-has-already-recovered/

Interesting. Higgs is great.

 

[acptulsa]

But it's really all Ben's fault. If Washington allowed currencies to compete with the FRN, people could spend what they have left--their blood.

 

[The Free Hornet]

It is a major factor but that does not mean that the consumer is not justified by spending less money. It is a "Catch- 22" situation. Business won't hire more until sales pick up and people won't buy more stuff until they feel more confident- and that is related to the high rate of unemployment.

"Business won't hire more until" they know how much of a subsidy they will get for hiring people. I expect a BIG drop in the September employment numbers. I may get out of the market this month...

Consider, Obama dangles more tax credits for hiring vets or the long-time documented unemployed (picking winners by government again). So why would any business higher now when they don't know what the tax credit will be or that it will even occur? Why hire an unemployed vet today when one can get thousands of dollars for doing it later? Obama is so committed to higher taxes, that he only keeps them low one or two years at a time. Most business people who think long term are going to save their money and use temps or nobody. Like Cash for Clunkers, this can create an employment spike by depressing activity before and after the subsidized period. It means businesses aren't hiring when they need people, but when government gives the green light. This is very bad for the economy.

 

[DamianTV]

The bottom 50% of the population only own 2% of the Total Wealth in the Nation. Then we get Apple having more Cash than the Federal Govt. I blame the Depression on Apple and the rest of the companies that the 98% of the wealth belongs to. The only reason people were spending before the Depression was because they had Credit, that came through artificially inflated home values and non existent assets. Now, there is no credit for the lot of us in our situation, jobless, no benefits, mooching off relatives and slowly destroying their savings and retirement funds, that is, if they are even available. Yet, Bernake has the nerve to come out and place the blame of the Depression on those who only control 2% of the wealth of the nation? Bernake, you need to go outside and play a game of hide and go fuck yourself.