December 4, 2009



"Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it's worth noting that there have been times when exchange rate policy has been an effective weapon against deflation.

A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly.

Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt's devaluation."

-Ben Bernanke, 2002

76 comments:

Andrew from Russia said...

No doubt, Ben Bernanke deserves a Lifetime Achievement Award for making the US dollar the World's Most Hated Currency.
(Welcome back BTW!)

Anonymous said...

You're back!

Anonymous said...

I watched the hearings and the one guy tore him a new a**hole !!

Michael said...

Got you speechless, huh? Well, good to see you active again...

BananaRepublicrat said...

!?

SquippY said...

Bout time, nice to see your still alive. I was wondering what it would take to get you back out looking for your shadow. Good to have you ...back?

So should we hug him or hate him, someone had to do the job, we did supposedly dodge the bullet. I'm sure as hell glad it wasn't a bunch of politicians doing it, we would have been waiting for decades for anything to get done. It's easy to shit on the guy, but who would have made the moves necessary? No one else can make those decisions objectively without answering to every politician, lobbyist, corporation, foreign countries, nevermind the American public who always get asked last (just to be polite). Yes I agree that the grift happened but look at the bigger picture, collapse of the banking industry, should this really be left to the machinations of a Federal Government that wouldn't wipe it's own ass unless it was lobbied for. Monkeys with car keys.

Anonymous said...

OMG Welcome back!

stash is in the mattress said...

"He will probably go down in history as the person that destroyed the Dollar"

Peter Schiff

Went2puke said...

Funny! I saw Sen. Bunning grilling BB and thought of you, and here you are!
Time to come home, Keith!

BananaRepublicrat said...

Summer of Rage 2?

http://tiny.cc/HyTuN

GT said...

Weird, I was just thinking about old keeferino's whereabouts yesterday! Still in euroland?

if this guy is reappointed, it is over. on the other hand, why would congress want the fed to have more power? i would think they are selfish enough to not allow that.

Angry Leprechaun said...

Nice to have you back, even if you are going to sit in the back of the class with a hat and sunglasses over your face and act like your not even here.

Anonymous said...

Oh what, you're back now keith? When are you leaving again cowboy?
-JDF

Thomas said...

Welcome back Keith!

Bukko_in_Australia said...

From what I've read about Bernskanky's testimony at his reconfirmation hearing, he's now advising Congriftss about domestic policy. (i.e. "Be like Willie Sutton [a famous American bank robber from the 1950s, for Keith's history-challenged readers.] Steal from where the money is -- Social Security and Medicare!") That should please those who want to screw the Boomer Generation -- is that YOU, Keith? -- so perhaps you'll want HeliBen to stay in.

I wonder why this un-elected, incompetent bearded Hobbit even has a prayer of keeping his job. Actually, I DON'T wonder. It's because he's a perfect foil for the fascist bankmaggots who control him and the Hopeless president who re-nominated him.

It's a strange day when the only Socialist U.S. Senator is the guy trying to do a one-man filibuster against Bernanke. (Warning to hard-core anti-socialists -- do not watch this 5-minute YouTube. You might find yourself agreeing with a socialist, and the cognitive dissonance will make your head explode. My only question is, how many corporate Democrats and lackey Repiglickins will vote for the inevitable re-appointment?

DollarToast said...

Welcome back, Keith. We've really missed you.

Anonymous said...

WTF, KEITH is that you?

BG said...

Keith,

i love ya buddy and really missed you. Now bring on the comments from the angry nut jobs who hate Obama and blame everything from the past decade on him.

Gotta go.

BubbleGirl

Anonymous said...

Here you go Keith, add this to your site:

http://tinyurl.com/yernw3u

I know you will not put it, but you can't deny the fact that it is what it is!

Psycho said...

It’s too cold to rage. How about we burn these worthless USDs to keep warm?

the duder said...

welcome back dude!
quick poll: who else should run the fed?

Randy said...

Well well well..

Looky looky looky.

I knew it

Keefer is back!

All the fun is about to begin

10 months?

12 months?

Loosen your seatbelts if you're a thrill seeker.

fine; go on and unbuckle..

Andrew from Russia said...


quick poll: who else should run the fed?


I vote for Friedman's computer. Now let's vote on hardware configuration, programming languages/SDKs and money supply targets for 2010...2099.

Randy said...

Ok, so we have:

Historic low interest rates

Goberment $8000 tax credit

FHA 3.5% down loans

House prices lower then 2 years ago

Desperate 6%ers giving it up for less

Etc. etc.

Every possible tool to prop up house prices

Yet inventory is building and house prices continuing to go down

This tells us 2 things

1)It was never the FEDs low rates that caused the insane bubble to begin with, cause if low rates cause housing prices to go up then why aren’t they going up now. As explained here on Sasherville many a-times – ‘cheap money; did NOT cause ‘Easy’ money..

Then what caused the bubble?
Hint: - think Dubai, (the same idiotic thinking that had Eurabians invest in gory Sheiks glittering golden teeth)

2)If all this has not been able to at least hold house prices from falling, imagine where house prices will go when reality forces them to stop the free cheese.

Anonymous said...

Keith, please keep posting. You're not as often right about things as other bloggers, but you're more entertaining!!

Just curious, how many more trillions do you think we should spend at this point??

Duder said: "quick poll: who else should run the fed?"

Congress. Congress is supposed to have control over the money supply, just like the U.S. Constitution says.

Would be nice if more Congress people would actually read the Constitution though...

BuyerWillEPB said...

I knew you couldn't resist. These are the times that try men's souls. I hope you had a nice respite with the eastern 'ways'. I would too for certain. Perhaps I did.

In any case, glad to see you back and please continue. We really do miss you.

Dolphin said...

Al-Queefer,

Where do you think we are in the Gold bubble cycle?

Anywhere near the top?

Long way yet to go?

will there be any dry powder left to bail that one out?

either way; its time to begin narrowing down a scape goat.
Someone has got to be responsible.
Its never us
and this time puleeze let it not be a Jew AGAIN..

I know I know its a habit and requires no effort to blame them but for once can we think of another minority.

Any suggestion folks?

Anonymous said...

the duder said...
welcome back dude!
quick poll: who else should run the fed?

December 5, 2009 2:24 PM

Ron Paul or Peter Schiff

LOL said...

YYYYYEEEEEEESSSSSSS!!!!!!!!!



your back

Banana Republicrat said...

duder:

Who should?: Volcker or Stiglitz

Who will?: Summers

Bonus: Elizabeth Warren '12

Peahippo said...

It's good to see Keith having to admit by example that this crash is nowhere near done. He keeps trying to sign off, but that's just his bizarre optimism in action. It's only the end of 2009, folks. Deflation is merely in the starting stages ... and then stagnation has to run at least a decade after that.

It's just strange to see people try to dismiss all this Second Great Depression in just a few months. Those who do, have no applicable senses of history and economics. A generational crash requires generational time to play itself out. So a crash that took about 30 years to finally happen, it going to take at least 15 years to play itself out. 2008+15=2023. It's MATH, folks. You were supposed to be a bunch of smart guys and learn MATH in your stupid college careers.

Anonymous said...

Good to see you posting again.

Nick said...

The real question is, what does Andrew Hac think about this?

Lost Cause said...

Welcome back. I suppose that comments are now worth about half of what they were before you left. But in my case, what is 50% of nothing? So I am not sure that I care what happens to the dollar. At least he has got a job for the next few years, the kabuki theatre notwithstanding.

Bukko -- aren't the sheep beautiful in the pastures? Shimmering and rippling like a school of fish.

Lost Cause said...

I don't mean to double post, but I just read the "last thread" (cough) and I must insist I am bullish on the economy. I think a very strong recovery is at hand. Retail will suck, with a bad Christmas, but that is already built-in, with the short selling season. Bad weather will cause even more distress, but come the first of the year, employers will start hiring and the economy will rebound extemely strongly because there is pent up demand. All indicators will be off the charts, compared to all-time lows. Housing prices will fall, as the tidal wave takes down the high end.

You know I've been a bear for a long time, but there is my prediction for 2010.

Dr. Huxtable said...

Watching the value of my savings vanish with the falling USD. But I am not about to buy stocks or commodities.

Anonymous said...

Keith,

You must leave a post about your travels and adventures. It's kind of weird just popping in like this....are u back?

casey said...

It's party time again!!!!!!We are having bidding wars on homes in s. california.The good times are back.who gives a rats ass about the dollar?Interest rates are low and I still have credit.I am looking to scoop up some more homes and flip this spring.Are you guys still bitching how you missed the boat again?I am rolling in the dough thanks to bernake, I love this man.He has made me a millionaire.I sold all my gold last week and put it in a money market so I have cash for my new homes I will flip.Keep renting and bitching why you are laways broke.

Devestment said...

Oh my GOD! Ben is a troll...

Roccman said...

So where are the frog walks keith that you spoke about a year...two years...three years ago.

If anyone still thinks their reps give two shits about you - I have a bridge to sell and story about 19 guys and box cutters to tell.

fools

Roccman said...

what about the frog walks keith!!!

bwhahahahahhahahahhaha!!!

long live the oligarchy

Fine&Dandy said...

Welcome back!

Keep the lighthouse lit for us, okay, Keith?


--Formerly Anonymous

chslaxcoach said...

Keith,

Your buddy Greg Swann has apparently gotten religion.

Here he is on the Phoenix NPR affiliate admitting that the recent spike in home sales is probably due to the tax credit and that we could see more price declines.

http://tinyurl.com/y98kooc

The host even plays a clip from 2006 where Swann goes off about how things will never go down.

He actually admits he has egg on his face.

SeattleMoose said...

"quick poll: who else should run the fed?"

Ans: Nobody, the FED should be abolished. A central bank that operates outside the jurisdiction of the United States and its people is a recipe for foreign control (in this case central bankers who owe allegiance to no country).

1776 - won our freedom
1913 - lost it again when FED was established

“Give me control over a nation’s currency and I don’t care who makes the laws.”....Mayer Amschel Rothschild (notorious European central banker)

vanilla ice said...

Congress will be confirm him for another four years.

blogger said...

What the hell are all of you doing still checking in here?

Been good to take a break, see the world, let the dust settle a bit, trying to figure out where this thing is going next..

Not saying I'm back, but good to read the comments. Miss the old days of HP when we had smart, good people posting. You know, before the whackos and realtors found us.

Someone sent me a current listing from Phoenix - $350k for a condo that sold 18 months ago for $1.3 million. And no bids.

What's your 'hood like, post-crash?

RiperDurian said...

"What's your 'hood like, post-crash?"

Berkeley CA, crash is just getting started,

cause you know its different here...

Years of crashing dead ahead.

French toast with no syrup said...

Free bowling (when you purchase one game.) plus $1.00 hot dogs.

Michigan is hit hard. Severe damage to all parts of the ship capitan.

Mayday, Mayday... She's going down.

Anonymous said...

It's been so long that I forgot my damn google account password.

The only reason I got an account in the first place was so I could post here.

Paul E. Math

Bottom Feeder in Philly said...

Welcome baaaack, Keith...my "hood" of the suburban Philly area has seen a mild decline in prices and sales, but it never zoomed up like the rest of the country. We have had a few job losses of note, but some growth as well. Hard to say what I feel at this point..is it a bear market rally we just saw, or is it a real recovery. Without getting into the politics part of things, it seems like the next shoe to fall is state revenues.

Anonymous said...

Post-crash is not everywhere.
Here in Vancouver prices are still at all time high and they keep on climbing.
I m waiting for the rocket to blow the same way it happens in the us. Wonder when it will happen though.

Lost Cause said...

It still sucks here in coastal Orange County, but there are cracks all over the facade. The million dollar housing development -- built upon an ancient native habitation site, and right next to the toxic waste site -- went bankrupt. But they are still trying to unload the houses, so it is making it a bit harder for all of the other sellers selling million dollar houses. I suppose once the dollar is worthless everyone could afford a million dollar house.

PS -- It is not "different this time." The recession is over. Goodbye. The recovery is going to be on like gangbusters.

Bukko_in_Australia said...

Lost Cause said...

Bukko -- aren't the sheep beautiful in the pastures? Shimmering and rippling like a school of fish.

Wouldn't know any more mate. We've immigrated to Cauckistan. I'll tell you what it looks like when I start seeing beavers and moose in the forest. Won't be seeing any schools of sockeye salmon in the Fraser River, though. The population has been almost extinctified.

What's it like in my 'hood? Housing bubble, baybee! Low interest rates, people feeling prosperous, bidding up prices, happiness over the Winter Olympics coming.

Meanwhile, for the poor, I gotta say I have never seen so many beat-down bearded people in shabby winter coats, people pushing shopping carts down the street with plastic bags full of crap tied to the sides like balloons on a poverty parade float, young men and women coming up to me on the sidewalks asking for change...

Even San Francisco had fewer down-and-outers. And the junkies! The city runs a legalized, medically supervised shooting gallery for needle fiends, and they're out by the dozens on the blocks around it.

I was getting a plastic water bottle out of the car we had rented while I was cleaning it up to return it (we just bought a new Prius) and a guy walking down the street shouted "Do you have any spare bottles you want to get rid of?" (Vancouver has a deposit system on plastic soda bottles, beer and liquor bottles, etc.) And this is on a middle-class residential street. But it's on the east side of Vancouver, which is miiigrant/junkie ville.

And in my hospital, waaaaaay more HIV, HEP C, IVDU patients in my first two weeks than I saw for four years in Australia.

In short, sugar high time for the yuppies, edge of starvation for the underclass. No sense of a brewing "Winter of Rage" in Canada, though.

Chris said...

END THE FED!

Chris said...

as far as what my neighborhood is like in Detroit.

The good forclosures are selling within a week of hitting the market. Everything else lanquishes forever.

Forclosures are listed for about 60 dollars per sq foot in Suburbs of Detroit. The regular houses that are selling around about 80 per sq foot.

Anonymous said...

Keith ,come on back and post . A lot is happening right now .

Dr. Huxtable said...

My Hood:

Housing already bottomed and prices have already begun the bounce. When I say bottomed I do not mean all active listings but the actual price houses are selling for.

Example: New neighborhood in exurbs, custom builder 4,000 sq ft SFR w/ Pool, built 2004, sold from builder $875,000. December 2008 these houses were selling for $430,000. Now one year later these same houses are selling for $600,000.

Most banks are holding out for more $$$ on their REO's, and waiting 3 days to review offers so the competition can pile up. Also have seen some banks fixing up the properties themselves to get market value.

I would say just like the stock market bottom in March 2009, many people will be looking back on housing in 12 months kicking themselves for not buying.

Angry Leprechaun said...

For those that know my area has the highest unemployment in the nation, El Centro CA, and things are entertaining. Houses are still falling in price, people are still swiping plastic everywhere I go, and i am still arguing with realtwhore buddies about this. They say prices have stabilized and I see no proof of it. They say look at the MLS, there is only a 3 month supply. Then I take them and show them empty houses people have foreclosed on and ask why they aren't on the list. I don't think we have seen the 3rd inning of this whole crash yet. The good times are still rolling. Yes some are tapped out but they are filing BK and you know what the easiest thing to get after a BK is? A credit card!

And the answer to who should run the Fed? HR1207! And then blow the damn thing up.

Thomas said...

My hood is the Seattle area.
Everything is great; people here are continuing to have their 3 Starbucks a day. This area is economically anchored by Boeing and Microsoft (nearly everyone I know either works for one of these companies or their spouse does).
Even though the 787 keeps getting delayed and MSFT hasn't produced a widely "accepted" OS since XP, my sister and husband, who both work for Boeing, are looking to buy a house. The government incentives, historically low interest rates, and fear of future inflation are motivating their decision. They both have MBAs.

vanilla ice said...

So many bullish posters. Why? What fundamentally has changed since this summer?

Oh yeah, the banks are making record profits and handing out record bonuses. They are 'too big to fail and the foundation of the US economy.

Anonymous said...

the central banking and investment world today is very different than it was in the 1930's. anything could happen.

Smug Bastard

RiperDurian said...

Dr. Huxtable: "many people will be looking back on housing in 12 months kicking themselves for not buying."

Dr., is your area of expertise by any chance the study of bull excrement?

Anonymous said...

Dr Huxtable said:

Example: New neighborhood in exurbs, custom builder 4,000 sq ft SFR w/ Pool, built 2004, sold from builder $875,000. December 2008 these houses were selling for $430,000. Now one year later these same houses are selling for $600,000.

Funny money helps for a little while but eventually:
2 years from now they'll be selling for 1 million each. Then 2 years after that they'll be selling for 4 million each, and then 2years after that they'll be selling for 8 million each and so on and so on. Look at the Dow 10 years ago. Most of the stocks are still massively negative in real terms since then and are still massively over-priced. Just like housing still is. Eventually your average Joe will be buying an average house for 400K based on his average salary of 100K.

Anonymous said...

Thanks for the teaser Keith, I had a feeling we would here from you when gold hit 1200. Now, its more fun when there is turmoil while you are posting so if you still need to rest, do it now before the fireworks start next year. If you are back for good or are back for a little taste, let's here about Climate-gate and the US media blackout. To steal a line from you: "nothing to see here move along". Personally, I'm glad the truth is slipping out, what a scam. I was always skeptical and thought global warming had more to do with the sun because I heard scientists say that the earth was warmer 1,000 years ago. But I was still almost ready to accept it when they anounced Cap & Trade. Follow the money: Al Gore, Ken Lay and Goldman Sachs invented this whole thing and stand to make the most money. You probably don't buy into the whole global domination thing but let's face it: How long until these conspiracy theories become conspiracy facts. The Government has been taken over and is now comprised of all ex-Fed, ex-Goldman people. Now Obama's big plan is to "spend our way out of this". What he really means is redirect more money from the tax-payers to Wall Steet and big business. Obama serves the same masters as Bush who served the same masters as Clinton and so on and so on.

Anonymous said...

DAmn , why you playing games Keith?

Tell us once and for all are you coming back , yes or no?

Come on now, you own your readers and visitors at least that much!

Either finish this site or tell us your back!

Fine&Dandy said...

Report from the ritzy North Shore suburbs of Chicago: The stink is getting thick. A lakefront home that listed two years ago for $1.5 sold for $550k. Most formerly $1.2 are going for about $800k or being pulled from the market. 14 months of inventory.

The local mayor is begging people to shop locally, so we can get the tax revenue. Property taxes (already high) are going up. They're thinking about hiring private contractors for police, worrying about how to fund pensions, cutting services, etc.

The prices are still dropping and the lis pendens have really spiked in the last four months. The county had the property tax auction on Monday-- the number of homes from small to magnificent on that list blew my mind.

Thanks to you and a few others, we're renting right now. Arrived here two years ago looking to buy-- if you ever get out this way, I owe you a beer.

Anonymous said...

I bought a house for $33K in Selma, Alabama. Took another 30K to restore it, but it's great.
Not huge house, built in 1900, and on quiet street. A lot like long lost small 1950's hometown America here. Crime is very low, and minor. Population of entire town only 20K. Everybody kind and looks out for each other.Climate has been great this year, highs never got into low 90's, and it's 61 degrees outside now.
EVERYTHING within walking distance. Taxes very low. Food great and really cheap.Newspaper only 6 pages long. Spanish moss everywhere like in Savannah.
Really beautiful old historic district, I mean, BEAUTIFUL old houses. Some are in the millions. But I got mine for a song. Main Street projects trying to restore old commercial buildings.
Little piece of heaven. Had no idea it existed until came to be close to family. Doctors and dentists even charge one tenth of what they did in Birmingham.
Yep, SELMA, ALABAMA. Who would have thought it, after watching all that transpired here in the 60s'. This little town is holy now.


I have no idea what will happen with the health insurance problem. At first, I was all gung-ho, but realize they will find some way for my social security check to match my monthly insurance premium. Still five years away from that.

The DA said...

Knew you'd be back...that's why i kept checking in.

TheDA

blogger said...

Nope, not back. Just droppin buy to say hey

No rule against that. Nice to hear from some of you too.

Anonymous said...

Northside of Chicago:

Several small, basic houses priced at around $600K have been on sale for 1 yr+. An old lady down the street died and her sons sold the house for $450K, it lasted about three weeks. A foreclosure on a busy street is going for $375K and it has been sitting for > six months.

Anonymous said...

Anonymous said...the one guy tore him a new a**hole !!

Yep; DeMint was what we need much, much more of: a calm recital of fact.

SquippY said...Yes I agree that the grift happened but look at the bigger picture, collapse of the banking industry..."

Ah yes; the hostage canard... AS IF there were no private capital NOR full faith/credit of the US to deploy instead of the Crony Corporate Crimewave we now have.

blogger said...Miss the old days of HP when we had smart, good people posting. You know, before the whackos and realtors found us...

Heh. +1.


Keith: If this blog is really over, how about annointing/nominating somewhere for us to go? It really was unique here, and we really need somewhere to talk about this stuff.

NOTHING BUT irrelevant bullshit everywhere else.

Bukko_in_Australia said...

Hey anonymous who wondered what to read with Keith being irregular: I like one called "The Automatic Earth."

It focuses a lot on housing, and has a Libertarian/Doomer angle to it. The blog is waaaaay skeptical of official spin, and demolishes the "green shoots" happy talk as the bullshit that it is. On the other hand, it's socially liberal, and the people behind have a heart, unlike hardcore Libertarians, who don't care what happens to real people, as long as Ayn Randish principles of selfishness are followed.

Automatic Earth mostly reprints articles from newspapers, business magazines and the foreign press. Lots of video links to contrarian economic thinkers like Max Keiser and such. The bloggers lead off each new day's posting with a thought-piece summarizing the news and analyzing what it all means.

The Automatic Earth bloggers are not as sarcastic and humourous as Keith, but I learn a lot from them. The commenters are intelligent, too -- not as many whack jobs as Keith attracts. I'd advise giving it a read if you want to see behind the official lies.

Anonymous said...

geez da guy takes as long a summer vacations as i do

Anonymous said...

Cone on Keith ,the fireworks are just about to start .

Anonymous said...

just love to see the people who devalue my time and money receiving huge pay days......not.....

Ross said...

Bernanke is simply a creation of our collective fear and consumerism. Oh did I mention deception too?

If we weren't so willing to be afraid, consume and be deceived, Helicopter Ben would just be a Community College "Professor."