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.

[Acala]

Then we get Apple having more Cash than the Federal Govt.

I have more cash than the Federal government.

[musicmax]

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.

Hotelier Steve Wynn:

I believe in Las Vegas. I think its best days are ahead of it. But I'm afraid to do anything in the current political environment in the United States. You watch television and see what's going on on this debt ceiling issue. And what I consider to be a total lack of leadership from the President and nothing's going to get fixed until the President himself steps up and wrangles both parties in Congress. But everybody is so political, so focused on holding their job for the next year that the discussion in Washington is nauseating.

And I'm saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime. And I can prove it and I could spend the next 3 hours giving you examples of all of us in this market place that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right. A President that seems, that keeps using that word redistribution. Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they are frightened of this administration.And it makes you slow down and not invest your money. Everybody complains about how much money is on the side in America.

You bet and until we change the tempo and the conversation from Washington, it's not going to change. And those of us who have business opportunities and the capital to do it are going to sit in fear of the President. And a lot of people don't want to say that. They'll say, God, don't be attacking Obama. Well, this is Obama's deal and it's Obama that's responsible for this fear in America.

The guy keeps making speeches about redistribution and maybe we ought to do something to businesses that don't invest, they're holding too much money. We haven't heard that kind of talk except from pure socialists. Everybody's afraid of the government and there's no need soft peddling it, it's the truth. It is the truth. And that's true of Democratic businessman and Republican businessman, and I am a Democratic businessman and I support Harry Reid. I support Democrats and Republicans. And I'm telling you that the business community in this company is frightened to death of the weird political philosophy of the President of the United States. And until he's gone, everybody's going to be sitting on their thumbs.

http://www.businessinsider.com/wynn-ceo-steve-wynn-conference-call-transcript-obama-2011-7#ixzz1Xsutxddd

[Brian4Liberty]

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.

Lol! :D

[Cleaner44]

So Bernanke is part of the "blame America" crowd... fuck that guy. The economy hates us for our prosperity!

[bobbyw24]

The foundering economy has left Americans consumers listless and frustrated with many unwilling to splurge at the malls and unable to take advantage of the lowest mortgage rates on record to buy a house or improve their finances.

Reports out Wednesday showed that growth in retail sales came to a near halt last month amid a major loss of confidence spawned by turmoil in the financial markets and a monumental fight in Congress over the budget deficit. The collapse in spending occurred even before news Sept. 2 that employers stopped creating jobs in August.

While consumers are understandably reacting to bad news about the economy, their response can be self-fulfilling because consumers normally drive about 70 percent of economic activity. Economists said their pullback only worsens the economic outlook.

http://www.washingtontimes.com/news/2011/sep/14/shoppers-took-holiday-in-august/

[Brian4Liberty]

Most "consumers" have no wealth. It is super-concentrated at the top, and they are not spending. Perhaps Bernanke needs to convince all of his buddies on Wall St. to go on shopping sprees to revive the economy. Oh yeah, I forgot that he is already giving them billions of dollars in zero percent loans which they turn around and buy government bonds for a no risk return. That "spending" will revive the economy. :rolleyes: