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is the title of this column posted today for tomorrowy's New York Times

Those who are hating are the Republicans, including Mitt Romney, who apparently did not like the changed policy of the Fed as announced by Bernanke this past week.  Or as Krugman puts in his second paragraph:

Now, many people on the right have long been obsessed with the notion that we’ll be facing runaway inflation any day now. The surprise was how readily Mitt Romney joined in the craziness.
the craziness  - interesting phrasing, eh?

The column provides a clear, plain language explanation of what the Fed is doing and why:  

In plain English, the Fed is more or less promising that it won’t start raising interest rates as soon as the economy looks better, that it will hold off until the economy is actually booming and (perhaps) until inflation has gone significantly higher.

The idea here is that by indicating its willingness to let the economy rip for a while, the Fed can encourage more private-sector spending right away. Potential home buyers will be encouraged by the prospect of moderately higher inflation that will make their debt easier to repay; corporations will be encouraged by the prospect of higher future sales; stocks will rise, increasing wealth, and the dollar will fall, making U.S. exports more competitive.

There is more -  although you might do well to simply read - and of course pass on - the Krugman piece now that it is available online.

Krugman is blunt, noting that Romney's criticism of the Fed move echoes the language of

the “liquidationists” of the 1930s, who argued against doing anything to mitigate the Great Depression.
He accuses Romney of having no real plan to create wealth, since his ideas seem to consist only of having less environmental protection and lower taxes on the wealthy.

Moreover, he points out that we have heard this before - from McCain in 2008 and Bush in 2004, which given some of those advising Romney should not surprise us.

Remember that a majority of Americans still blame Bush for the current economic problems of the nation, which is why Romney's attempts to defeat Obama solely by focusing on the economy have failed miserably, as was seen by the President suffering no ill effects in his polling numbers as a result of the weak job numbers released 9 days ago.

So let me push fair use just a bit if I may, because Krugman's final paragraph really twists the stiletto he has already inserted between Romney's ribs:  

So last week we learned that Ben Bernanke is willing to listen to sensible critics and change course. But we also learned that on economic policy, as on foreign policy, Mitt Romney has abandoned any pose of moderation and taken up residence in the right’s intellectual fever swamps.
Remember, Romney has promised to get rid of Bernanke.  But Bernanke's policy was opposed by only 1 member of the Fed Board voting on the proposals.  And the markets did not tank because there was a commitment to stick to the policy until the economy recovers.

And Krugman is absolute right on Romney's policy directions

- we saw Paul Ryan somewhat released
- a variety of outlets are saying the campaign is going to move more in that direction
- the campaign is responding to the shots fired at them at the Values Voters Summit, like the words of Brian Fisher of the American Family Association

There is no doubt that Mitt Romney has b>abandoned any pose of moderation - remember that in the primaries he described himself as "a severely conservative" governor (hah) and every time he says anything even hinting of moderation his campaign walks it back within hours

But it is the end of the final sentence that really grabs me, that Romney has taken up residence in the right’s intellectual fever swamps.

Polls make it clear that most of the policies of that intellectual swamp are rejected by the American people.  All day I have been noting in tweets and in comments here that I really hope that the Romney campaign moves further to the right, because it will alienate independents (and who knows, maybe even what few sensible Republicans are left).  

But I was thinking of social policies.

Krugman points out how much Romney is turning back to failed economic policies of the past.  The Obama campaign must be liking this very much.

That the other side is "Hating on Ben Bernanke" should not surprise us, because so much of the right only knows how to operate from hate.  And Praise the Lord (and pass the ammunition) that is not what the American public wants to hear.

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  •  Tip Jar (150+ / 0-)
    Recommended by:
    Renee, HappyinNM, annan, palantir, SueM1121, Positronicus, GAS, pioneer111, deep, psnyder, miracle11, TomP, Bob Love, tofumagoo, Sassy, kerflooey, rmonroe, sparkysgal, teresab, bythesea, Shockwave, howd, Gooserock, 3goldens, jdmorg, puakev, hungrycoyote, NearlyNormal, JML9999, xaxnar, belinda ridgewood, latts, sunbro, beka, Clytemnestra, eyesoars, daveygodigaditch, exiledfromTN, Williston Barrett, Flint, fixxit, ItsSimpleSimon, One bite at a time, TracieLynn, Mary Mike, koosah, revsue, murrayewv, SaintC, tgypsy, Nulwee, eru, basquebob, VTCC73, mskitty, Sapere aude, subtropolis, rogerdaddy, Youffraita, susakinovember, Dr Squid, sfbob, sailmaker, Michael Chadwick, oldliberal, sabo33, uciguy30, Mathazar, petulans, ColoTim, happymisanthropy, fhcec, PrahaPartizan, AaronInSanDiego, Loose Fur, riverlover, Pam from Calif, rexxnyc, kaliope, vahana, brentbent, stevenaxelrod, MadRuth, mujr, Jim R, Yamara, PurpleThistles, haremoor, scarvegas, salmo, gulfgal98, Emerson, Thursday Next, PeterHug, RLF, bronte17, gramofsam1, Loudoun County Dem, divineorder, elginblt, merrily1000, OleHippieChick, coppercelt, hopeful, MizKit, Andrew F Cockburn, Eric Twocents, Sanuk, Habitat Vic, No one gets out alive, Words In Action, Chi, astral66, Aquarius40, Alumbrados, jfromga, Cinnamon, Pescadero Bill, newpioneer, Marjmar, Shadowmage36, TexDem, pixxer, shortgirl, LookingUp, Nag, arizonablue, IndieGuy, Rosaura, Nebraskablue, Nica24, Ohkwai, blue aardvark, DRo, Marihilda, tidalwave1, pamelabrown, Pilotshark, clarknyc, science nerd, TX Unmuzzled, qofdisks, trumpeter, cpresley, redlum jak, doingbusinessas, Mistral Wind, Larsstephens, buckstop, opinionated

    "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

    by teacherken on Sun Sep 16, 2012 at 07:52:54 PM PDT

  •  I know you do lots of diaries, and probably don't (9+ / 0-)

    need my help, but it would be easier to follow if you had just put Krugman's statements in blockquotes. I'll go read the article. Then I'll know.

    Your left is my right---Mort Sahl

    by HappyinNM on Sun Sep 16, 2012 at 08:02:03 PM PDT

  •  excellent. glad you brought this here. (14+ / 0-)

    I'm glad Barack Obama is our President.

    by TomP on Sun Sep 16, 2012 at 08:13:24 PM PDT

  •  Will someone please explain the following (3+ / 0-)
    Recommended by:
    Nailbanger, Malachite, Mambo

    sentence to me:

    Potential home buyers will be encouraged by the prospect of moderately higher inflation that will make their debt easier to repay
    Why does moderately higher inflation make debt easier to pay?

    Thank you.

    Your left is my right---Mort Sahl

    by HappyinNM on Sun Sep 16, 2012 at 08:16:28 PM PDT

  •  First time in over 6 yrs of blogging... (26+ / 0-)

    ...I've ever significantly disagreed with one of your posts, Ken, which is really more of a disagreement I have with Krugman's support of Bernanke, in general (although that has not always been the case, either; at least over the past 3-4 years, there have been many instances where Krugman has nailed Bernanke quite hard on issues).

    Bernanke is a registered Republican. His job is to manage the Fed, arguably, making him Wall Street's chief minion in D.C.

    All one has to do is take a quick look over at Zuccotti Park tonight to see what effect his leadership of the Fed has had on government policy to date.

    It is a good thing, however (at least compared to the way the Fed's been run over the last 30+ years), that the bulk of the Board is now comprised of Obama appointees. And, please note, I'm merely saying it's good in comparison to the way it was (for the past 12 years, up until now). This is, very much,  a RELATIVE comment.

    However, to think that Fed policy with regard to QE3 is anything other than--primarily--more veiled support and ongoing bailouts for the TBTF banks, is little more than wishful thinking.  The fact that it (QE3) might provide some (nominal) help to mortgageholders and as far as the jobs picture is concerned (strictly at the fringes), is a secondary or tertiary side benefit, IMHO.

    The primary purpose of QE3 is to buy up the GSE's MBS; and, that's basically an effort to insure that it is the taxpayers that get saddled with Freddie's and Fannie's crap, as opposed to our government supporting: a.) more substantial/direct compensation to homeowners (above and beyond a few billion dollars provided in the recent Attorneys General mortgage settlement); and, b.) taking the burden off the TBTF's when it comes to the GSE's "push-back"  program (wherein banks were told to eat paper they had bogusly underwritten to the GSE's in the first place).

    In short: unless and until they perfect brain transplant surgery, we all need to be reminded that Ben Bernanke is NOT Main Street's friend. He may be quite friendly with some in our Party these days; but, all one has to do is take a stroll in lower Manhattan tonight to be reminded how we got where we are today.

    All in all, weak sauce, all around...meant for those devoid of any sense of recent and not-so-recent economic history in this country, across-the-board.

     

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Sun Sep 16, 2012 at 08:19:58 PM PDT

    •  As an overseas retiree, I also disagree. (5+ / 0-)
      Recommended by:
      ozsea1, Duckmg, antirove, divineorder, qofdisks

      On our webiste for USA ex-pats, one of the fellows was writing about waking up from nightmares as he has to watch his SS payments buy less and less out here. This is a real problem and we will soon have a whole bunch of improvished American Senior Citizens if the USA does not reconsider letting the value of the US$ continue to slide. And remember, this is a double hit for those who were depending on their US$ savings, as the US$ continues tanking.

      I voted with my feet. Good Bye and Good Luck America!!

      by shann on Sun Sep 16, 2012 at 09:39:11 PM PDT

      [ Parent ]

      •  With all apologies, (1+ / 0-)
        Recommended by:
        PrahaPartizan

        I think there's a lot more people who need to rely on the US being able to be in the export business and help reinvigorate the manufacturing sectors.  It sucks but a choice has to be made and making the USD weak overseas may benefit the most people.  But you're right - some people may take a bath on that.

        "The first drawback of anger is that it destroys your inner peace; the second is that it distorts your view of reality. If you come to understand that anger is really unhelpful, you can begin to distance yourself from anger." - The Dalai Lama

        by auron renouille on Sun Sep 16, 2012 at 11:48:51 PM PDT

        [ Parent ]

        •  Wrong (1+ / 0-)
          Recommended by:
          qofdisks

          The export economy is far smaller than the US' domestic economy. But the 1% depend on the US export economy. Though not as much as they depend on the US import economy.

          "When the going gets weird, the weird turn pro." - HST

          by DocGonzo on Mon Sep 17, 2012 at 05:03:21 AM PDT

          [ Parent ]

        •  There are other ways to support an export program (3+ / 0-)
          Recommended by:
          Pescadero Bill, qofdisks, Duckmg

          than a race to the bottom for most devalued currency. Think about it. Why do 3rd world countries, like where I have  been retired to for 7 years, export mostly very low margin commodities? Is this what the USA wants to do? Japan is a powerhouse exporter and the yen is the highest relative to all currencies I have seen it since I first visited Tokyo in 1988.

          Rather than steal my savings and SS, why not manufacture higher margin (higher technology with higher salaries) goods?

          I voted with my feet. Good Bye and Good Luck America!!

          by shann on Mon Sep 17, 2012 at 07:10:17 AM PDT

          [ Parent ]

    •  More Disagreers Agreeing (6+ / 0-)

      I often disagree with your gloomy diaries about the banksters (at least in degree and imminence of public collapse). But I agree with you 100% here.

      Presidents and their parties use the Fed's debt machine to fake prosperity as they steal it for their rich sponsors. The price eventually is paid by the 99%. Bernanke has managed to keep the cost right at the edge of tolerable to the 99%, while completing the getaway - and setting up yet another round of theft.

      Bernanke is the fiscal equivalent of the psychiatrists who kept our torture victims talking while torturing them to the very edge of sanity. After we've all been milked for what the 1% require, we're dropped to collapse, drained of anything worth having. His previous career as top expert in the Great Depression was his training to perform "perfect brain surgery" - on us.

      "When the going gets weird, the weird turn pro." - HST

      by DocGonzo on Mon Sep 17, 2012 at 05:01:39 AM PDT

      [ Parent ]

  •  But... but... gold standard! (8+ / 0-)

    My Ron Paul friends keep saying all will be well if we just eliminate the Fed completely and go back to the gold standard, and they're trying to buy up gold and silver right now.

    I told them about the Panic of 1832, but they seemed to just ignore it.  Not even dismiss it as not being able to happen in the modern economy or something, but to pretend as if I had never even mentioned it.

    •  Milton Friedman got his Nobel Prize (13+ / 0-)

      in Economics refuting that nonsense.

      Anybody who reads A Monetary History of the United States: 1867-1960  and understood it will know what a disaster the gold standard was post Civil War:  it massively redistributed wealth from millions of farmers in the Mid West to the Eastern banks that owned their debt.  The limited supply of gold caused decades of deflation, making every payment of that debt more expensive in real value than the rest.

      Tying your money supply to a commodity may make sense to "anyone with half a brain", but if you have a whole brain, you'll know better.

      Mitt Romney is a T-1000 sent back from the Future as a harbinger of the upcoming Robot Apocolypse.

      by mbayrob on Sun Sep 16, 2012 at 09:32:39 PM PDT

      [ Parent ]

  •  You know what would be a sign of inflation? (9+ / 0-)

    Wages starting to rise again. AKA putting more money in the hands of people instead of banks, Wall Street, and corporations.

    The "Ownership Society" is the code phrase for turning America into a country where the economy rewards people who own things - like property, bonds, etc. - instead of people who make a living by working. And those owners HATE inflation - because it makes the stuff they own worth less. That's why we've had 30+ years of war on working people - and a huge transfer of wealth.

    It's no wonder Republicans are going ape shit over this.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Sun Sep 16, 2012 at 08:53:19 PM PDT

  •  When the Republicans have done everything possible (11+ / 0-)

    to sabotage the economy, monetary policy is all we have left to try to give the economy a kick-start.  As Mitt offers no effective solutions to reigniting the economic engine, Bernanke has made the correct move given the circumstances.  I agree with Paul Krugman and Robert Reich on this point.

    -4.75, -5.33 Cheney 10/05/04: "I have not suggested there is a connection between Iraq and 9/11."

    by sunbro on Sun Sep 16, 2012 at 09:01:55 PM PDT

  •  Mitt is excellent at this game (2+ / 0-)

    He knows this is a long term good thing that will take a few months to implement fully, so if he were to take office, the economic improvement that would occur would instantly benefit him. It's called a long con, the Bain business model. He could then get rid of Bernake as things stayed good for a few years due to this action, and then claim credit for his decision to end the program leading to the turnaround. Because a lot of his base are to stupid to know how macro economic work and how long it takes for any action to actually affect the economy.

  •  I still don't get how QE (7+ / 0-)

    is anything other than trickle down economics basically.

    It might be great for people who have homes, investments, etc, but how does it help the vast majority of people suffering in this economy who have debt, and under/unemployment, and/or stagnant/functionally decreasing wages.

    There are moments when the body is as numinous as words, days that are the good flesh continuing. -- Robert Hass

    by srkp23 on Sun Sep 16, 2012 at 09:19:26 PM PDT

  •  Romney is trying to win the Paulbots (3+ / 0-)
    Recommended by:
    Loose Fur, gramofsam1, Aquarius40

    They despise Bernanke and the Fed in general with every fiber of their being. They are absolutely convinced that we are going to be Zimbabwe any minute now.

  •  Expansionary Fiscal & Monetary Policy - IOKIYAR (3+ / 0-)

    So we have noticed that the GOP somehow was not concerned about the deficits generated by tax cuts during the Dubya and Reagan years.  Somehow deficits under Obama are of great concern. GOP did not mind Greenspan shooting interest rates to historic lows post 9-11. Somehow expansionary monetary policy like Bernanke is practicing now is a huge problem/

  •  When I go to buy groceries, (3+ / 0-)
    Recommended by:
    PrahaPartizan, Mambo, qofdisks

    Lately i often drop a Benjamin

    This used to be rare.  We are having some inflation.

    And raising the price of housing does not help homebuyers.

  •  Romney is against Bernanke's move (4+ / 0-)

    because it's going to help the economy, whereas the GOP strategy is to sabotage the economy and put the blame on Obama. They can block congress, but they can't block the fed. As a result they're upset.

    Romney is tied. Obama is free.

    by French Imp on Mon Sep 17, 2012 at 12:10:09 AM PDT

    •  You are describing instant reactions - (0+ / 0-)

      the effect of one a few weeks.  In that regard, Obama certainly welcomes the fact that this takes the possibility of a major stock market turn and a change in the housing markets off the table.  Romney's reaction is obviously opposite.  Longer term though . . . who cares what Romney thinks (the populist side of the R base is probably truly against this) and hopefully we'll get to see whether Obama has the conviction and the spine to stand up to the street.

  •  Thanks for posting the key points (0+ / 0-)

    We non-subscribers to the NY Times are limited to only 10 articles a month, so I generally prioritize Nate Silver's screeds first.

    If the Times didn't employ so many partisan hacks, I might consider signing up. But...

    "Alcohol enables Congress to do things at eleven at night that no sane person would do at eleven in the morning." - George Bernard Shaw

    by Loose Fur on Mon Sep 17, 2012 at 12:20:50 AM PDT

    •  sign up for the daily email for the NY Times (2+ / 0-)
      Recommended by:
      divineorder, qofdisks

      anything you read through the links they provide you does not qualify for your quota.  

      Also, if you google the title of the piece and get a link and follow it, at least so far it does not count against your quota.

      "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

      by teacherken on Mon Sep 17, 2012 at 04:42:38 AM PDT

      [ Parent ]

  •  Once again, Krugman has been far in front (1+ / 0-)
    Recommended by:
    gramofsam1

    He's been calling for this sort of thing for a few years now...slowly, the Fed shambles along...

  •  Inflation for the Rest of Us (5+ / 0-)

    You know how prices are going up, including necessities like energy that drive up other prices? That's inflation. Inflation is when the quantity of money increases while the value of what it buys doesn't increase as much (or stays the same, or drops). "Quantitative Easing (3)" is when the Fed increases the quantity of money into circulation. Inflation.

    Because decades of credit have dragged money from the future into the present. Which vastly inflated home prices. While the housing bubble was intact, that inflation was largely partitioned in the housing products, which circulated the new money among homesellers (and banks, which at anything over 5.3% pays them as much interest as the homeseller received). It also pumped money into the rest of the economy, starting with homebuilders, agents, closing lawyers and "flip it" TV shows. But when those businesses suddenly collapse with the bubble, all that money doesn't have anywhere to go, except to inflate other prices it now can be spent on, just as it once inflated home prices. Meanwhile the many people who lost their incomes no longer swell the markets for these other goods, so the sellers have to raise their prices on the remaining buyers to keep incomes up.

    To keep this perpetual motion machine going, though it's run off its rails, the Fed puts ever more money into circulation. Again its from selling debt, pulling more money from the future, buying US Treasury debt (bonds).

    All of this is inflation. The Fed is responsible for keeping inflation down, which it does by defining inflation to exclude whatever's inflating (gas prices, houses, whatever's most sensitive). But banks aren't affected, because programmes like Quantative Easing inflate their income along with price inflation.

    Just because you're paranoid doesn't mean people aren't after you. Just because it's Republicans who hate the Fed doesn't mean the Fed isn't screwing all of us. Bernanke was sold to the Congress and to the public during the bubble as an expert in the 1930s Great Depression, and has presided over its modern repeat. Of course it's worked out perfectly for the banks he represents, and the (.00)1% who own them.

    For the rest of us, it's just inflation. With an orwellian name.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Mon Sep 17, 2012 at 04:44:25 AM PDT

  •  The problem I have with Bernanke's position... (4+ / 0-)
    Recommended by:
    Aquarius40, TJ, qofdisks, fuzzyguy
    Potential home buyers will be encouraged by the prospect of moderately higher inflation that will make their debt easier to repay;
    There is a giant assumption built in here.  A) that those potential home buyers have and will keep their jobs, and B) that those jobs will come with raises to match inflation, giving those potential home buyers more money to offset that moderately high inflation.

    The problem is that wages are, if anything, decreasing, such that moderately high inflation does not make debt 'easier' to pay down.

    As with every part of America's problem, the 'finance elite' are fixated on the supply side to the exclusion of the demand side.  It doesn't matter how attractive a deal any major purchase is if you simply can't afford it because you don't have enough income, and with higher inflation, the reality is that Americans will simply buy less, and even more Americans will be pushed into poverty and hunger.

    Without fixing the problem of high unemployment and stagnant wages it's merely another path to austerity.

    •  Yep, I agree. The issue here is really (1+ / 0-)
      Recommended by:
      qofdisks

      that of jobs and any sort of security on those jobs.

      As I've been saying, offering a really low 30 yr. fixed mortgage rate or a really low refi rate is great - PROVIDED you can qualify for it.   If you don't own a home, your credit is shot and/or you're upside down on your mortgage, the needle hasn't really moved for you.

      Bernanke has done what he can.  This is on Congress.

    •  I was just abot to comment on this too (0+ / 0-)

      but the problem is simpler...what home buyer actually understands the role of inflation in the economy other than that it makes groceries more expensive?

      What home buyer considers inflation when deciding to buy a home?

      Most home buyers today don't even remember inflation much less link it to the ability to pay for a home.

  •  about inflation (4+ / 0-)

    It is a little scary to hear about MORE inflation.   Eggs are nearly two dollars a dozen.  The price of cheese will give you a heart attack, and it costs $70 to fill up my gas tank.

    Whenever they release the numbers, they say "excluding volatiles", meaning, they ignore everything that ordinary people buy to survive.   I guess, because the price of apple ipads is remaining fairly stable, we are considered to have "low levels of inflation".

    However, my company is laying off.  My husband's company is in bankruptcy.  He hasn't had a raise in several years, and mine are barely "cost of living" raises, which don't keep up.

    I have the feeling that whoever they are talking about, they aren't talking about us when they talk about inflation, because at our household, we're seeing some serious inflation.

    •  Probably a Micro Macro Economist thing (0+ / 0-)

      ?

      I started to like Economics. Then realized its job prospects were as good as Poly Sci, which was a lot easier.

      So I took some Econ classes.

      The price of Gas- that's probably not a good inflation indicator. As it swings violently based on well shady stuff we know and probably shadier stuff we do not.

      Consumer goods may be, but may be specific.

      I suppose you are a counter example (I by no means understand all of this)

      That is, at your job you only get "cost of living" raises. Not an annual review and 3%-up, so that probably doesn't keep up with many jobs.

      If your Husband's company is in Ch 11, I could see why he hadn't got a raise. But IF they make it out, which if he still works there is probably a decent sign (as so many do not, GM, etc were really not Ch 11's the gov't bent the rules rediculously) I guess you'd see.

      That is your husband's co would ostensibly shed it's worse debts at a reasonable rate. Some creditors in a CH 11 reorg, you just have to have a plan to pay off based on NPV. So theoretically say they owe one creditor 10 million at LIBOR + 2%.

      I believe (depending on TYPE of creditor) maybe they make a play to pay 1.1 (say) over 10 years. Year 1 that is a true 1.1. Year 10 if there is higher inflation that is fixed. So that 1.1 could have a NPV of .7 million. So they are making out alright. Same as new loans. Etc. The cost of their sales should rise with inflation, and their debt is worth less, which I'd think in theory would help them get out?

      I realize yous was a more generalized comment but having had to learn Ch 11 recently it got me thinking (they make me learn a lot of specialties in weeks, not always my favorite thing to do).

      I guess another example is. In theory if your raises were beating inflation. Say your Eggs are 5 dollars. Inflation makes them 7. But you got a 3 dollar raise. You are buying the eggs for cheaper.

      So yes I believe it pulls the rug out, when wages are stagnant as inflation just buries your debt less.

      But good luck to you and your husband. I suppose the best thing is (like I am trying) to understand so I can be vocal. . . why I tried to reply as I thought it helped me better understand.

      •  Inflation (3+ / 0-)
        Recommended by:
        ClevelandAttorney, fuzzyguy, Duckmg

        Maybe an economist feels less in debt when there's some inflation, but your typical person on a fixed mortgage has to write the same number on the check every month, and sees the same number on his check coming from the employer.  The only thing that is fluctuating is what we're buying, and inflation means THAT is more expensive.  

        Same paycheck, same fixed costs, and more money out the door on variable costs.

        Inflation is only not so noticeable if the paychecks rise too, and from the street-level view, that doesn't seem to be happening.  The folks who got laid off from here seems to be being offered less than what they were making here.  

        Salaries are going down.   Prices are going up.

        Now, THAT'S some painful inflation.

        •  As I said (0+ / 0-)
          So yes I believe it pulls the rug out, when wages are stagnant as inflation just buries your debt less.
          So I agree yours is not the situation they contemplate. And your average person doesn't much care (nor do I much) about pontificating about inflation and its affects on Capital Expansion, they care about their own lives- which they probably should as a usually good indicator.
  •  huh? (2+ / 0-)
    Recommended by:
    qofdisks, Duckmg

    not everything is right/left , dem/rep.

    The FED has just show us how bad things are with their latest desperate attempt.

    Ask yourself this, By next year the FED may well hold 4 TRILLION on its books, thats over 25% of the US GDP.  How do you unwind that?  You cant without putting us right into another recession.  So we now slowly fall into a world recession, and now the FED has made sure if and when that recession ends, and we unwind the FED debt, the US goes right back into another one.

    We are screwed.  That is what the FED just admitted with its latest hail mary pass attempt.

    Its amazing how many people simply dont understand this.

    Bad is never good until worse happens

    by dark daze on Mon Sep 17, 2012 at 06:40:35 AM PDT

    •  Why should the FED have to 'unwind' anything? (1+ / 0-)
      Recommended by:
      ClevelandAttorney

      The US pays $200 billion in interest payments on $16 trillion dollar national debt. The US will never have to pay off the national debt because we don't have to.
      The only way to pretend to cure the budget deficit is to raise revenues with huge job growth.  Nobody serious thinks that we can balance it off thru austerity. All models of recovery are based on job growth.

      The people who really hate Bernanke are lazy soreheads
      who are mad that they can't leave the money in government insured secure instruments accummulating reasonable rates of interest.
      The whole Friedmanite M2 inflation bogieman has no relevance to current conditions.

      •  you dont understand what Im talking about (1+ / 0-)
        Recommended by:
        Kickemout

        First off your idea that we have to pay off our debt is not the question, we do have to SERVICE our debt.  And like our european brothers it will become impossible at what was once NORMAL levels.  Europe is imploding because many countries cant possibly service their debt at freakin 7%.  Point is NEITHER could we.  Thats the problem.  7% is within historic norms, now its doomsday.

        And again, you dont understand what unwind means.  If be next year the FED had 4 Trillion on its books, it HAS to start selling at some point.  That creates market pressures Im not sure our economy can handle.  4 trillion is simply too much.

        Bernanke and he gang will go down as among those that leads this world to the great unwind depression and likely ww3.

        Bad is never good until worse happens

        by dark daze on Mon Sep 17, 2012 at 08:13:58 AM PDT

        [ Parent ]

    •  I honestly don't understand what you mean (0+ / 0-)

      Or if the below answers it?

  •  Disagree. Just another bank bailout. (1+ / 0-)
    Recommended by:
    qofdisks

    Not going to affect the mortgage market much, since that money is going to go to the TBTFs for their toxic crap.  The top 20% will  benefit, it'll probably hurt the rest.

  •  I do not get the shape of the argument (0+ / 0-)

    From the detractors in this diary? As Krugman says

    "Conventional Monetary Policy has reached its limits"

    I am not being merely rhetorical, but I'd be interested to see a comparable situation that came to the result most would like to see (ie I think most would say a more active borrower/lender (regulated), etc, aimed at middle class, but at the end of the day when you give money that people pay back that still (absent huge inflation) is going to benefit wall street and the banks?)

    I guess I do not see a perfect fix, and see Bernanke like so many R's before. Who well, their party moved away. He's R in name only so we can tell people "look Obama kept him he's an R". . .

    In my experience even with 1%'ers who I work for as in house Counsel- they have had it up to here with the banks. And yes there's some trickle down as my Boss cares, and has had to let people go because they hold all the cards.  I don't exactly know what Bernanke can do to make them lend. For example my boss had a troubled bank (we didn't know) suddenly call in a bunch of loans as a universal default. He was current on every single one. Probably 15 million dollars for 5 notes. Bank took control of rents, squeezed us (and are), and he has a lot less to grow other things- because of  . . . a tax delinquency on one property.

    That's when I saw It's not even the 1%'ers it's the banks, and a lot of the 1%ers hate the banks. My boss wants me to sue every single one I can (I am up to 3).

    But back to the point, if he can't work out a tax default, and they'd rather foreclose after 10 yrs of current payments, I don't know if that is Commercial Real Estate Shoe Dropping, or just a bad sign in general. I suppose I'd rather do anything I can to say look at the wealth I "created" by taking this "risk" and turning it into 16 million in assets (the properties, who have good anchor tenants). All while having plenty of money to lend, to nobody, because why would you.

    I guess Part of my point is banks have done nothing to show me that conventional wisdom would indicate that they'd help out wall-street let alone them-selves.

    I am interested in the circles of un-conventional wisdom as I don't have a problem with this, but I don't think a fix.

    For example look at the Chi teachers' strike. People saying "raises aren't keeping up with inflation" I disagree. I know of no companies or friends who don't have an annual review. And if you look at what the teachers' realities are (for ex: the Principals are firing the GOOD teachers because they've been there too long, so make too much and the Union is taking an issue with that, they show how everyone is trying to surpress that new "conventional wisdom" but it's being fought- and I just don't see).

    If I have not made any sense until now, if Romney doesn't like then I do. He is completely premises on certainty as he doesn't make or do anything (Private Equity). If they invest 300 million the economy booms the 500 million they made might be at risk of inflation to be worth 299. Bad for them.  . . Good for well your car loan, (depending) your student loan, mortgages etc.

    I guess the problem is that is step B. Step A is the banks have to be willing to lend, and what incentive do they have when they have every incentive to bulk up reserves?

    I guess that had more questions, but I hope made sense.

    I also do find interesting Mankiw is Romney's advisor, but another indication, as the diarist says Krugman is right about the far right.

    I see this as much ado about nothing until banks lend, then we can argue. Which I do not foresee (more likely Chinese banks come in and bail out main street)

    •  Bernanke thinks the problem is a Capital Strike (1+ / 0-)
      Recommended by:
      ClevelandAttorney

      aka business, rich have gone Galt are not investing in the economy as they rationally should given super low interest rates. The Business Excuse is uncertainty, well Uncle Ben just fixed super low rates thru 2015--there's your certainty.
      The villains are 1.)Low income tax rates have provided a disincentive to investments in jobs and a Congress that refuses any normal Keynesian fiscal stimulus/job bills.

      •  Yes I didn't know if off-topic (0+ / 0-)

        but I see the biggest as the Congressional, lack of stimulus.

        I mean since the bank bail-out, I wondered, what if we forgave all the student loans.

        Sure I'd be pissed cuz I re-paid, but I'd assume I'd be a lot happier with stability.

        I have to think it'd be less than 7 trillion. Then you don't have 20 year olds locked into $50,000/yr jobs they think are "good money" just to make payments on 200k.

        They have options and probably start buying whatever cars detroit may finally be making that run past 100k miles, houses etc.

      •  In reading more completely agree re Capital Strike (0+ / 0-)

        I read some book portions to better understand the more generalized theories, building on Keynes.

        And it seems "universal" that after the banks have recovered their natural path is credit expansion? Esp as interest rates are. And regardless "business" should be fore-ward looking and suceeding

        A little disturbing that the last theory building off Ricardo, etc I was reading about, Mises', is what seemingly Romney thinks. Not too far from Marx. May we now call him a communist (Mises-  govt do nothing, it'll work out, Marx- govt do nothing- people will work out).

        •  Im not educated in economics but tax cuts for rich (0+ / 0-)

          guys is a pretty good excuse for them not to risk their money by investing it in creating jobs(not easy, long term responsibility).
          I really don't agree with the assumptions of economists.
          I like FDR's approach. People need jobs, people need help dealing with banks, insurers, medical system. Let's address the many real problem.
          In the long run we're all dead.

  •  Reinflating assets while wages are (1+ / 0-)
    Recommended by:
    qofdisks

    deflating is brain dead policy and reveals how little Washington really cares about the 99%.

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