I just read this ridiculous article written by an insane wackadoodle who claims to be a fellow at the "Ludwig Von Mises a Lot" society. (and he missed again).
Here is one of the inanities"
"One factor weighing on the housing market was interest rates. Mortgage rates have started to increase along with bond yields. Presumably, Mr. Bernanke thought QE2 would have reduced mortgage rates, but he recently testified to Congress that the new higher rates are actually a sign of "green shoots" in the economy. Higher rates could be a sign of economic confidence, but other signs indicate lenders are concerned about inflation and are raising rates to account for the falling value of the dollar."
Once a rightarded gold bug, always a rightarded gold bug. Note the "presumably".
Bernanke is absolutely correct. You can't force people to borrow money and buy a home. The interest rates on mortgages are what the market will bear. And right now a possible interpretation is that people are starting to decide that buying a home is no longer a death trap. And the rightarded are playing their same game as always in looking at and commenting on actual levels as opposed to relative levels or "what would it be without the any government action?" But on that same note, the FED is buying 10 year stuff (and sorter) and NOT 30 year stuff. And that changes the yield curves increasing the relative yields on what the FED isn't buying. That will include 15 and 30 year instruments. If the FED wanted to reduce 30 year mortgage rates, then the FED would be buying 30 year T-bonds or even mortgages, themselves. And so much for the "presumably".
Next we have the international inanity:
"Higher food prices set off the revolutions in Tunisia and Egypt and the mass protests in countries like Algeria, Jordan, Yemen, Bahrain, and Iran. People in these countries buy more unprocessed foods and spend a much higher percentage of their income on food, so they have been severely impoverished by Bernanke's QE2."
This is another example of rightarded lying. The rightarded know that people are ignorant of how money actually works and so they are able to concoct crap like this and sell it at will. Most people refuse to actually think about this and so they keep falling for this sort of pig crap. A falling value of the American dollar does NOT increase the price of food for people in sovereignties that do not have dollar based economic systems (where wages are paid in the domestic currency). As a matter of fact, dollar devaluation makes the Egyptian currency more valuable and grain from the US (and everywhere else) easier to buy. This fellow's ridiculous fallacies are the ones into which the gold bugs will always fall. This same crap was thrown at Ed Schultz the other day and he swallowed it hook, line, and sinker. When braced on this obvious lie, the fav of the rightarded is to drag out the "dollar is the world's reserve currency" gambit and ink the water with that. Here again, it is a refusal of the mind to deal with monetary reality that allows the gambit to succeed (money is sacred). Handling this ink in short order: If dollars are cheaper, then the nation seeking wheat can get more dollars in trade for local currency and hence, more wheat. This observation is true for ALL commodities. But it is ever more true in relation to commodities that are exported from the United States. And agricultural goods most certainly fit that description. While the cost of wheat as measured in dollars is rising very slightly more for Americans (due to QE dollar devaluation however slight), prices will be reduced for all others. And the supply demand curves will make more wheat available to the people of Egypt and other nations than would have otherwise been the case. There are limits to quantitative easing because of this MINOR inflation problem localized within the USA.. But grain prices and oil prices are rising because of real world events. The problems in Libya increased oil prices by record amounts for any day since the Arab oil embargo. Ya gotta click that link. It looks like a rocket launch. But you can bet your ass that the rightarded will be blaming it on Bernanke and quantitative easing.
And the next installment from Mr. Misses a lot:
"Bernanke claims that monetary policy cannot change the quantity of wheat by one bushel and that higher food prices are the result of bad weather conditions in Russia and Australia. However, bad weather does not explain why the prices of virtually all food and nonfood commodities have increased substantially in recent recessionary times. This is clearly a case of too much money chasing too few goods."
THE GRAIN SHORTAGE IS A FACT OF CLIMATE CHANGE. But SCIENCE is of little interest to the rightarded.
Consider what this moron has implied with this "too much" pig manure. For him, you see, the people are of little concern and what matters is the stability of prices as measured in his selected "money". His answer to a wheat shortage is to reduce the amount of money to match the reduced amount of wheat -- for him, that solves the problem. What is actually clear is how his respect for money supersedes any respect for real world conditions and plight of the people adversely affected by such realities.
Then comes:
"Of course, it would be incorrect to credit Bernanke for freeing the Egyptian people, because food prices were only the trigger, not the true cause of all this social unrest.
However, it is surely correct to credit Bernanke and his fellow central bankers for worldwide commodity inflation."
JEEEEEEEEEEEEEEEEEEEEEEEBUS!!!!
And so ends another session of rightarded pig crap. Maybe I can stop it from being swallowed by a few of the people.
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Unfortunately, I've see some comments here on Kos that are almost as bad. OTOH, we have a diarist here at Kos that is probably too far along to be grasped by the Kosacs. He posts as Letsgetitdone and he speaks of monetary theory and fiat money. I also try to convey the facts concerning fiat money and to spread the truth concerning the current Kabuki Theater being presented in Washington DC. LetsGetItDone probably goes too far too fast and the normal people throw up the hands and say "whatever". So let us try a different approach:
Most people have seen the videos about how banks create money to lend so as to "promote capital development and commerce" (the purpose in the videos, however, is to claim that this money creating is solely to enrich the bankers because conspiracy theories make for popular videos). That created bank money is then recovered over time such that the money supply does not grow too quickly, causing inflation. This is actually called "endogenous money theory". Yet for some reason, people don't seem to understand that government should (and largely does) work the same way:
Government, at the behest of the people (through their representatives) decides what must be done to "provide for the common defense" and "promote the general welfare". So government creates the money (by borrowing it from the FED if you insist as discussed below) and does what government is designed to do. Just as the banks must be repaid to prevent extreme money growth, then so too does the government need to be repaid. Government created a "loan" to build a battleship. And government will collect the payments from the people that wanted a battleship. This "repayment" is called taxes. But unlike the banks, it is often NOT necessary to collect all the government loaned (spent by government) money. And it is certainly NOT necessary to collect any interest because the government is not a business charged with profit making. It is ONLY necessary to prevent rampant monetary devaluation (inflation).
THEREFORE!!!!!!!!
It is not possible for the government to "run out of money". It is possible for the government to fail to tax in respect of its spending and thus create serious dollar devaluation and hyper inflation. But the notion that government must, in order to spend, borrow money from those who have it is as stupid as the claim that banks loan depositors money. Government (the creator of money) will no more "run out of money" than the oceans will run out of salts. Underlying ALL of this money creation by banks and government is the NEED to increase the amount of money in step with the growing population and growing economy. People who scream for a balanced budget are simply people that believe that all money should be created by banks and that none should be created by government. What is truly amazing is that we have seen over the last 10 years how very wrong these people are. The "free market" and the attendant banking system FAILED and so too did a government that refused to tax appropriately.
I said I would deal with the loans from the FED at the beginning of the battleship construction and so I will.
From wikipedia: ---------------------------------------------------------------------
The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous other private U.S. member banks and various advisory councils.[8][9][10] The FOMC is the committee responsible for setting monetary policy and consists of all seven members of the Board of Governors and the twelve regional bank presidents, though only five bank presidents vote at any given time. The responsibilities of the central bank are divided into several separate and independent parts, some private and some public. The result is a structure that is considered unique among central banks. It is also unusual in that an entity outside of the central bank, namely the United States Department of the Treasury, creates the currency used.[11]
According to the Board of Governors, the Federal Reserve is independent within government in that "its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government." However, its authority is derived from the U.S. Congress and is subject to congressional oversight. Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. Thus the Federal Reserve has both private and public aspects.[12] The U.S. Government receives all of the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. The Federal Reserve transferred $78.4 billion to the U.S. Treasury in 2010.[13]
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The US government, you see, controls the FED. The federal reserve banks that hold the shares of stock have seats on in the Federal Open Market Committee. However, the Federal reserve board gets six votes (counting the chairman) to five votes permitted for the member banks within the FOMC. THE IMPORTANT POINT to remember about monetary policy is that the congress has created laws that demand that the treasury issue T-Bills and T-bonds to the public as a means to retire the short term loans from the FED (the initial money not drawn from taxes that is used to initiate any government action such as the battleship building or roads or bridges).
It is a fact of fiat money that government cannot tax or borrow money out of the real economy until the money is spent into the economy. If spending did not work this way then the money stock would shrink as the government PRE-borrowed the money in anticipation of the battleship expense. In the real world this spending and borrowing happens somewhat concurrently. But the spending will always precede the borrowing or taxing and it is done with short term loans from the Fed that create the money on demand just like any other bank. As the battleship is built, money is spent and public borrowing and taxation occur during the entire process of the battleship construction. In the current system, the Treasury auctions are automatic because of prevailing law. But what is NOT automatic is the activities of the Federal Reserve concerning its open market operations. As the treasury sells treasury notes to the public, the FED can buy the notes from the public. That is what QE2 is doing and it is the correct thing to do. Such activity WILL increase the amount of money in the system and cause some amount of dollar devaluation and inflation. But this is why the FED exists.
During the good years of the 90's the average inflation rate was 2.5% and interest rates on 10 year treasures were 6.5%. The FED targets prior to the recession were at or above 2% inflation. What is needed now is inflation on the order of 5% for a couple of years. That means MORE quantitative easing. This is especially true in that the Republicans will not allow any fiscal address to the recessionary problems. The FED is doing all it can do. And YES!!!! The Fed is buying down the national debt as I write this essay. So why the Kabuki theater in Washington over the debt limit????