US economy could withstand sharp dlr drop-Bernanke

[UpInArms]

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-03-21T233026Z_01_N21342616_RTRIDST_0_ECONOMY-BERNANKE-UPDATE-1.XML

WASHINGTON, March 21 (Reuters) - The chronic U.S. trade gap need not fuel a "precipitous" decline in the dollar, but the economy could handle it if it did, Federal Reserve Chairman Ben Bernanke said on Tuesday.

"Although U.S. trade deficits cannot continue to widen forever, these deficits need not engender a precipitous decline in the dollar, nor should such a decline, were it to occur, necessarily disrupt financial markets, production or employment," Bernanke said in a letter to Rep. Brad Sherman, a California Democrat.

The letter, which was released by Sherman's office, was in response to question the lawmaker submitted in connection with a Feb. 15 House of Representatives Financial Services Committee hearing on monetary policy.

In the letter, Bernanke also restated the Fed's position that Congress should review an exemption that allows commercial firms to acquire industrials banks, warning that decisions on the issue could have "important ramifications" for the U.S. economy.

...more...

Here's your "shot across the bow" folks - this is Mr. "Printing Press" "Chopper (helicopter money" Ben Bernanke at his "finest".

Remarks by Governor Ben S. Bernanke

What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Think about it. What one commodity does the US import the most of? Oil.

If the dollar is worth less, it will take more dollars to buy it.

Bend over, it's coming.

[pitohui]

1. we've had a soft dollar policy since * took office

snow acknowledged it some years ago

that's why europe is so out of reach now for most formerly middle-class americans, even with airfares at all-time lows

[Onlooker]

2. Tell me about it

I just spent a week with my partner in London. The cheapest Tube fare was $5 each. The high-speed train from Heathrow to London cost almost $30 each. A really, really cheap lunch (share a sandwich and each have a bowl of soup and soft drink in a self-serve type of place) cost $25. That said, the great museums are free and half price theater tickets are only around $40 (which is cheap by New York City standards).

[teryang]

3. Inflation favors debtors

this has been the whole game all along. The biggest borrowers are corporate.

[patcox2]

10. It can also favor the average worker.

John Kenneth Galbraith was big on this idea. Inflation is like a tax on those who live off inherited wealth. Their assets are diminishing in value with inflation, and their real rate of return is smaller.

But the average worker is a net debtor, with a mortgage and a car loan. Assuming even inflation accross the board, inflation reduces the debt.

[pitohui]

12. not if the average worker ever wants to retire

a lifetime of savings is worth nothing

what i saved over a lifetime of work should have been enough to retire on, now it isn't even enough to wipe my butt with, well, only slight exaggeration, but if they keep moving the goalposts, it is stupid to save

only a stupid person saves in an inflationary era because the money you save buys less or nothing the next day

money i've saved over decades could be gone in days if i had cancer or a serious injury

[teryang]

19. Sad isn't it?

I feel the same way.

[Zynx]

21. That's not how it historically works out.

Sure, it causes havoc with financial assets if it gets out of control, but this benefits no one as we need healthy financial markets for our economy to function.

For average workers, salaries increase by smaller amounts the lower you go and thus hyperinflation does serious damage to them. Meanwhile upper income groups raise their own salaries to beat inflation.

[bemildred]

4. Aw, thanks, what a swell idea. nt

[killbotfactory]

5. We could also withstand a nuclear attack

doesn't mean it's a okay.

[converted_democrat]

6. You know he never would've said a word about this unless he knew

something was coming.. Well, I guess we can say we were warned..

[Demeter]

7. I Didn't Think I Could Despise These Bushevicks More

but every day proves I have unplummeted depths of disgust, horror, revulsion and so forth that they have newly uncovered and tapped into. Kind of like drilling for oil, if you get my drift.

[IndianaGreen]

8. and if we needed euros to buy oil, what then?

The Iranian oil bourse rears its menacing head...

[megatherium]

9. Folks here were saying there'd be a war against Iran by March 24

because of the Iranian Bourse trading in Euros. What's the story behind that?

[Javaman]

11. Something is on the horizon and these pigs know it and ain't telling. nt

[Roland99]

13. Discontinuance of M3 - IT'S TOMORROW FOLKS!!

http://www.federalreserve.gov/releases/h6/discm3.htm

[Barrett808]

15. And is the Iranian Oil Bourse opening this week, or what? n/t

[Roland99]

16. I believe that's not yet ready for prime time...perhaps by summer

[Roland99]

17. Check out this statement from Rep. Ron Paul - The End of Dollar Hegemony

http://www.house.gov/paul/congrec/congrec2006/cr021506.htm


Iraq invasion and the rhetoric pointed at Iran have nothing to do with terrorism or 9/11. It's all a front.

[Barrett808]

18. Great link, thanks! n/t

[Roland99]

23. No problem!

[WhiteTara]

30. why isn't this guy a democrat?

How can he be in the party of destruction and try to stop it simultaneously? :shrug:

[TexasLawyer]

14. Jenga, Jenga

The pieces keep getting pulled out of the once-stable economic tower. Who wins the game when it crashes?

[Shakespeare]

20. And that, boys and girls, is what's known as a "trial balloon." n/t

[daleo]

22. Always the question is: why this, why now?

And what does this news presage?

[Moderator]

24. Kick

[UpInArms]

25. Bernanke - Capital flow shift need not spell pain (this guy's a loon!)

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-03-23T232454Z_01_WBT005031_RTRIDST_0_ECONOMY-FED-BERNANKE-DOLLAR.XML

WASHINGTON, March 23 (Reuters) - Federal Reserve Chairman Ben Bernanke said in a letter released on Thursday that the U.S. economy would not necessarily suffer a big hit if global capital flows shifted away from the United States.

"Should such a development occur, it might be associated with a decline in the value of the dollar and a narrowing of the U.S. trade deficit," Bernanke said in a letter to Democratic Rep. Harold Ford of Tennessee.

"Neither of these events would be likely to threaten U.S. growth or boost inflation and interest rates to a worrisome extent," he added.

...a bit more...

Cuckoo!

[Deja Q]

26. Hardly breaking news:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=364&topic_id=720666

[lovuian]

27. He has to keep us from panicking

thats what this is about!!!

[Warpy]

28. He means HIS CLASS won't suffer

because that's all these idiots at the top seem to see, their own class, existing far above the rest of us, isolated on estates with helipads to whisk them to their private airports should they ever feel the need to travel anywhere.

I've met some of these types. They were affable enough but utterly clueless, satisfied if their immediate surroundings were pleasant and completely uncurious about what existed outside them. They have no idea that there are people in the world who live by working and don't have trust funds to tide them over when the paychecks are interrupted for some reason.

"Let them eat cake" assumed the peasants had a choice between bread and starvation. I've never met a wealthy person who didn't assume the choice was there. So when rich idiots like Bernanke say there will be no pain, you have to realize that he really has no clue how we live and sincerely thinks we'll all be just fine if we dip into our reserves or sell some of our stocks.

[WhiteTara]

29. how does the decline of the dollar

equal the narrowing of the trade deficit? We won't have a dime to import anything? You're right, the guy is a loon.