{"id":46323,"date":"2013-06-29T04:50:37","date_gmt":"2013-06-29T03:50:37","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/breaking-news\/bernanke-goes-rogue\/46323\/"},"modified":"2013-06-29T04:50:37","modified_gmt":"2013-06-29T03:50:37","slug":"bernanke-goes-rogue","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/breaking-news\/bernanke-goes-rogue\/","title":{"rendered":"Bernanke Goes Rogue"},"content":{"rendered":"

by
\n Gary North<\/a>
Tea Party Economist<\/a><\/i><\/b><\/span><\/p>\n

Recently
\n by Gary North: San
\n Francisco Teens Create Rent-a-Car Company. City Sues Them: ‘Unfair
\n Business Practices.’<\/a><\/i><\/span><\/p>\n

\n
\n \"\"<\/a>
\n <\/p>\n

The Federal
\n Reserve is in damage-control mode. Last week\u2019s announcement
\n by Bernanke unilaterally scrapped the official unemployment rate
\n target of the Federal Open Market Committee (FOMC), which sets monetary
\n policy. I reported
\n on this on June 25.<\/a><\/span><\/p>\n

He raised the
\n target from 6.5% to 7%. This indicated that the FOMC has decided
\n that it could stop inflating earlier than previously reported. This
\n is what Bernanke said: QE3 may \u201ctaper off\u201d this year.<\/span><\/p>\n

His announcement
\n sank stock markets around the world. It created a panic-driven crisis
\n based on the idea that the FOMC might stop the printing presses
\n early.<\/span><\/p>\n

Mortgage rates
\n are up
\n by a third from last December<\/a>, when the Federal Reserve adopted
\n QE3. The FOMC said at the time that it did this to keep mortgage
\n rates down. The policy has blown up in the FED\u2019s face.<\/span><\/p>\n

To the rescue
\n comes the #2 Federal Reserve official, William Dudley, the president
\n of the Federal Reserve Bank of New York, which is the most influential
\n of the 12 privately owned regional FED banks. Before he was president,
\n he was the chief economist for Goldman Sachs. In short, he is the
\n #2 person of influence in the Federal Reserve System.<\/span><\/p>\n

The Bloomberg
\n headline said it well: \u201cFederal Reserve officials intensified
\n efforts to curb a growth-threatening rise in long-term interest
\n rates, seeking to clarify comments by Chairman Ben S. Bernanke that
\n triggered turmoil in global financial markets.\u201d<\/span><\/p>\n

Clarify, my
\n foot. They are seeking to rein in Bernanke, who on his own authority
\n changed the targets. Dudley is the Vice Chairman of the FOMC. They
\n are trying to put out the interest rate fire that Bernanke\u2019s
\n comments last week produced in the bond market and mortgage market
\n \u2013 the targets of QE3.<\/span><\/p>\n

Bernanke has
\n gone rogue. Dudley is trying to bring him under control. He is trying
\n to persuade investors that QE3 is here to stay, and that the FED\u2019s
\n monetary inflation will continue to prop up the faltering U.S. economy.<\/span><\/p>\n

Bloomberg reports
\n that he insisted that any reduction of asset purchases would not
\n represent a withdrawal of stimulus.<\/span><\/p>\n

How\u2019s
\n that again? A reduction of money creation to buy government bonds
\n and Fannie Mae\/Freddie Mac mortgage bonds would not be a reduction
\n in the stimulus? I am afraid I do not understand. The FOMC announced
\n the program in December by announcing an increase in purchases.
\n That is how the FOMC creates the supply money: by purchases of assets.
\n If it ceases to purchase assets, it automatically decreases the
\n stimulus.<\/span><\/p>\n

Dudley also
\n insisted that an increase in the Fed\u2019s benchmark interest rate
\n is \u201cvery likely to be a long way off.\u201d He said bond purchases
\n \u2013 this is stimulus \u2013 will continue if economic performance
\n does not meet the FED\u2019s forecasts.<\/span><\/p>\n

But what are
\n these forecasts? He did not say.<\/span><\/p>\n

He was joined
\n by FED governor Jerome Powell and the Atlanta FED president Dennis
\n Lockhart. Bloomberg said they \u201csought to damp expectations
\n that an increase in the benchmark interest rate will come sooner
\n than previously forecasted.\u201d<\/span><\/p>\n

The word \u201cdamp\u201d
\n means \u201cput out fires.\u201d<\/span><\/p>\n

The FED is
\n in damage-control mode. Bloomberg quotes Dudley: \u201cSuch an expectation
\n would be quite out of sync with both FOMC statements and the expectations
\n of most FOMC participants.\u201d This is what I reported on June
\n 25. Bernanke\u2019s announcement was a unilateral scrapping of the
\n FOMC\u2019s official boilerplate statement, which it publishes word
\n for word every
\n six weeks<\/a>.<\/span><\/p>\n

<\/i><\/b>The
\n FED\u2019s regional leaders are dealing with Bernanke, who is clearly
\n preparing for his departure on February 1. Bernanke is asserting
\n his independence. Dudley and others are trying to put out the fires
\n until he departs.<\/span><\/p>\n

Their approach
\n is to say that the markets
\n misunderstood Bernanke<\/a>. The markets in fact heard Bernanke loud
\n and clear. The FED officials are doing their best to pull Bernanke
\n back into the pen. They are trying to make it look as though he
\n has not gone rogue. A rogue Chairman would indicate dissent in high
\n places. That would rattle the markets. So, they pretend that investors
\n misunderstood Bernanke. It papers over what has happened.<\/span><\/p>\n

We will now
\n see who is in charge.<\/span><\/p>\n

Continue
\n Reading on www.bloomberg.com<\/b><\/a><\/span><\/p>\n

June
\n 29, 2013<\/i><\/span><\/p>\n

<\/b>G<\/span><\/i>ary
\n North [send him mail<\/a>]
\n is the author of <\/span><\/i>Mises
\n on Money<\/a><\/span>. Visit http:\/\/www.garynorth.com<\/a>.<\/span><\/i><\/span>
\n He is also the author of a free 31-volume series, <\/i>An
\n Economic Commentary on the Bible<\/a>.<\/i>\n <\/p>\n

Copyright \u00a9
\n 2013 Gary North<\/span>
\n
\n <\/span>\n <\/p>\n

The
\n Best of Gary North<\/a><\/b><\/span><\/p>\n

Republished with permission from:: Lew Rockwell<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

by Gary NorthTea Party Economist Recently by Gary North: San Francisco Teens Create Rent-a-Car Company. City Sues Them: ‘Unfair Business Practices.’ The Federal Reserve is in damage-control mode. Last week\u2019s announcement by Bernanke unilaterally scrapped the official unemployment rate target of the Federal Open Market Committee (FOMC), which sets monetary policy. I reported on this […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[487],"tags":[],"class_list":{"0":"post-46323","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-breaking-news"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/46323","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=46323"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/46323\/revisions"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=46323"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=46323"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=46323"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}