Sunday, June 27, 2010

Ben Bernanke needs fresh monetary blitz as US recovery falters

There will be nothing deflationary about this depression. Deflation would be a welcome turn for the average serf - if you're going to lose your job at least you can look forward to necessities lowering in price. But no, hold on, slave. You won't be so lucky. You will lose your job in the midst of hyper-inflation, and they will kick you while you're down.

Notice the ridiculous story they're pushing here, of how everything is going to be flushed down the drain if Bernanke isn't allowed to print more money. It won't be Ben's fault, you see. He tried to keep papering over the depression.

    London Telegraph -

    Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.

    Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion. But they are certain to face intense scepticism from regional hardliners. The dispute has echoes of the early 1930s when the Chicago Fed stymied rescue efforts.

    "We're heading towards a double-dip recession," said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. "The party is over from fiscal support. These hard-money men are fighting the last war: they don't recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again."

Read it all.