Bernanke is soooooo full of $hit!

When the credit Ponzi was still in the run up portion of the mania, Bernanke was busily concentrating power into the Federal Reserve and into his moneymen pals.  As a result, its mission and objectives became larger and larger and bankers became systemically important to the economy.  The most recent federal reserve mission statement reads:

• conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
• supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
• maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
• providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system

It's pretty clear that the federal reserve has pretty much failed on every count but the hubris involved with trying to be responsible for the items highlighted in red is out of this world.  Why didn't they also take on "a chicken in every pot, a car in every garage and sex 5 nights a week" while they were at it?  And all of this is coming from an organization that doesn't actually DO anything productive.  All it does is sit on a throne and dictate how others should behave economically.  What an elitist scam!

In any case, the basic tenet behind Keynesian / Federal Reserve policy was/is that the government should be a sort of economic shock absorber.  If people didn't feel like spending, government would do it in their name.  If government didn't have the tax revenue to pay for it, it would just borrow the money to fund it.  Then (supposedly), after the danger is past, the government would tighten up the screws, collect more taxes and use the good times to pay down the debt so that the shock absorber would be ready and waiting to absorb the next shock.

The only problem with this obvious con game is that the shocks are coming faster than the shock absorber can recover from the last one.  Bush's tax cuts were supposed to be temporary cuts designed to boost a flagging economy.  But the economy has never recovered and so Bernanke is now warning that allowing them to expire will cause a recession.  But wait, oh omnipotent Ben, aren't you in charge of  "maximum employment, stable prices, and moderate long-term interest rates"???  Why is it is all of a sudden going to be the fault of Congress when we slip into recession/depression?

At the same time, the article goes on to say, "But the Fed chairman made clear his most urgent concern is what would happen to the economy if Congress can't resolve its budget impasse before the year ends.".  So clearly, Bernanke is trying to set the Congress up for a fall.  Damned if they do, damned if they don't.  If they do the honest thing and raise taxes then it's recession (depression more likely).  But if they don't balance the budget then expect massive inflation which is just as bad if not worse than a depression.  Bernanke, you shameless B@$T@RD!  Nobody can have it both ways and you know it!  You took all the credit when the Ponzi was being pumped but now that it's being dumped you want none of the blame.  You are a criminal!  You need to be put behind bars for high crimes and treason.  You have betrayed the American people and all peoples of the world with your elite con game.  You deserve no less than to share a small jail cell with Greenspan until the life leaves your old, tired body due to natural causes.

I can assure you, the blame game is a clear sign that the end game is playing out.  In fact, there is no avoiding a massive recession and more likely a massive depression.  Bernanke is just a ridiculous con man and I guarantee you his credibility will be $hit within 2 years.  People will spit when they hear his name.  You will know it is going to happen if the federal reserve is ever audited by an independent source which can be trusted by the people.  Many skeletons will be dragged up in the process which would never occur if the economy wasn't collapsing.

To be fair, it really won't matter much if the Bush tax cuts are extended or not.  The debt Ponzi that was architected by "maestro Greenspan" is rolling over and jobs will go with it.  When that happens the spending will collapse and corporations will go into hibernation mode hoping to survive long enough to make it through the hard times so that they can be one of the few left standing on the other side.  In other words, they will do the same thing that the big money has been doing as it ran into US government bonds that carry an effective negative return when inflation is factored in.  If you wonder why people park their money in such investments in times such as this, that is the reason: they want to have cash on the other side of the great crash so that they can buy distressed but valuable assets for pennies on the dollar.  Corporations that manage to survive the depression will be the new leaders.  Many of the current leaders are debt bombs which will not survive.

If Bernanke is allowed to remain in control, expect a deflationary crash.  Why?  Because fed-mandated massive inflation will certainly be blamed on him and on the federal reserve.  So unless there is a compelling reason for Bernanke to allow him and the federal reserve to become public targets, Bernanke will opt for austerity, not more money printing. But he also knows that will get very ugly - no different than Greece, Spain, etc.  There will be unemployment, demonstrations, riots and perhaps even worse.  And so Bernanke tries to slip out the back door with comments from the article such as ""Congress is in charge here, not the Federal Reserve".  All of a sudden, the fed "mandates" are looking a bit more like wishful thinking by a group of pompous elitist asses.

Bernanke is running scared now folks and the markets will sense it as certainly as I write this.  Prepare for rough waters ahead.  It is going to be unprecedented in US history IMVHO.