Bernanke Admits He’s Clueless

“Brutally honest, Bernanke admitted that he had no clue what was actually causing the current fragility in the U.S. economic recovery. While the FOMC statement assigned blame outside of the U.S., pointing at Japan along with rising food and oil prices, Bernanke was put on the spot by a reporter who noted the inconsistency behind that explanation and a lowering of long term forecasts. Bernanke took the hit, admitting only some of the factors were temporary and that he didn’t know exactly what was causing the slowdown, but that it would persist. “Growth,” said Bernanke, “will return into 2012.””

Ben Bernanke "clueless" about economy

Is this quote for real? With a hard debt of 70% of the GDP and a soft debt of 95% of the GDP, personal debt of 109% of GDP, Social Security obligations of 102% of GDP, prescription drug liabilities of 135% of GDP, Medicare liabilities of 539% of GDP, and a debt of $129,000 per taxpayer and the worlds smartest banker is “clueless?” Fricking unreal.

Please let me explain. The GDP formula, Y = C + I + G + NX is a fairy tale.

The formula should read Y = C + (1.05) I + (-) G + NX.

In the past five years the Federal Reserve and the federal government have been pumping billions of dollars into the rat hole. We have spent our treasure to keep zombie banks alive, employ bureaucrats, save teachers, cops, and other government workers jobs for a couple of years. We have increased federal spending from $2.68 trillion to $3.76 trillion. A 40% increase in spending in the negative portion of the GDP equation, government.

Our investment into the productive sector of the economy, the people and organizations that produce goods and services, has DECLINED from $2.34 trillion to $1.88 trillion a 19.7% drop.

Bernanke and the Federal Reserve panicked and thought they could save the world. Now the world is coming to collect.

We have pissed away our future. All the borrowing at the consumer, government, state, and local level has to come due at some point. And here we are.

If you read banking history, and Bernanke did, just the wrong books, you know these banking booms and bust take about three years for the excess cash to “work through the system” and the fourth year is usually the collapse and repercussions. Bernanke followed Friedman’s advice and pumped billions of “liquidity” into the system. The result was saving zombie banks that will fail and enabling a bunch of politicians to rip off the taxpayers. Like a bartender giving out the drinks on the house while everyone has a good time, trashes the place, then splits when its time to clean up.

What Bernanke should have done was let the banks fail, refuse to monetize the debt, and keep the money supply stable. End of story.