Monetary News Dec. 6 - 10

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News
FRIDAY
Ron Paul, Author of `End the Fed,' to Lead Panel Overseeing Central Bank
Paul, in an interview last week, said he plans a slate of hearings on U.S. monetary policy and will restart his push for a full audit of the Fed’s functions.

THURSDAY
Bond Prices Plunge for 2nd Day on Deficit Fears
U.S. Treasurys plunged Wednesday, extending Tuesday's sharp losses and pushing benchmark yields to a six-month high, after a deal in Washington to extend tax cuts fueled fears of inflation and a swelling budget deficit.
More Than Half of Americans Want Fed Reined In or Abolished
A majority of Americans are dissatisfied with the nation’s independent central bank, saying the U.S. Federal Reserve should either be brought under tighter political control or abolished outright, a poll shows.

WEDNESDAY
Bernanke: US 'close to border' of recession, Federal Reserve may intervene
Federal Reserve Chairman Ben Bernanke says that the US economic recovery is 'not far' from losing momentum. If the recovery slips further, the Federal Reserve is prepared to act again.

TUESDAY
Everybody hates the Fed
The Fed is taking heat from just about everyone lately. But it's not just conservatives joining together to criticize the Fed and its boss. Some on the left are also starting to show disdain for the Fed's controversial plans to spend an additional $600 billion on long-term Treasuries, known as quantitative easing.

MONDAY
US could need third dose of quantitative easing, says Ben Bernanke
The chairman of the Federal Reserve defended his decision to launch a second $600bn (£382bn) stimulus program – dubbed QE2 – last month. Appearing on CBS News's 60 Minutes, Bernanke said it was "certainly possible" that the Fed would open the QE floodgates again, if the US recovery does not pick up pace.
Bernanke defends bond buys, citing at-risk economy
Critics, from Republicans in Congress to some officials within the Fed, say they fear the Fed's intervention could spur inflation and speculative buying on Wall Street while doing little to aid the economy.

Economists Comments
FRIDAY
Why Are the Fed's Actions Surprising Anyone?
Bernanke is often inaccurate, but propping stock prices was never something the Fed overtly lied about.
A European Economic Tsunami?
In 2007, the chairman of the Federal Reserve, Ben Bernanke, spent most of the year assuring markets that the U.S. sub-prime mortgage loan problem would be contained. In an all-too-similar manner, the European Central Bank president, Jean-Claude Trichet, now keeps asserting that Europe's sovereign debt crisis does not pose a significant threat to the overall European economy, let alone to the global economy.

THURSDAY
Teflon Bernanke?
Yes, yes, people hate the Fed. But believe it or not, they're sort of OK with Ben Bernanke.
The Farm Belt Boom
Land prices are soaring. Is this another Fed asset bubble?
Don't Be Fooled: Inflation Has the Upper Hand
Citing declining credit as proof we're in deflation is overly simplistic; base money creation, velocity, and the level of market participants' faith in monetary policy must also be considered.
Euro Falls Amid Fears of Sovereign Default
The ECB and several eurozone nations are urging Portugal to follow Ireland's lead by applying for a bailout.
Is Deflation on the Horizon?
Todd Harrison and Michael Pento discuss the ongoing inflation vs. deflation debate.

WEDNESDAY
Bernanke: 60 Minutes, 2 Big Lies
This past Sunday on the CBS program "60 Minutes", Americans received a massive dose of mendacity from our Fed Chairman. Mr. Bernanke's shaky delivery, and even shakier logic may cause faith in America's economic leadership to evaporate faster than the value of our dollar. In particular, Bernanke delivered two massive distortions:
What I Would Have Asked Bernanke
After 60 Minutes was gentle with Ben, here are some tougher questions for the Fed chief.
Great Expectations for Ben Bernanke
Forget legacies; world history hangs in the balance.
The Fed: From Central Banking to Central Planning
The American public takes a back seat to the banks; the Fed has gone from smoothing the business cycle to mircomanaging the markets.

TUESDAY
Knowing the Limits of Monetary Policy
U.S. monetary policy has become a tool of fiscal policy, and uncertainty characterizes both.
Folding the Fed
Central bank isn't equipped to save the economy.
The Federal Reserve: America's Fourth Branch of Government
The Fed alone determines how much money should be in the economy, yet its powers aren't defined by the Constitution, and neither the chairman nor the senior officials are elected by the people.
Why the Argument for Imminent Inflation Is Flawed
It is futile to expect inflation because of a liquidity rally within a larger deflationary wave.
U.S. Unloads Citi Stake for $12 Billion Profit
The U.S. Treasury sold the last of its Citigroup Inc. common shares in a $10.5 billion offering that capped the government's biggest bank bailout of the financial-market meltdown.

MONDAY
Bernanke 1, inflation hawks 0
Like it or not, history shows Ben Bernanke is right to say inflation isn't knocking at the door.
With Economy on the Brink, Bernanke Sees Path to Recovery
Federal Reserve Chairman Ben Bernanke said the United States is still four to five years away from a more normal unemployment rate, between 5 and 6 percent, and cautioned that a prolonged period of joblessness could result in a changed workforce.
Wasn't QE2 Supposed to Make Rates Lower?
That's what they told us. But it hasn't exactly worked out that way.

Blogs
FRIDAY
Inflation, Inflation Everywhere
Before conservatives give up on arguing against QE, there are a few things to note

THURSDAY
Jon Stewart Catches Bernanke’s Lie
You are going to love this. Even our favorite mugging slapstick news sources gets it that quantitative easing is the same as “printing money.”

WEDNESDAY
The Face of Qualitative Easing
The question isn't whether or not the Fed buys assets, but what kind of assets the Fed buys. Or in this case, what kind of assets the Fed accepts as collateral for its facilities.
Thinking the unthinkable: Let the euro-chips fall
French and German banks hold nearly a trillion euros worth of other European nations' debt: Ireland, Spain, Portugal, Italy, France, Greece. What would happen if they were allowed to collapse?

MONDAY
No Doubt Ben Bernanke is Sincere, But What If He is Sincerely Wrong?
I have increasingly come to the opinion that the data that individuals are pointing to as an example of the down-turn in 2008 is merely the manifestation of the market correcting for the previous distortions caused by the policy error of the manipulation of money and credit of the previous period.
Boehner to Protect the Fed?
With Republicans taking control of the House in January, long-time Federal Reserve critic Rep. Ron Paul is in line to take over chairmanship of the House Financial Service Committee’s Subcommittee on Domestic Monetary Policy and Technology.  This is the subcommittee with direct oversight of the Federal Reserve.

The public really hates inflation, probably due to money illusion, which is one of the reasons we are in the current situation. Circa 1996 Robert Shiller asked a group of 113 randomly chosen responders the following questions:
Japan Failed at Deflation Management
Not only did printing money fail to break deflationary expectations, it failed to keep the yen from rising.

Reports
MONDAY
The Great Recession and Its Aftermath From a Monetary Equilibrium Theory Perspective
We argue that the primary source of business fluctuation is monetary disequilibrium. Additionally, we claim that unnecessary intervention in the banking sector distorted incentives, nearly resulting in the collapse of the financial system, and that policies enacted to remedy the recession and financial instability have likely made things worse. Finally, we offer our own prescription to reduce the likelihood that such a scenario occurs again by better ensuring monetary equilibrium and eliminating moral hazard.