Evans-Pritchard-The Fed is indeed Out of Control Deliberately Creating Inflation

[Letsbereal]

Shut Down the Fed (Part II)
28 September 2010, by Ambrose Evans-Pritchard (Telegraph.UK)
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100007777/shut-down-the-fed-part-ii/

Excerpt:

I apologise to readers around the world for having defended the emergency stimulus policies of the US Federal Reserve, and for arguing like an imbecile naif that the Fed would not succumb to drug addiction, political abuse, and mad intoxicated debauchery, once it began taking its first shots of quantitative easing.

My pathetic assumption was that Ben Bernanke would deploy further QE only to stave off DEFLATION, not to create INFLATION. If the Federal Open Market Committee cannot see the difference, God help America.

We now learn from last week’s minutes that the Fed is willing “to provide additional accommodation if needed to … return inflation, over time, to levels consistent with its mandate.”

NO, NO, NO, this cannot possibly be true.

Ben Bernanke has not only refused to abandon his idee fixe of an “inflation target”,  a key cause of the global central banking catastrophe of the last twenty years (because it can and did allow asset booms to run amok, and let credit levels reach dangerous extremes).

Worse still, he seems determined to print trillions of emergency stimulus without commensurate emergency justification to test his Princeton theories, which by the way are as old as the hills.  Keynes ridiculed the “tyranny of the general price level” in the early 1930s, and quite rightly so. Bernanke is reviving a doctrine that was already shown to be bunk eighty years ago.

So all those hillsmen in Idaho, with their Colt 45s and boxes of krugerrands, who sent furious emails to the Telegraph accusing me of defending a hyperinflating establishment cabal were right all along.

The Fed is indeed out of control.

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But deliberately creating inflation “consistent” with the Fed’s mandate – implicitly to erode debt – is another matter. Nor can this be justified at this particular juncture.

M3 has been leveling out. M2 has begun to rise briskly. The velocity of money has picked up. The M1 monetary mulitplier has jumped.

[Letsbereal]

The Fed Is Pushing On A String
25 september 2010, by John Mauldin (Business Insider)
http://www.businessinsider.com/the-fed-is-pushing-on-a-string-2010-9

Excerpt:

Now, if the strategy is to lower the dollar, then QE might make some sense; but of course no one would admit to that, not when we are accusing other countries of manipulating their currencies (as in China).

No, we would just be fighting deflation. The fact that the dollar dropped would just be a coincidence, a necessary but sad thing in the important fight against deflation.

[Letsbereal]

Youri Carma: I think the genreal idea is and Faber has said it and also Rickards in the latest king World Interview that first you’ve got deflation and to counter that the FED will overshoot on the monatary side creating severe Inflation trough gross money printing.

Jim Rickards in an earlier interview shared my view which I established allready in 2008 that Inflation and deflation can go hand in hand. Example: If your house became 10% cheaper during a certain period of time but at the same time you had 10% inflation you exactly pay the same.

Actually the dollar decline, which is confused with inflation a lot, should also be brought in but mainly affects imported goods.

[Letsbereal]

Rosengren Says Federal Reserve Should Respond Vigorously to Slow Recovery
29 September 2010, by Caroline Salas (Bloomberg)
http://www.bloomberg.com/news/2010-09-29/rosengren-says-federal-reserve-should-respond-vigorously-to-slow-recovery.html

Excerpt:

Federal Reserve Bank of Boston President Eric Rosengren said the central bank still has tools to boost an “anemic” recovery and should consider further action to cut unemployment and raise the inflation rate.

Policy makers must respond “vigorously, creatively, thoughtfully and persistently, as long as we have options at our disposal,” Rosengren said in the text of remarks to the Forecasters Club of New York today. “And we do have options, despite having pushed short-term rates to the zero lower bound.”

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“Current economic conditions -- an unemployment rate near 10%, sluggish growth, and undesirably low inflation -- together constitute a serious economic problem,” said Rosengren, 53, who is a voting member of the policy making Federal Open Market Committee this year.

Fed officials said in their statement this month that inflation is “somewhat below” levels consistent with their congressional mandate for price stability.

One gauge of inflation -- the personal consumption expenditures index, minus food and energy -- was up 1.4% in the 12 months to July and has been lower than 2% since November 2008. That compares with a long-term inflation goal of between 1.7% and 2%.