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By: Jas Jain, Ph.D.
the Prophet of Doom and Gloom
Wed, Jan 16, 2013
Early in the morning, I watched an interview on Bloomberg with Boston Fed President Eric Rosengren, who just became a voting member on FOMC (Federal Open Market Committee, but it is more of a Foul Open Mouth Committee because these days they talk on TV lot more than they deliberate in the meeting, i.e., they are in propaganda business). Bill Cohan (that is the correct spelling according to Bloomberg), who had worked on Wall Street before the Crisis of 2008 and these days he is a Bloomberg commentator after writing a book on the Crisis, was infuriated after the interview because “all that the Fed is doing is enriching the banks.”
(Rosengren being the most supportive of Fed doing more QE, i.e., he is left of the left interventionist). In 2008, the Federal govt saved the banks and after that Federal Reserve has been enriching the banks and Mr. Cohan can’t believe that this is allowed to go on. This is because Mr. Cohan doesn’t understand the American system and why Rosengren was chosen to be the Boston Fed President. (By far the biggest beneficiaries of the federal govt and Fed policies have been big businesses, in general, and big banks, in particular. The proof is in the pudding–Goldman Sachs earnings, announced this morning, hit the ball out of the park).
Mr. Rosengren claimed that Fed has helped the economy and can help more (lot more if only FOMC listened to Mr. Rosengren fully and ignored the rest because he knows exactly how the help flows thru the economy and the job market via housing, etc.). Few months back Bernanke claimed that Fed policy was responsible for creating 2M jobs. We know for a fact that these people are lying and making false claims about the Fed helping the economy in creating jobs. What evidence do I have? Did Bernanke and Rosengren tell us when and how the Fed policy was hurting the economy? Did they even know?? Or, were they lying, or hiding the truth, by virtue of not warning about the potential threats to the economy that were obvious to many during 2006 and 2007???
The biggest Bernanke lie that I remember is that during a testimony to the Congress in March 2007, few months prior to the housing market crash, he was asked about the threat to the US economy posed by housing prices falling, something many were expecting and talking about publicly, and Bernanke replied that prices may fall in few areas but nationwide the housing prices would not fall and only the rise in housing prices would come down to 3-5% annual rate. Was that a lie or is the guy that clueless? In either case he should not have been able to keep his job, but people don’t know what his real job is. There is no conspiracy; it is all in the open.