Bernanke Speaks

Fed Chair Ben S. Bernanke,  in his prepared comments, observes:

"With the economy expanding at a solid pace, resource utilization rising, cost
pressures increasing, and short-term interest rates still relatively low, the
Federal Open Market Committee (FOMC) over the course of 2005 continued the
process of removing monetary policy accommodation, raising the federal funds
rate 2 percentage points in eight increments of 25 basis points each. At its
meeting on January 31 of this year, the FOMC raised the federal funds rate
another 1/4 percentage point, bringing its level to 4-1/2 percent."

On another note, how goddamned annoying is that CNBC sound effect? Jesus Christ, what are you people 4 years old? Its the Fed Chair, not a f*%$# video game.

I guess that means I am hungry and cranky. Time for a lunch break soon . . .


UPDATE:  February 15, 2005 4:05pm

I was just looking over some of the Fed Chief’s testimony. The Capital
Surplus discussion made me giggle. Everytime I hear the "Savings Glut"
phrase, I cannot help but be reminded of Mr. Montgomery C. Burns (of
Simpsons fame):

"Oh, meltdown. it’s one of those annoying "buzzwords." We prefer to call it an unrequested fission surplus."



Testimony of Chairman Ben S. Bernanke
Semiannual Monetary Policy Report to the Congress
Before the Committee on Financial Services, U.S. House of Representatives
February 15, 2006

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What's been said:

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  1. LS commented on Feb 15

    I agree with you regarding the CNBC sound effects; when you’re thin on substance, it helps to be thick on style, I suppose. Thank goodness the Dow’s staying over 11,00 today. Those constant “Dow 11,000 alerts” should be shipped over to Abu Ghraib, where they might be of some use. However, I appreciate their airing of the BB testimony as it’s a changing conversation.

  2. Christian commented on Feb 15

    I don’t mind the f*%$# , but would you please refrain from taking the Lord’s name in vain? You cause offense without adding anything to the content, and risk losing readership.

  3. ryan commented on Feb 15

    Amen to the CNBC sound effects. I think they tried to jazz things up ahead of the Fox financial channel coming out. The sounds are the worst. Putting reporters and cameras down on the trading floor is annoying. Those floating “3D” charts the move just a little while you are looking at them was clearly not the idea of someone with a financial background. Someone tell those clowns that adults watch CNBC and not five year-olds. Oh well, at least they still have Rick Santelli.

  4. Emmanuel commented on Feb 15

    I was struck by the moment when Bernanke said that further interest rate hikes might be necessary. The Dow swooped immediately, while the dollar rose. All unwarranted if you ask me. The bourses are deluding themselves, and the dollar is practically worthless for all intents and purposes.

    When B-B-B-Benny and the Feds quit raising rates, we’ll have fun, I’m sure. In the meantime, on to a more pronounced yield curve inversion!

  5. Anonymous commented on Feb 15

    As your quote indicates, Bernanke is refreshing if for no other reason than he has yet to lose his short-term memory.

  6. Lola commented on Feb 15

    Gee Christian sounds like those wacky Muslims…

  7. David Silb commented on Feb 15

    Gentlemen, (and the occasional Lady)

    Don’t you know that the ideal market Demographic is 18-25. (and yes I am aware of the 25 or 35)

    These so-called “ideal” demos are responsible for all the good things in the world. They buy whatever you throw at them, they watch whatever you show them and they are so more edgy and smarter then all the other demographics put together.

    If a network follows the above philosophy will naturally apply it to all its channels.

    I hate it too and maybe one day I will find somewhere, where adults rule. (Besides my house, not really)

  8. Mark commented on Feb 15

    Wow, kudos to you Barry. I turned my TV off because of those sound effects. I asked myself if I was the only person who hates listening to those annoying *slicing* sounds. How can this channel possibly be any worse.

    I hear Fox is coming out with an all business channel. Now that would be sweet.

  9. Barry Ritholtz commented on Feb 15

    I suspect that Fox is the reason why CNBC has these annoying sound FX. There channels are even more graphics and sound FX.

    I guess thats “the cost of freedom . . .”

  10. GRL commented on Feb 15

    One thing BB trots out in his testimony is the old “savings glut” saw.

    The premiums that investors demand as compensation for the risk of unforeseen changes in real interest rates and inflation appear to have declined significantly over the past decade or so. Given the more stable macroeconomic climate in the United States and in the global economy since the mid-1980s, some decline in risk premiums is not surprising. In addition, though, investors seem to expect real interest rates to remain relatively low. Such a view is consistent with a hypothesis I offered last year–that, in recent years, an excess of desired global saving over the quantity of global investment opportunities that pay historically normal returns has forced down the real interest rate prevailing in global capital markets.

    There is an interesting discussion of the real “natural rate of interest” over on the Morgan Stanley GEF website:

    Looking at our estimate of the natural rate for the past 43 years, the first thing to note is that the natural rate was trending down from a peak of around 3.75% in the mid 1960s to a trough of slightly above 2.0% in the early 1990s. Since then, the natural rate has hovered sideways in a range of 2% to 2.5%. Our latest point estimate for the final quarter of 2005 is smack in the middle of that range at 2.25%.

    I have no idea whether the Morgan Stanley calculations of the real natural rate of interest are correct, but the question I have is this:

    If there is now such a huge and unprecedented glut of global savings with nowhere to go, why isn’t the real natural rate of interest lower and still trending down?

  11. Rdub9000 commented on Feb 15

    Don’t mind the chutzpah.
    I’ll still read this, even if you take the lord’s name in vain – just don’t take Thom Yorke or Ben Gibbard’s name in vain, and you’re ok in my book.


    “Thom Yorke, what are you people 4 years old?”

    That would be absolutely unacceptable…

  12. trader75 commented on Feb 15

    Oh man. Thanks for the belly laugh, that was great. Haven’t yukked that hard in a while.

    Remind me again what I’m missing by not having cable?

    Maybe they can start introducing Bernanke segments with the Looney Tunes theme. Bearish soundbites get Yosemite Sam running into an anvil or Wile E. Coyote falling off a cliff. Bullish ones get the daffy duck WooHoo! When he’s done they can cut to the porky pig outro: Th-th-th-th-That’s All Folks!

  13. David Silb commented on Feb 15

    Nice GRL makes a great point here on Natural rate of interest. If it is a glut why is the interest rate trend going down?

    That is a great point. It makes a lot of sense. My take would be inflation, but that may be a knee jerk reaction here. WOW lots of money and no home. Hmmm, this is an interesting ponder.

  14. Barry Ritholtz commented on Feb 15

    I love the surplus/glut excuse –its almost as good a rationale for anything as is Dark matter.

    Ma’am, he didn’t Drown — He had Water Surplus!

    Then of course, there’s the classic Simpsons comment:

    Everytime I hear the “Savings Glut” phrase, I cannot help but be reminded of Mr. Montgomery C. Burns of Simpsons fame:

    “Oh, meltdown. it’s one of those annoying “buzzwords.” We prefer to call it an unrequested fission surplus.”

  15. todd commented on Feb 15

    HERE HERE! …on the CNBC sfx. At one point the sound effects were overwhelming the whole testimony audio. I thought it was very annoying and very rude.

  16. algernon commented on Feb 15

    Amen on the sound effects criticism. It seems like all TV networks have to have explosions punctuating everyone of their short superficial segments. With all day long to fill, why couldn’t they have an occasional in-depth discussion.

    For instance, how real IS the “global savings glut”? Could it be exxagerated by Asian central bank money creation? Can anybody cut to the heart of that subject?

  17. Jordan commented on Feb 15

    Check out the money supply. Despite rates rising from 1 to now 4%+, the money supply continued to expand. M3 was up 12% (annualized) in January.

    The public and most of wall street is unaware of how much money the Fed has pumped into the markets. This abundance of credit has not been invested in production of goods and services, it has gone straight to consumption- and that is very inflationary.

    Bernanke is an idiot- he has no idea of why and how bubbles occur and even more disturbing is that he seems to think that Fed action can manipulate the economy and prevent/control crisis’. I thought individuals and businesses moved the economy? Simply put, he is going to find out how wrong he is when the credit bubble bursts.

  18. B commented on Feb 15

    Personally, I like WTF. Spending a fair amount of my career in marketing and sales, I am always thinking of how to appeal to the greatest audience.

    Remember, you only connect with a third of the world’s population when you make reference to Jesus Christ or even less if you reference the Prophet Mohammed or to Buddha or Vishnu and on and on and on. Everyone is offended by WTF.

    Frankly, with all of the daily sh*t that goes on in this pathetic existence we call life, I doubt God would is too upset by a few choice words meant to create a little humor. But he might be offended by all of those Christians who killed millions of Africans, Jews, Muslims, Native Americans and a few of their own since the beginning of time. Oh, not to leave out other religions for they have been as flamboyant in the name of their vision of God.

    Did I stir up a hornet’s nest? It’s all in good fun. Relax and go do something constructive. Maybe cleansing the Boston Archdiosese. Or telling your Congressman to stand up and support the UN’s call for action in Darfur. You remember President Bush’s comments that hoods and hooligans will not be tolerated? While hundreds of thousands of Christians are butchered in Darfur but have no oil to entice us to get involved? Just some random thoughts.

  19. B commented on Feb 15

    While I am busy pissing everyone off, I have a few more choice words for the self-righteous.

    We all tease Greenspan and Bernanke about their messy handling of the economy but I really wonder what all of the self described geniuses on here would have done when presented with some of the situations they were.

    I doubt there is anyone on this board, present company included, that is nearly as brilliant as either man. Not that test scores are a sign of superior intellect…..well…..actually they are when you get a near perfect score on your SAT like Bernanke did. And he did it before they started fiddling with how the scores were tabulated. How many out there have also held distinguished positions at MIT, Harvard and the White House? Not as a political crony but on intellectual merit?

    It’s one thing to be a Monday morning QB but when the markets were cratering and the economy was not responding to attempts at resuscitation, we might all have overdone it. Maybe they had discussions about overdoing it. I suspect they knew exactly what they were doing. I wonder if that was the only way to attempt to stop a total collapse. Overinflate and hope by the time the crows come home to roost, you’ll have a better chance at managing the situation? I don’t think people realize how potentially dire that situation was post 2000.

    Bernanke will surely be tested. And his time will not be as pleasant as most of Greenie’s time through what will likely be no fault of his but I tend to think he’s quite capable. I’d rather have him calling the shots than those calling him an idiot.

  20. RogerThat commented on Feb 15

    B. Smart people are a dime a dozen. Smart people that know the limits of the human brain and its ability to manage something as chaotic as a global economy, on the other hand, aren’t too common and they certainly aren’t running the Fed.

  21. Jordan commented on Feb 15

    I think we all have the right to criticize one of the most powerful men, the Fed Chairmen.

    My problem, is not so much with the Chairmen/Chairman…but its with the Fed as an institution. There’s nothing federal about it and it holds no reserves. It’s an unnacountable institution and frankly, its unconstitutional.

  22. B commented on Feb 15

    Oh, I get it now. The oddballs are now showing their true colors. Before any of more people not playing with a full deck respond, I’ll make it easy.

    The Fed is unconstitutional? Well, why don’t you write a brief on the constitutionality or, lack thereof, and submit it for review to a few constitutional lawyers. If you are looking for a few names, I’l’ drum a few. You might post a link to your argument here so we can review it. Maybe you could then get one of those attorneys to take your case to the Supreme Court. They could argue the Fed is unconstitutional and if you are right, Bernanke will be gone. Maybe today you could just outline your argument and while you are at it, your credentials for making such a statement for today. And your other constitutional arguments and cases that have been successfully argued before the Supreme Court? Btw, I once worked with a guy that sounds similar to you. They came and took him away one day.

    And smart people are a dime a dozen? Idiots (I am putting words in your mouth by drawing conclusions around your statements. I apologize if I am taking too much liberty.) are running the Fed? Roger, might I ask you to point us to your published research on economics? Where you received your PhD in economics? Your ground breaking theories in economics and why the Fed needs your intellectual capital in lieu of those who currently work there? What qualifications you have to judge the professional works of each FOMC member, the Chairman and each Fed President?

    Maybe you could start by sharing your conclusions regarding President Geithner? That ought to make it easy on you.

    I love listening to other view points when they are intelligently laid out. Even enjoy a little cynical hilarity when that is how it is meant. As this response is. Idiot, stupid and unconstitutional doesn’t rise to that level of intelligence. But I forgot, intelligence is a dime a dozen.

  23. brian commented on Feb 16

    Jesus Christ B! (what an ass you are)

  24. B commented on Feb 16

    Eh, maybe. I guess it depends what side of the fence you are on. I love debate but I have this big pet peeve about people personally trashing others, talking behind people’s backs and piling on someone’s character. I guess you could call it a values problem. I still have some.

  25. Eric A. commented on Feb 16

    I suspect they knew exactly what they were doing. I wonder if that
    was the only way to attempt to stop a total collapse. Overinflate and hope by the time the crows come home to roost, you’ll have a better chance at managing the situation? I don’t think people realize how potentially dire that situation was post 2000.

    I’m glad you said that. More recently I began to think the Fed had decided that inflation was the lesser evil, having to choose between that and say, imploding the housing bubble. One could even have wondered whether their meddling with the definition of the CPI wasn’t incompetent at all, but was rather in order to lay out a safe course for themselves politically — their “official job” is to fight inflation, but since officially there’s no inflation anymore, they can get away with not doing anything about it.

    But now they are going to continue raising rates anyway? I’m surprised.

    If they believe their own inflation numbers, are they really willing to risk recession and worse just to fight a little wage inflation? That’s hard to believe.

    If they don’t believe their own numbers, and they raise rates to try to combat the inflation they themselves have been hiding, don’t they risk being blamed for the consequences, especially since they’ve made it appear to be unnecessary to raise rates?

    Maybe in the public’s eye it looks better to raise rates when there’s no inflation than to keep rates low when there is inflation.

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