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The Economic Outlook - November 28, 2006
Remarks by Chairman Ben S. Bernanke Before the National Italian American Foundation, New York, New York
This month marks the fifth anniversary of the beginning of the current expansion. Frequently, the early stages of an expansion include a period of above-trend growth, as underutilized resources are put back to work. As slack in the economy is reduced, however, economic growth tends to moderate. Indeed, at that stage, some slowing of growth to a pace consistent with the rate of increase in the nation's underlying productive capacity is necessary if the expansion is to be sustained without a buildup in inflationary pressures. In my testimony to the Congress in July, as part of the Federal Reserve's semiannual monetary policy report, I noted that the U.S. economy had entered this transition phase, and that some moderation of economic growth over the remainder of the year seemed likely.
AntiSpin: There are so many problems with this opening statement, it's hard to know where to begin. Reminds me of this Tom Toles cartoon, credit to The Washington Post.
No one has the patience to read through and analyze all of this bureaucratic pablum, so let's get right to the most egregious errors.
Given that as large a portion of the economy is running on military spending as on housing, as Galbraith points out in his iTulip interview, it's a mystery why words related to housing appear 24 times in this speech while words with "mil" or "gov" appear exactly zero times. How credible is an "Economic Outlook" that fails to even mention such a significant part of the economy?
We'll give Ben a couple points for sticking his neck out as far as a geek can these days.
_____
For guidance on how to play the coming currency corrections, see "Crooks on Currencies"
To buy and trade gold easily and inexpensively, see BullionVault
To receive the iTulip Newsletter or iTulip Alerts, Join our FREE Email Mailing List
Copyright © iTulip, Inc. 1998 - 2006 All Rights Reserved
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer
Remarks by Chairman Ben S. Bernanke Before the National Italian American Foundation, New York, New York
This month marks the fifth anniversary of the beginning of the current expansion. Frequently, the early stages of an expansion include a period of above-trend growth, as underutilized resources are put back to work. As slack in the economy is reduced, however, economic growth tends to moderate. Indeed, at that stage, some slowing of growth to a pace consistent with the rate of increase in the nation's underlying productive capacity is necessary if the expansion is to be sustained without a buildup in inflationary pressures. In my testimony to the Congress in July, as part of the Federal Reserve's semiannual monetary policy report, I noted that the U.S. economy had entered this transition phase, and that some moderation of economic growth over the remainder of the year seemed likely.
AntiSpin: There are so many problems with this opening statement, it's hard to know where to begin. Reminds me of this Tom Toles cartoon, credit to The Washington Post.
No one has the patience to read through and analyze all of this bureaucratic pablum, so let's get right to the most egregious errors.
"Overall (or "headline") inflation has slowed significantly since earlier this year; indeed, in October the consumer price index fell by 1/2 percent for the second consecutive month. This improvement is largely the result of the recent declines in energy prices."
Please stop pretending that high energy prices cause inflation. Who prints the money to pay for the oil? That's like telling the local college town press that the high spirited mood after the football game caused the drunken brawl at the frat party that resulted in two burned down houses, and the 10 kegs of Budweiser on site had nothing to do with it. True, 10 kegs of beer will go warm and flat at a nursing home. On the other hand, a frat party without the beer is unlikely to produce mayhem. "This scenario envisions that consumer spending--supported by rising incomes and the recent decline in energy prices--will continue to grow near its trend rate, and that the drag on the economy from the motor vehicle and housing sectors will gradually diminish."
Wrong. The drag on the economy from the motor vehicle and housing sectors will gradually intensify, after a six to nine month lag. First, housing, then consumer spending. To wit:Given that as large a portion of the economy is running on military spending as on housing, as Galbraith points out in his iTulip interview, it's a mystery why words related to housing appear 24 times in this speech while words with "mil" or "gov" appear exactly zero times. How credible is an "Economic Outlook" that fails to even mention such a significant part of the economy?
We'll give Ben a couple points for sticking his neck out as far as a geek can these days.
"In the case of inflation, the risks to the forecast seem primarily to the upside. Given the current level of inflation, a failure of inflation to moderate as expected would be especially troublesome."
Indeed. You will never hear the word "stagflation" mentioned, but how else to characterize the need to keep the bubble cycle running while the housing and mil spending bubbles subside, never mind the LBO, I mean, private equity bubble? Time to check in on Stagflation Godzilla, who has been lolling around in the East River off Wall Street for the past few months. He's waiting until January to wade ashore. More on his recent movements later._____
For guidance on how to play the coming currency corrections, see "Crooks on Currencies"
To buy and trade gold easily and inexpensively, see BullionVault
To receive the iTulip Newsletter or iTulip Alerts, Join our FREE Email Mailing List
Copyright © iTulip, Inc. 1998 - 2006 All Rights Reserved
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer
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