A world in economic crisis

Germany Blasts Bernanke: Results of Fed Stimulus Could Be ‘Horrendous’

Posted in USA by Aussie on November 6, 2010


German Finance Minister Wolfgang Schäuble has sharply criticized the US Federal Reserve’s decision to pump a further $600 billion into the country’s ailing economy. He says the move could create problems for the global economy. Others have joined in the condemnation.

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The Germans “get it” – they can more clearly see what is so very dangerous about the moves being made by Ben Bernanke and how those moves will hurt the world economy.

Schäuble has some very harsh words for Øbama and Ben Bernanke regarding what he states is a violation of an agreement or pledge given at the previous G20 summit meeting in Toronto last June.

It is not just Germany that is critical. China also gets it, that this move will hurt the world economy. From this same article:

Criticism has also come from China, with the country’s central bank head, Zhou Xiaochuan saying that the Fed’s move might hurt economies in the rest of the world. “There is a spill over,” he said. Brazil, Indonesia and Japan have also voiced concern.


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8 Responses

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  1. Carlyle said, on November 8, 2010 at 4:55 am

    I hate Keynes.
    But on the off chance that you are right and Keynes is not the real devil – – –
    I hate Keynesians even worse!


    November 06, 2010
    The Keynesians Get Their Wish
    By Peter Raymond

    The Keynesians finally got their wish. The Federal Reserve plans to inject $600 billion of the most caustic debt imaginable into the economy. This is the Agent Orange of monetary policies that has the potential to wreak financial havoc.

    In the hope of generating inflation, the central bank is going to enable deficit spending by buying treasury bonds. You read that correctly: the primary goal is to erode the value of the dollar, and we get to watch our currency and wealth literally dissolve before our eyes.

    Only a desperate government would consider debasing its own currency. The resulting inflation will be an insidious tax on every American who will suffer as wages lag behind increasing prices. It is doubtful that countries like China will react favorably to the precipitous drop in the value of the debt owed to them.

    This strategy of monetary sabotage will punish savers and creditors, but Keynesians simply will not tolerate anything that impedes deficit spending. Since deflation hamstrings spending, they will stop at nothing to reverse deflationary pressures.

    RTWT: http://www.americanthinker.com/2010/11/the_keynesians_get_their_wish.html

  2. Carlyle said, on November 8, 2010 at 5:00 am

    BTW – if you EVER read anything by Paul Krugman, you may as well be sucking on an atom bomb. That guy is a “clear and present” danger – perhaps as much as any other American alive today. Not only because he is dead wrong, but because he has a bully pulpit and a large following.

  3. Aussie said, on November 8, 2010 at 2:35 pm

    Now you have it right. I hate Keynesians too. They have not understood the issues :).

    Of the little I have read of Paul Krugman, I consider him to be a total idiot… and a Marxist. Yes, I agree, he is dead wrong….

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  5. economics9698 said, on November 9, 2010 at 1:36 pm

    I don’t think people realize that these actions like devaluing the dollar after billions of bonds were sold to China and the possibility of China losing its cash market in the US because of the devaluation can and does lead to war.

    What lead to Hitler’s rise and the fascist economy in Germany? the collapse of the gold standard and the wiping out of German gold reserves.

    I don’t think people really understand the implications of what our president and his appointee Bernanke are doing.

    • ozzieaussie said, on November 9, 2010 at 8:36 pm

      You raise a very good point about the actions that lead to war.

      Did you also study economic history 🙂

    • ozzieaussie said, on November 9, 2010 at 8:55 pm

      Actually, Germany had hyperinflation in the 1920s. It was so bad that their stamps were overwritten with millions of marks… I kid you not because I have some of those stamps that are overwritten.

      Germany’s situation was a lot more complex because of the Treaty of Versailles, Germany had to pay war reparations to the rest of Europe.

      It was this situation that led J.M. Keynes to believe that there had to be a different solution after world war 2, which of course led to the setting up of the World Bank and the IMF.

      This is one reason it is so interesting that it is Germany, and the World Bank that is criticizing Bernanke for his decision-making.

      My feel though, is that we are heading for a repeat of the stagflation of the 197os. My gut feel is that you already have high inflation, and that the real rate is hidden because of the changes that were made to the basket of goods for the hikes in such things as utilities, and especially petrol (gas) prices. If I remember correctly someone stated that these commodities were removed for “feel good” reasons.

      My gut feel is that the world has been heading towards stagflation again because governments have been getting away with out of control spending. This is the same scenario that led to the stagflation of the 1970s. In Australia it was the Whitlam government that had done the out of control spending that helped to prolong the stagflation. It was the classic case of government taking more than its fair share of the pie. Now we have the same thing again – the Rudd-Gillard (Julia-the-Marxist) govt has been throwing money away, without regard to what is best for the economy. KRUDD had seized the opportunity to spend the surplus that the previous govt had amassed, and the spending has not stopped.

      It all sounds so familiar to me, because you had Øbama directing the expenditure through the Porkulus, and we had the same thing over here, when in fact it was not necessary for the govt. here to take such action. There had been a minor blip and I might add that my husband lost his job in the middle of the global financial crisis (but that is how QANTAS screws over its employees), yet here in Australia we moved away from crisis quite rapidly, and we did not need the porkulus type projects, where excessive amounts of money has been wasted. The govt has wasted money on a school building projects as well as rolling out the white elephant NBN network.

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