Liberty News Forum
Political News Forum - Let your opinions be heard on current news and politics. Not for wimps!
Political Opinion Page - Recent Posts - LNF Forums LNF in the Age of Empowerment! Algorithm free!
Christian Forum - Religion Forum - Entertainment - Sports Forum
Military - A1 News Page - Computers Tech - Financial News - Bunker - Presidential Tracking Poll
The House - Off the Wall News - Page 2 - Rasmussen Reports Polls - Chat Room
Liberty News ForumLNF Forums HerePolitical Opinion Page - The Hot Seat › Ben Bernanke: Economy going "over the cliff" by 2020
Page Index Toggle Pages: [1] 2 3  Send TopicPrint
Very Hot Topic (More than 25 Replies) Ben Bernanke: Economy going "over the cliff" by 2020 (Read 401 times)
TowardLiberty
LNF Speaker
LNF Bunker
*****
Online

anti-state, anti-war and
pro-market

Posts: 34,729
Location: Houston
Joined: Apr 6th, 2008
Gender: Male
Ben Bernanke: Economy going "over the cliff" by 2020
Jun 12th, 2018 at 12:33pm
Print Post  
This is an interesting analysis. Many would have thought we would have already gone through a recession by now, myself included. So I hesitate to make any bold predictions.

That said, this seems like a solid prediction backed by some compelling logic.

Quote:
Former Federal Reserve Chairman – Ben ‘Helicopter’ Bernanke – just threw cold water on the mainstream growth narrative. He said the economy by 2020 is going to go right over the cliff.

Although rarely – I do agree with Helicopter Ben about something. . .

President Trump’s $1.5 trillion in personal and corporate tax cuts – plus $300 billion in increased federal spending – was done at the “very wrong moment.”

The huge tax cuts and government spending requires a significant amount of new debt to be issued, all while the Fed’s tightening and unwinding their balance sheet via Quantitative Tightening (QT).

This is going to cause an evaporation of dollar liquidity – making the markets extremely fragile.

Putting it simply – the soaring U.S. deficit requires an even greater amount dollars from foreigners to fund the U.S. Treasury. But if the Fed is shrinking their balance sheet, that means the bonds they’re selling to banks are sucking dollars out of the economy (the reverse of Quantitative Easing which was injecting dollars into the economy). This is creating a shortage of U.S. dollars – the world’s reserve currency – therefore affecting every global economy.

This illiquidity is going to cause the oil that greases the wheels of markets to dry up – fast.

So, with the dollar shortage making matters worse – we also have that there’s never been a time when the Fed began tightening and it didn’t lead to negative economic growth or a market crisis.

https://seekingalpha.com/article/4180614-critical-mass-will-investors-care-dolla...

We know dollar shortages are disastrous for the economy.

So the question is: will this relationship between treasury borrowing and fed tightening cause one?
  

Open Trade, Open Borders, Taco Trucks on Every Corner
Back to top
 
IP Logged
 
Queshank
LNF Majority Leader
LNF Bunker
***
Online

I Love Liberty News Forum!

Posts: 6,742
Location: South Dakota
Joined: Apr 22nd, 2015
Gender: Male
Re: Ben Bernanke: Economy going "over the cliff" by 2020
Reply #1 - Jun 12th, 2018 at 12:39pm
Print Post  
TowardLiberty wrote on Jun 12th, 2018 at 12:33pm:
This is an interesting analysis. Many would have thought we would have already gone through a recession by now, myself included. So I hesitate to make any bold predictions.

That said, this seems like a solid prediction backed by some compelling logic.

https://seekingalpha.com/article/4180614-critical-mass-will-investors-care-dolla...

We know dollar shortages are disastrous for the economy.

So the question is: will this relationship between treasury borrowing and fed tightening cause one?


I've seen a lot of predictions of recession within the next year or two.

Most of them at the core are simply "We're due for one."

What Bernanke seems to be saying is "The Federal Reserve is deliberately creating one?"

And if so I have to wonder if recognizing what they're doing means they'll stop doing it?

Queshank
  

BowHunter wrote on Nov 30th, 2017 at 10:24am:
I am not aware of any article
Back to top
 
IP Logged
 
Ulysses
LNF House Leader
LNF Bunker
****
Online

¡RESIST!

Posts: 8,317
Location: The Lodestar
Joined: Feb 19th, 2018
Re: Ben Bernanke: Economy going "over the cliff" by 2020
Reply #2 - Jun 12th, 2018 at 12:50pm
Print Post  
OK, none of this sounds particularly good.

As one who is nearing retirement, of course I'm concerned with what's going to happen with my retirement funds (401k and IRA).

As I see it, QE has resulted in record low interest rates.

QT thus might reasonably be expected to result in higher - perhaps dramatically so - interest rates.

True?

Along with high interest rates, in this case the dollar shortage, along with the burgeoning tariff war, might also reasonably be expected to cause a rise in inflation. The typical Fed strategy of raising interest rates to combat inflation doesn't seem like it will work outside a narrow set of circumstances, which reasonably can be expected to disappear when economy "goes over a cliff". It will be more like rearranging the deck chairs on a sinking Titanic.

In the worst case, tangible assets might do best: precious metals, commodities, real estate, antiques, etc.

Any of this sound plausible?
  

When fascism comes to America, it will be wrapped in the flag, carrying a cross, and wearing road kill as a toupée
Back to top
 
IP Logged
 
TowardLiberty
LNF Speaker
LNF Bunker
*****
Online

anti-state, anti-war and
pro-market

Posts: 34,729
Location: Houston
Joined: Apr 6th, 2008
Gender: Male
Re: Ben Bernanke: Economy going "over the cliff" by 2020
Reply #3 - Jun 12th, 2018 at 12:51pm
Print Post  
Queshank wrote on Jun 12th, 2018 at 12:39pm:
I've seen a lot of predictions of recession within the next year or two.

Most of them at the core are simply "We're due for one."

What Bernanke seems to be saying is "The Federal Reserve is deliberately creating one?"

And if so I have to wonder if recognizing what they're doing means they'll stop doing it?

Queshank

I doubt it. For one the central bank was always planning on tightening during this phase of the cycle. The government should have taken that into consideration before cutting taxes like they did without cutting spending.

For it is these two acts taken together which set us up for a dollar crisis.

But truth be told I don't think there is a way out of this. The Fed either tightens now thereby reducing economic activity, or it switches back to accommodation and blows a massive inflationary bubble which later unwinds in an even greater crisis.
« Last Edit: Jun 12th, 2018 at 1:45pm by TowardLiberty »  

Open Trade, Open Borders, Taco Trucks on Every Corner
Back to top
 
IP Logged
 
Queshank
LNF Majority Leader
LNF Bunker
***
Online

I Love Liberty News Forum!

Posts: 6,742
Location: South Dakota
Joined: Apr 22nd, 2015
Gender: Male
Re: Ben Bernanke: Economy going "over the cliff" by 2020
Reply #4 - Jun 12th, 2018 at 2:06pm
Print Post  
TowardLiberty wrote on Jun 12th, 2018 at 12:51pm:
I doubt it. For one the central bank was always planning on tightening during this phase of the cycle. The government should have taken that into consideration before cutting taxes like they did without cutting spending.

For it is these two acts taken together which set us up for a dollar crisis.


But that's hardly unusual.  It's pretty much business as usual since the 80s.

Quote:
But truth be told I don't think there is a way out of this. The Fed either tightens now thereby reducing economic activity, or it switches back to accommodation and blows a massive inflationary bubble which later unwinds in an even greater crisis.


How was Ben Bernanke on predicting the last recession?   Some people actually accuse him of starting and exacerbating it. 

I think the credibility of the messenger is definitely relevant.

Queshank
  

BowHunter wrote on Nov 30th, 2017 at 10:24am:
I am not aware of any article
Back to top
 
IP Logged
 
TowardLiberty
LNF Speaker
LNF Bunker
*****
Online

anti-state, anti-war and
pro-market

Posts: 34,729
Location: Houston
Joined: Apr 6th, 2008
Gender: Male
Re: Ben Bernanke: Economy going "over the cliff" by 2020
Reply #5 - Jun 12th, 2018 at 2:07pm
Print Post  
Ulysses wrote on Jun 12th, 2018 at 12:50pm:
OK, none of this sounds particularly good.

As one who is nearing retirement, of course I'm concerned with what's going to happen with my retirement funds (401k and IRA).

As I see it, QE has resulted in record low interest rates.

QT thus might reasonably be expected to result in higher - perhaps dramatically so - interest rates.

True?


Yeah, that's accurate as far as I can tell.

Quote:
Along with high interest rates, in this case the dollar shortage, along with the burgeoning tariff war, might also reasonably be expected to cause a rise in inflation. The typical Fed strategy of raising interest rates to combat inflation doesn't seem like it will work outside a narrow set of circumstances, which reasonably can be expected to disappear when economy "goes over a cliff". It will be more like rearranging the deck chairs on a sinking Titanic.


Depending on what is happening with trade, it very well could. Usually high interest rates and dollar shortages mean asset prices fall but a stagflation scenario is also possible.
Quote:
In the worst case, tangible assets might do best: precious metals, commodities, real estate, antiques, etc.

Any of this sound plausible?

I think that sounds very plausible.
  

Open Trade, Open Borders, Taco Trucks on Every Corner
Back to top
 
IP Logged
 
TowardLiberty
LNF Speaker
LNF Bunker
*****
Online

anti-state, anti-war and
pro-market

Posts: 34,729
Location: Houston
Joined: Apr 6th, 2008
Gender: Male
Re: Ben Bernanke: Economy going "over the cliff" by 2020
Reply #6 - Jun 12th, 2018 at 2:11pm
Print Post  
Queshank wrote on Jun 12th, 2018 at 2:06pm:
But that's hardly unusual.  It's pretty much business as usual since the 80s.


Can't argue with that.

Quote:
How was Ben Bernanke on predicting the last recession?   Some people actually accuse him of starting and exacerbating it. 

I think the credibility of the messenger is definitely relevant.

Queshank

Awful. And I agree. But at some point we can detach the message from the messenger and evaluate it on its own merits.
  

Open Trade, Open Borders, Taco Trucks on Every Corner
Back to top
 
IP Logged
 
Mojo-Jojo
LNF Representative2
***
Offline

The hobo fohmally known
as Jojo is no mo'.

Posts: 2,389
Location: Appalachia, USA
Joined: Jun 29th, 2011
Gender: Male
Re: Ben Bernanke: Economy going "over the cliff" by 2020
Reply #7 - Jun 12th, 2018 at 5:16pm
Print Post  
In my short time on this planet I've noticed that whenever the "economy" is roaring, we've entered a new normal. Until it isn't. Are we in a new normal?
  

If you are more fortunate than others, build a longer table, not a taller fence.
Back to top
 
IP Logged
 
forgotten centrist
LNF Speaker
*****
Online

bring back the middle
class!

Posts: 12,644
Joined: Sep 29th, 2004
Re: Ben Bernanke: Economy going "over the cliff" by 2020
Reply #8 - Jun 12th, 2018 at 5:32pm
Print Post  
Mojo-Jojo wrote on Jun 12th, 2018 at 5:16pm:
In my short time on this planet I've noticed that whenever the "economy" is roaring, we've entered a new normal. Until it isn't. Are we in a new normal?


We're "winning".  Soon, we'll get sick of winning.  Trump warned us.
  

2017 dream team (junior member)
and now as friendly as Jasmine!
Back to top
 
IP Logged
 
Running Deer
LNF Majority Leader
LNF Bunker
***
Offline

Disloyal Opposition

Posts: 5,064
Joined: Dec 10th, 2005
Gender: Male
Re: Ben Bernanke: Economy going "over the cliff" by 2020
Reply #9 - Jun 12th, 2018 at 5:51pm
Print Post  
We have recessions every 8-10 years, and the last recession ended in 2009, 9 years ago.  Predicting that the next recession hits within 11 years of the end of the last recession is like predicting cold weather in winter.
  

"If cousins, I would much prefer to marry one my Neanderthal relatives than a screeching chimpanzee which might bite my face off as has happened recently. Of course, chimps are not even a human species so procreation between humans and chimps is out of the question." - joe_christian, on sex
Back to top
 
IP Logged
 
Page Index Toggle Pages: [1] 2 3 
Send TopicPrint
 
Liberty News ForumLNF Forums HerePolitical Opinion Page - The Hot Seat › Ben Bernanke: Economy going "over the cliff" by 2020

LNF Home - Political Opinion Page
LNF Forums

Christian Forum - Religion Forum - Sports Forum - Entertainment - House
Military, History - Cooking and Crafts - Creative Writing
Off the Wall News - Science Forum - Tech Gadgets - Financial News - Humor
Bunker - Page 2 - Page 3 - Page 4 - Chat Room





Drudge Report - News Max - Rush Limbaugh - FrontpageMag
Advertise on the LNF - Twitter LNF - LNF Archive - LNF News
LNF Blog
News and Political Links
Political Blogs
Add your website or blog
Political Columnists
Political Humor
A1 News Page
David Limbaugh
Political Frog
Conservatives Directory
President Trump Approval Poll
Presidential Party Election Poll News forum posting, privacy policy and member rules