Is Ben Bernanke an Idiot, Dumb, & Ignorant?

[MadMarketScientist 11]

Great post from the Casey Report ...

 

In this newsletter, we've often called Ben Bernanke an idiot, dumb, ignorant, and a whole other variety of adjectives to demean his intelligence and understanding of the economy. Though these words are convenient ways to label a nemesis, they are completely inaccurate.

 

Ben Bernanke is an extremely intelligent man. Few morons can graduate from the MIT Ph.D. economics program. Perhaps some graduates are dishonest or idiot savants, but in sheer brain power, they are on the far right tail of the IQ distribution.

 

However, what Bernanke lacks is not intelligence - it is a much more basic human characteristic: humility. The Fed chairman's intelligence has deluded him in to believing the economy can be centrally planned through complex equations and statistics. This isn't his failing alone. Many highly intelligent people, especially in physics, chemistry, and mathematics, lack the same humility when it comes to social issues. Researchers in these fields solve extremely complex systems, and as a result, become deluded in to thinking economic problems can be solved in the same way.

 

Unfortunately for them, society is vastly more complex than a controlled lab experiment; the economy is pure chaos with millions of forces shaping it.

 

Scientists and mathematicians often falsely believe the world is just another equation to solve. Usually the smarter the individual, the more they believe in man's capacity to plan and shape the world (even Einstein had communist tendencies). If we get the equation right, we can take the economy to some perfect equilibrium.

 

Yes, human beings are highly intelligent. We can build skyscrapers, fly planes, cure diseases, and even explore outer space. With these accomplishments achieved, why not centrally plan society through mathematics and the scientific method as well? Unfortunately for us, it just doesn't work that way. The economy is a far too complex system. Several equations cannot capture the simultaneous reactions of six billion people around the world to a million different economic events.

 

Society doesn't need smarter central planners. If we need any at all, they should be central planners with greater humility and a better understanding of their own limitations.

Thoughts?

[Tams 20]

nobody climbs to his position because his is an idiot, dumb, or ignorant.

 

having said that, it definitely takes a special personality to want that job.

anybody with half that brain could make 100 times in the outside world.

[SIUYA 11]

while the article criticizes him, so far not many others seem to have been able to give alternative solutions, apart from the let it fail and see where the chips lie.....well that is exactly what happened in the Great depression, Bernakes specialty....arguably the New Deal was what helped stop the depression worsening was similar to the current pump priming (maybe without the infrastructure build). Now depending on if he is successful or not will be a matter of history. I wonder if the Casey report is as critical of the free market zealots who helped cause the current situation? they certainly had no humility.

[MadMarketScientist 11]

nobody climbs to his position because his is an idiot, dumb, or ignorant.

 

having said that, it definitely takes a special personality to want that job.

anybody with half that brain could make 100 times in the outside world.

 

agreed ... but the only thing more intoxicating than money is POWER (and sex but thats for another forum! :haha:)

[MightyMouse 12]

If you would like to amuse yourself further with Bernanke type humor, do a search on " the Great Moderation"

 

And, anyone who thinks they can control a market so that a bubble does not form does not know much about markets and should not meddle with them.

[Cory2679 11]

Unfortunately for them, society is vastly more complex than a controlled lab experiment; the economy is pure chaos with millions of forces shaping it.

 

Good/interesting point...I suggest people do a search for "chaos theory"...

 

First paragraph from Wikipedia (emphasis added by me):

 

Chaos theory is a field of study in applied mathematics, with applications in several disciplines including physics, economics, biology, and philosophy. Chaos theory studies the behavior of dynamical systems that are highly sensitive to initial conditions; an effect which is popularly referred to as the butterfly effect. Small differences in initial conditions (such as those due to rounding errors in numerical computation) yield widely diverging outcomes for chaotic systems, rendering long-term prediction (or planning!) impossible in general. This happens even though these systems are deterministic, meaning that their future behavior is fully determined by their initial conditions, with no random elements involved. In other words, the deterministic nature of these systems does not make them predictable. This behavior is known as deterministic chaos, or simply chaos.

[calsprdr 10]

agreed ... but the only thing more intoxicating than money is POWER (and sex but thats for another forum! :haha:)

 

Usually these guys already have the money. Power is the next step up the ladder.

[biko77 10]

none of the above. Seriously, Bernanke was a tenured professor at Princeton University and was chair of the Department of Economics there from 1996 to September 2002.

 

Is it more likely that HE is the idiot, or the are the morons who attack him the idiots? (a la Sarah Palin)

[SIUYA 11]

first you get the money, then you get the power then you get the woman.....say hello to my little friend (the printing press)

 

(for all those too young to know of Scarface - Al pacino)

[ACS 10]

The FED is a creature of and a servant to the big banks. Understand that and everything he and his predecessors have done makes perfect sense.

[statsign 10]

He is extremely brilliant. I can say with complete humility that the economy of the USA can be modeled and predicted. The requirements of doing this are asking the right questions. The Fed has zero interest in how the economy works for anyone other than the owners of the Fed. The assumption that they do is at the heart of the article's folly. And, "Several equations cannot capture the simultaneous reactions of six billion people around the world to a million different economic events." stated is a continuation of folly, world based instead of USA based. The modern acceptance of free trade that has historically always destroyed the economy that began on top. Many variables there are, but that isn't chaotic. Equations from chaos theory, and more so - non-linear dynamics, are extremely useful in finding root causes, but once found the end result is the knowledge that the proper questions lead one to a linear system of accurate prediction.

[Stanton 10]

Benanke lacks the ability to understand the plight of the others that get left behind by his social experiments. All the folks that got scared out of the market and too scared to get back in because of all the confusing signs and signals of the economy got left in the dust.

 

Thanks for the Fed's need to lower and sustain an interest rate of 0% left all those folks relying on their money market accounts as interest income (TO LIVE ON) saw it totally evaporate. And so their principal was being drained steadily over years now. To add insult to injury, QE2 devalued the remaining cash of these people, putting many in a desperate situation.

 

The Fed is a BANK (private, I might add) with concerns over banks and financing. He doesn't seem to empathize with the plight of the unsophisticated citizen and thinks that in reinvigorating the banks all will be well.

 

I don't think Ben is evil... So I'm going with ignorant... and arrogant.

[laurus12 10]

The FED is a creature of and a servant to the big banks. Understand that and everything he and his predecessors have done makes perfect sense.

 

Agree. The IQ of Mr. Bernanke is irrelevant. He is just doing what he is being told to do by the European low breed psychopath bankers who owns the Fed. Generally the same people who funded Hitler. So one should not expect any utopia in near future.

[evancds 10]

While the Fed is certainly very powerful and can exert a lot of force on the US and global economy, they are only one central bank. Every country has their own agenda. This link isn't related to Bernanke, but you might find it Interesting.

 

China Issues Cautious Response to S&P Move - WSJ.com

[djohnsonhot 10]

The word Elitism stills makes me pause today, after reading "The Irony of Democracy" in college over 40 years ago.

 

It is a "club" of Elites, making a nice warm wonderful bed and we are heading towards a Meritocracy which leads to a total break-down for the middle class, and the jobs that are a result of the opposite actions of this elitist regime. Good luck, America. Bernanke is a puppet of the Class.

[Ingot54 13]

Not certain how recent this video is - but the story from The Daily Bell - Confronting the Fed, Alan Grayson Returns ran today.

 

A link in that story tells us The Daily Bell - Beginning of the End? Fed Cannot Account for $9 Trillion ... so where is that money.

 

Had to laugh in the following video, where the Fed Reserve loaned $9 bil to NZ ... which equates to $3000 for every man, woman and child (and a few elite sheep) in that country!

 

Grayson really has Bernanke in a corner, it seems. The amazing "gotcha" coupe de grace comes from 4:10 onwards in the video!

 

[Ingot54 13]

If you liked the above, you might be interested in Grayson'e earlier clash with Elizabeth Coleman.

 

"The Federal Reserve apparently can't account for $9 trillion in

off-balance sheet transactions. When Rep. Alan Grayson (D-Orlando)

asked Inspector General Elizabeth Coleman of the Federal Reserve

some very basic questions about where the trillions of dollars that

have come from the Fed's expanded balance sheet, the IG didn't

know. Worse, nobody at the Fed seems to have any idea what the

losses on its $2 trillion portfolio really are. "I am shocked to find out

that nobody at the Federal Reserve is keeping track of anything," Grayson says.

 

The Daily Bell - Is Anyone Minding the Store at the Federal Reserve?

 

Has anything been done to rectify that yet?

 

[MightyMouse 12]

Not certain how recent this video is - but the story from The Daily Bell - Confronting the Fed, Alan Grayson Returns ran today.

 

A link in that story tells us The Daily Bell - Beginning of the End? Fed Cannot Account for $9 Trillion ... so where is that money.

 

Had to laugh in the following video, where the Fed Reserve loaned $9 bil to NZ ... which equates to $3000 for every man, woman and child (and a few elite sheep) in that country!

 

Grayson really has Bernanke in a corner, it seems. The amazing "gotcha" coupe de grace comes from 4:10 onwards in the video!

 

 

Grayson is really the fool. He is asking Bernanke elementary questions that he really should know the answers to. The fed swaps currencies to avoid having to print the money to pay the foreign central banks. The fed has been granted these rights and it is an oversight of congress and not the fed to be dealing in such large sums of money. Asking the fed chairman if the fed should have the rights granted to it is silliness in my not so humble opinion.

 

My statement is by no means a defense or endorsement of the actions of the US fed reserve or of Bernanke.

[Ingot54 13]

I think Grayson's questions were rhetorical, to get the issue on the record.

 

Was it Einstein who gave one definition of insanity?

 

“The definition of insanity is doing the same thing over and over again and expecting different results"

 

QEI... QEII... QEIII ... QEnext ...

 

Now that's smart!

 

Where exactly did the money go ... what has it achieved ... how do we measure the effects ... how will we know if it worked ... these are questions that should have been answered BEFORE QE-anything. But of course that was not possible ... they are winging it.

 

As it stands, the average US citizen is on the hook for a fair bit of loot now, and bankers like Goldman Sachs et al are on the hook for nothing ... yet they were complicit in causing the derivatives collapse that brought on the domino effect and ensuing crisis.

 

And even though GS have been shown to be short housing while selling long positions to their clients, the A-G has been unable to find fault with that! Are the policies of the Fed made for the likes of GS? Or for the benefit of the American people?

 

Just curious - I don't live there and simply wouldn't know. If for the former, then it must be GS who pays Bernanke's salary. Is that so?

 

Interfering with interest rates sets artificial prices in the marketplace, manipulates the savings of people who have worked diligently towards their financial security, reduces incentive to save, and plunges an economy into a Japan-like stagnation that has so far resisted all efforts to stimulate.

 

These are not my beliefs - I am not an economist - they are things that many are saying, and in the absence of any green shoots in the economy as a result of any QE, it is hard to see Bernanke and his money printing behaviour as the solution.

 

There seems to be enough inconsistencies in the world of finance and politics for me to keep away - I know enough not to interfere when something comes between a politician and his feeding trough!

[thalestrader 14]

...I think Grayson's questions were rhetorical, to get the issue on the record.

 

Was it Einstein who gave one definition of insanity?

 

“The definition of insanity is doing the same thing over and over again and expecting different results"

 

QEI... QEII... QEIII ... QEnext ...

 

Now that's smart!!...

 

For every $20 Billion of Fed Open Market purchases, the stock market has risen 1% from the the inception of each program. Every QE program (except for the latest) has been launched as PCE was contracting, and in each instance PCE reversed and expanded.

 

There are a lot of American Idiots - Bernanke isn't one of them.

[Ingot54 13]

For every $20 Billion of Fed Open Market purchases, the stock market has risen 1% from the the inception of each program. Every QE program (except for the latest) has been launched as PCE was contracting, and in each instance PCE reversed and expanded.

 

There are a lot of American Idiots - Bernanke isn't one of them.

 

And what is happening to the SP500 today?

 

And where is the $trillions = stock market "up by 1% for every $20bil"

 

Under those guidelines TT, the stock market should be up by 50%.

 

I'm not sure that it is.

 

Yes, there are a lot of people who swallow that ... not necessarily idiots - they just believe what they are told by people who spend other people's money, and at the end of the day are not offering money-back guarantees that they know what they are doing.

 

One thing is certain - the people who sold the derivatives that created much of this mess, get to keep their commissions and profits, while the taxpayer foots the bill. And even when corruption is blatantly obvious - ie in the case of GS selling against their own clients ... they are not held accountable

 

That is not fair.

 

Bernanke was a GWB appointee, wasn't he?

[thalestrader 14]

And what is happening to the SP500 today?

 

And where is the $trillions = stock market "up by 1% for every $20bil"

 

Under those guidelines TT, the stock market should be up by 50%.

 

I'm not sure that it is...

 

I do not know what you mean by asking what is the S&P doing today, nor do I understand why it matters who appointed Bernanke.

 

SP was 666 at its low of March 2009, and today it sits at 1360, or +104% from its low.

 

The day the Fed announced the expansion of QE1 to 1.4 trillion the S&P was at 720, and it then rose to 1220 by the time QE1 ended, or +69.4% (1.4 Trillion//20 Billion = 70).

 

The charts are there for all blessed with sight to see, and the basic arithmetic will do the rest, so long as you know which numbers are important.

 

Measurable actions have been taken, and measurable results have followed upon those actions. In addition to these quantitative differences, there have been qualitative changes to the real economy as well (the return of rush hour traffic, lunch time crowds at restaurants, the proliferation frozen yogurt stores) which indicate that the real economy is not so weak as it was at the height of the crisis nor as many continue to think it to be.

 

At some point, if not already, the economy will enter a new recessionary period and thew stock market will enter a new bear phase. And while it will seem exceedingly bad to many, it will not be nearly as debilitating as it would be had Bernanke not acted as he had, and had instead followed the example of his 1930's predecessors.

[Ingot54 13]

 

At some point, if not already, the economy will enter a new recessionary period and thew stock market will enter a new bear phase. And while it will seem exceedingly bad to many, it will not be nearly as debilitating as it would be had Bernanke not acted as he had, and had instead followed the example of his 1930's predecessors.

 

Fair bit of assumption there - can not debate assumption.

 

I am not blessed with the gift of prophecy.

[thalestrader 14]

Fair bit of assumption there - can not debate assumption.

 

I am not blessed with the gift of prophecy.

 

A Bayesian calculation, i.e. one based upon the probability of B occuring, given that A has already occurred.

 

Interesting that that is what you chose (not) to respond to.

[Ingot54 13]

A Bayesian calculation, i.e. one based upon the probability of B occuring, given that A has already occurred.

 

Interesting that that is what you chose (not) to respond to.

 

Clearly I lack the intelligence required to follow the mendacious happenings in high financial places, so please

forgive me if I decline to address things I am not able to comprehend as clearly as you do.

 

I look forward to your further enunciations of just how this will all play out ... and I will consider my investments

accordingly ... a bear market was it?

 

And silly me was thinking that for every $20 billion - puh ... mere change ... we were going to get a 1% rise in

stocks - as measured by the SP500.

 

Currently, we are down for the past 7 weeks ... how's that going now? Looks very close to 9% lower that the early

September recent top to me. Let me see ... that represents a sheer wastage of about $180 billion, but I am using

an old Canon calculator, so could be anything!

 

That would have gotten a lot of American homeless (formerly mortgage owners) out of the parking lot camps!

 

But I digress - a mere armchair observer can sometimes not see through what is happening behind the scenes,

as the FOMC have it all under control.

 

I hear what they say, but I see what is happening.