The Sequester

[snapper]

snapper,

Brad DeLong : Milton Friedman Supports Ben Bernanke on Quantitative Easing

LOL. anything else you want to know about Friedman and monetarism? :)

Well firstly the author of the piece you quote is deluded. Milton Friedman died on November 16th 2006 according to wiki. Bernanke became chairman of the Fed on February 1st 2006 and started raising interest rates that year. QE started in 2011.

Anything else you need to know about reality? :Zzzzzz:

[astralis]

snapper,

thanks for letting me know that you didn't actually read the blurb, let alone the article. this was Friedman's Q&A following his speech in 2000 regarding Japan.

[snapper]

Read it and he's clearly deluded. What has it got to do with buying your own debt? Friedman speaking about Japan in 2000 was a very long way from what the US is currently engaged in, which is nothing short of fraud. The author is deluded and I do not see your response to Austrian accusations at the Fed. Perhaps you have some?

By the way Japan is only due to start QE next year.

Let me quote you Bernanke himself just the other day: "One of the paradoxes is that the best way to get interest rates up is to have low interest rates, because that promotes a stronger growing economy, and that causes interest rates to rise. In some ways, the fact that interest rates have gone up a bit, and it happens on the real and not the inflation side, is actually indicative of a stronger economy, which is, again, suggests that maybe this is having some benefit."

I am NOT an economist but when 'economists' and particularly bankers start talking about "paradoxes" I smell a decaying fish. They're not living in the real world. They are living Keynesian theory. I am not saying that it won't work - it might for all I know but the Fed is clearly providing 'liquidity' as a stimulus. The problem is that every time that the Fed does this - as you can see for yourself - it creates another another 'bubble' and at present it is supporting the bubble that the nation relies on; the bond bubble.

Frankly I couldn't give a damn what Keynes or Freidman said long ago. I have read their theories but all theories are meaningless with the current level of US debt - neither Keynes nor Freidman would advocate more debt except on the basis that you buy your own debt - which is unsustainable medium to long term. You only need a snowflake to cause an avalanche and it is bound to snow some time. Your Bernanke chap is gambling on 5-6% growth before it snows and it's not going to happen.

[dalem]

And I agree- the co-opting of the MSM by this administration is shameful. A true disservice to the American people.

I don't blame the administration though - who wouldn't want a totally compliant media?

-dale

[astralis]

snapper,

Friedman speaking about Japan in 2000 was a very long way from what the US is currently engaged in, which is nothing short of fraud.

what Friedman advocated in 2000 was exactly what Bernanke did in 2009-2012. you can't get any clearer explanation of QE than "They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high powered money starts getting the economy in an expansion."

these are MONETARIST policies because by DEFINITION the fed can only ENACT MONETARY DECISIONS.

QE, everything the fed has done up to this point is right out of the monetarist textbook, and in fact, came from the very mouth of the founder of the school. it is NOT keynesian in theory, because keynesian theory discounts the value of monetarist/fed actions-- useless at worst, marginal at best.

describing monetary policy or easing as "stimulus" makes no sense, because this is the key policy differentation between the monetarist and keynesian schools.

---

to explain this in another light, an ideal monetarist policy (Friedman) to the Great Recession would have included everything Bernanke did and nothing Obama did (stimulus).

an old-school Keynesian policy (Keynes, Krugman) to the recession would have done everything Obama did and significantly more, while being agnostic about everything Bernanke did.

a New Keynesian policy (Mankiw, Romer) to the recession would have included both.

an Austrian approach (Hayek) to the recession would have included neither.

does this make it more clear now?

[snapper]

QUOTE=astralis;905022]an Austrian approach (Hayek) to the recession would have included neither.[/QUOTE]

I do not see your response to Austrian accusations at the Fed. Perhaps you have some?.

Please forgive me for getting the names of 'schools' wrong... if I have. I am not an economist, just studied logic and invest in the markets when I have time.

Look old chap theories are whisps of smoke, frankly I don't give a damn what 'school' says what. The Fed is lining you up for a bubble burst by providing 'liquidity' - it's the same as 'stimulus' just done by a so-called 'independent agency'. You are missing the point that the whole 'Federal' printing press is run by the same people. The US has been doing and is still doing the Japanese plan - Abenomics. Look at the Fed's rate cuts and rises since 1999 and it clearly shows they have both helped ease bubble bursts but also created new bubbles. I dare you to do an analysis yourself - will only take a minute on the engine I linked. With the QE 'liquidity' (in your terms or another 'stimulus' in my terms) the dog is eating it's tail to stop it's tail catching up with it's nose. The system is being perverted from the top down, 'free market' is out of the window. You are living on belief alone and the more they push the Ponzi scheme the closer collapse comes. I don't give a damn what 'school' says add up this way or that - it's basic maths and 'schools' are justifications only for a failed and disastrous policy.

You seriously believe that US is going to repay $16.5 (and growing)? Where is your honesty?

[astralis]

Please forgive me for getting the names of 'schools' wrong... if I have. I am not an economist, just studied logic and invest in the markets when I have time.

Look old chap theories are whisps of smoke, frankly I don't give a damn what 'school' says what.

IE, "i don't care if people have studied this for years and back it up with evidence." ah, very good of you to say this after i just pointed out your rather grievous error re: Friedman.

granted economics is not and cannot be a hard science but your inability and worse, lack of interest in understanding the basics of economic theory means that you're missing out on the very foundation of finance and investing.

The Fed is lining you up for a bubble burst by providing 'liquidity' - it's the same as 'stimulus' just done by a so-called 'independent agency'. You are missing the point that the whole 'Federal' printing press is run by the same people. The US has been doing and is still doing the Japanese plan - Abenomics. Look at the Fed's rate cuts and rises since 1999 and it clearly shows they have both helped ease bubble bursts but also created new bubbles. I dare you to do an analysis yourself - will only take a minute on the engine I linked. With the QE 'liquidity' (in your terms or another 'stimulus' in my terms) the dog is eating it's tail to stop it's tail catching up with it's nose. The system is being perverted from the top down, 'free market' is out of the window. You are living on belief alone and the more they push the Ponzi scheme the closer collapse comes. I don't give a damn what 'school' says add up this way or that - it's basic maths and 'schools' are justifications only for a failed and disastrous policy.

"i have no evidence to support my claim, thus i will choose to disregard everything as ramblings of pointy-eared academics."

let's put it this way. keynesian economics predicted back in 2009 continued low inflation despite QE and stimulus. austrian economics predicted hyperinflation, and that in short order.

i leave to you to honestly tell me which prediction was more accurate. please take a look at a 5-year chart of US 10-year treasury yields and tell me which way the trend line lies.

this is, ah....real world evidence? :)

You seriously believe that US is going to repay $16.5 (and growing)? Where is your honesty?

and that just demonstrates you have no idea how the international bond markets work.

countries cannot be equated to humans. it can be an occasional useful metaphor but it is absolutely erroneous if extended too far.

allow me to present a short economic history of your country. here is a picture of UK debt history from 1692 to today.



note that the entire time the British Empire was expanding by leaps and bounds, from 1720-1870, the British had an enormously higher debt problem than the US has today (at 74%-- that, at its peak following a severe recession and rather worse demographics).

this should indicate to you that even extraordinarily high levels of debt, by itself, is not ruinous towards an economy. there are more important other factors at play.

i don't expect this to seep in, however. if you like, i can stop answering your posts; i'll just come and collect the butter cookies when next year, we haven't all fallen victim to currency wars and hyperinflation, which you can send to me with a nice thread stating 'I was completely wrong'. sound good?

[Bigfella]

i don't expect this to seep in, however. if you like, i can stop answering your posts; i'll just come and collect the butter cookies when next year, we haven't all fallen victim to currency wars and hyperinflation, which you can send to me with a nice thread stating 'I was completely wrong'. sound good?

Good luck. I'm still waiting for the Greek military to be deployed to stop Greeks from leaving the country & to find out what happened to those Drachma that we were assured had been printed. Oh, and then there was that reactor in Iran....and so forth. It would actually be amusing simply to run a 'Snapper's predictions' thread starting from about 2-3 years ago. That, however, would require archive trawling that I lack the time or the constitution for.

[Minskaya]

If you folks really want to torture yourselves with bureaucratic arithmetic, here are the sequester numbers from the Office of Management and Budget. This document contains 224 pages listing the sequester amounts from every single agency in the United States government, followed by another 158 pages of agency accounts that are exempt from the sequester.

OMB Report Pursuant to the Sequestration Transparency Act of 2012

Note: The document above is in .pdf format

[bigross86]

Obama just lost the nerd vote:

Obama: No "Jedi mind-meld" with Republicans

Obama: No "Jedi mind-meld" with Republicans

By Matt Spetalnick
WASHINGTON | Fri Mar 1, 2013 6:13pm EST
(Reuters) - President Barack Obama, who said just days ago that he had no interest in playing a "blame game," spent much of a news conference on Friday pointing fingers at Republicans after last-ditch talks with congressional leaders failed to avert automatic spending cuts from kicking in later in the day.

Emerging from a nearly hour-long meeting and taking the podium in the White House briefing room, Obama displayed a combative style that has become his regular approach toward opponents since his decisive re-election victory in November.

Asked why he didn't just refuse to let congressional leaders leave the room until they had a deal, Obama told reporters: "I am not a dictator. I'm the president. So, ultimately, if (Senate Republican leader) Mitch McConnell or (Republican House of Representatives Speaker) John Boehner say, 'We need to go to catch a plane,' I can't have Secret Service block the doorway, right?"

Pressed on whether he was showing enough leadership - something Republicans say he has been lacking in the fiscal showdown - Obama mixed up his sci-fi references but made his point, nonetheless.

"I'm presenting a fair deal. The fact that they don't take it means that I should somehow do a 'Jedi mind-meld' with these folks and convince them to do what's right," he said, while offering no new ideas for resolving the bitter dispute.

Obama combined a reference to the "mind trick" sometimes used by Jedi on weak-minded adversaries in the "Star Wars" films with the "Vulcan mind meld" technique used by the "Star Trek" character Spock and others from his fictional planet Vulcan.

The president acknowledged that "this is not going to be an apocalypse" but he called the cuts "just dumb."

Obama's self-confidence - and his willingness to let things go over the edge, at least temporarily, in the latest fiscal battle - demonstrated what his aides have been saying for weeks.

He believes he's winning the public relations war and that Americans will put the lion's share of the blame on the Republicans for any economic pain and social hardship caused by failing to head off $85 billion in spending cuts due to start taking effect.

Republicans, for their part, insist Obama is exaggerating the potential impact of the cuts, but are seeking to avoid blame. McConnell, after the talks, called it "the president's across-the-board cuts" even though both sides agreed in 2011 to have these "sequestration" spending cuts go into effect if Obama and lawmakers failed to fashion another deficit-reduction plan.

But with lawmakers either heading out of town or already gone, Obama used the presidential soapbox on Friday to hammer home his points. He suggested that Republicans - who accuse him of continuing to campaign despite the election being long over - were driven, at least in part by entrenched hostility toward him still simmering after their election losses.

'PAINT HORNS ON MY HEAD'

"I recognize that it's very hard for Republican leaders to be perceived as making concessions to me," Obama said. "Sometimes, I reflect, 'Is there something else I could do to make these guys - I'm not talking about the leaders now, but maybe some of the House Republican caucus members - not paint horns on my head?'"

Obama wants Republicans to agree to eliminate tax loopholes enjoyed largely by the wealthy in order to help reduce the U.S. budget deficit. Republicans have ruled out raising taxes and want spending cuts instead.

Obama also took a shot at New York's billionaire mayor, Michael Bloomberg, who endorsed the president in the 2012 election. Bloomberg, during a visit to the White House on Wednesday, suggested to reporters that the administration was hyping the warnings of dire consequences from sequestration.

Responding to that, Obama said the Defense Department was trying to figure out how to continue funding schools for the children of military families. He also said Border Patrol agents "out there in the hot sun" were facing a 10 percent pay cut.

"I don't think they feel like this is an exaggerated impact. So I guess it depends on where you sit," he said.

Obama's sci-fi reference caused a stir on the Internet.

His mashing-together of the Vulcan "mind meld" and the Jedi "mind trick" went viral, drawing an avalanche of commentary on Twitter from "Trekkies" and "Star Wars" fans eager to point out the mistake.

The White House, known for its use of social media, wasted little time joining in the fun. "We must bring balance to the Force," it tweeted along with a photo of a gesturing Obama. "To deny the facts would be illogical." "The Force" was a "Star Wars" reference, while Spock often called things illogical.

Leonard Nimoy, the actor who played Spock, weighed in on Twitter, saying: "Only a Vulcan mind meld will help with this congress."

(Additional Reporting by Roberta Rampton and Steve Holland; Editing by Will Dunham)

And here's what George Takei had to say about Obama's brutal abuse of sci-fi terminology:

[leib10]

IE, "i don't care if people have studied this for years and back it up with evidence." ah, very good of you to say this after i just pointed out your rather grievous error re: Friedman.

granted economics is not and cannot be a hard science but your inability and worse, lack of interest in understanding the basics of economic theory means that you're missing out on the very foundation of finance and investing.



"i have no evidence to support my claim, thus i will choose to disregard everything as ramblings of pointy-eared academics."

let's put it this way. keynesian economics predicted back in 2009 continued low inflation despite QE and stimulus. austrian economics predicted hyperinflation, and that in short order.

i leave to you to honestly tell me which prediction was more accurate. please take a look at a 5-year chart of US 10-year treasury yields and tell me which way the trend line lies.

this is, ah....real world evidence? :)



and that just demonstrates you have no idea how the international bond markets work.

countries cannot be equated to humans. it can be an occasional useful metaphor but it is absolutely erroneous if extended too far.

allow me to present a short economic history of your country. here is a picture of UK debt history from 1692 to today.

[ATTACH]32166[/ATTACH]

note that the entire time the British Empire was expanding by leaps and bounds, from 1720-1870, the British had an enormously higher debt problem than the US has today (at 74%-- that, at its peak following a severe recession and rather worse demographics).

this should indicate to you that even extraordinarily high levels of debt, by itself, is not ruinous towards an economy. there are more important other factors at play.

i don't expect this to seep in, however. if you like, i can stop answering your posts; i'll just come and collect the butter cookies when next year, we haven't all fallen victim to currency wars and hyperinflation, which you can send to me with a nice thread stating 'I was completely wrong'. sound good?

Explain the spike near 1950 then. Wasn't the empire actually contracting at that point?

[Officer of Engineers]

Explain the spike near 1950 then. Wasn't the empire actually contracting at that point?

They lost India but gained Germany.

[xinhui]

Takei rules

Obama just lost the nerd vote:

Obama: No "Jedi mind-meld" with Republicans

LOL


And here's what George Takei had to say about Obama's brutal abuse of sci-fi terminology:

[ATTACH]32168[/ATTACH]

[snapper]

IE, "i don't care if people have studied this for years and back it up with evidence." ah, very good of you to say this after i just pointed out your rather grievous error re: Friedman.

granted economics is not and cannot be a hard science but your inability and worse, lack of interest in understanding the basics of economic theory means that you're missing out on the very foundation of finance and investing.



"i have no evidence to support my claim, thus i will choose to disregard everything as ramblings of pointy-eared academics."

let's put it this way. keynesian economics predicted back in 2009 continued low inflation despite QE and stimulus. austrian economics predicted hyperinflation, and that in short order.

i leave to you to honestly tell me which prediction was more accurate. please take a look at a 5-year chart of US 10-year treasury yields and tell me which way the trend line lies.

this is, ah....real world evidence? :)



and that just demonstrates you have no idea how the international bond markets work.

countries cannot be equated to humans. it can be an occasional useful metaphor but it is absolutely erroneous if extended too far.

allow me to present a short economic history of your country. here is a picture of UK debt history from 1692 to today.

[ATTACH]32166[/ATTACH]

note that the entire time the British Empire was expanding by leaps and bounds, from 1720-1870, the British had an enormously higher debt problem than the US has today (at 74%-- that, at its peak following a severe recession and rather worse demographics).

this should indicate to you that even extraordinarily high levels of debt, by itself, is not ruinous towards an economy. there are more important other factors at play.

i don't expect this to seep in, however. if you like, i can stop answering your posts; i'll just come and collect the butter cookies when next year, we haven't all fallen victim to currency wars and hyperinflation, which you can send to me with a nice thread stating 'I was completely wrong'. sound good?

Deary me... You seem determined not to address the main point I am making. I am not debating who has studied what more; certainly any 'economist' and perhaps you yourself has studied more on the subject than I. I do not claim to be an 'economist' and a debate over who has studied what seems rather trivial. You say that Bernanke policy is 'monetarist' and that based on what Freidman said about Japan in 1970 he would endorse Bernanke policy; an interesting subsiduary debate and one on which I disagree with you as you fail to acknowledge that Freidman advocated the abolition of the Fed. Now you introduce another debate by wishing to talk about levels of debt while ignoring the growth rates or the bond yields at the time. All interesting debates in themselves no doubt but not what I am saying which is that Federal Banks interest rate policy over that last decade or so has acted to cause and burst bubbles and that they are currently distorting the market to feed a very a dangerous bond bubble with the QE policy of buying $85bn worth of US Government debt per month. You have not addressed this question. If you do not wish to debate this fine but please stop confusing the issue. I have presented evidence but you have not replied to it... You accuse me of being mistaken about Freidman but ignore other matters he advocated. We appear to be having several debates at the same time while you ignore my origonal assertion so let me clarify these points:

1. My original point - and evidence - suggests that the US Fed's interest rate policy since 1999 and now it's QE programme have acted to artificially distort the market to create bubbles. The low interest rates after the dotcom bubble fed the property bubble and now with QE they are artificially keeping bond yields low. Whether this is justifiable or not is another matter and no doubt you would argue that it is while I would argue that the consequences of this bubble bursting outwiegh any risk of short term recession and in fact makes the future burst of this bubble even worse. The point about a free market is that it should reflect some degree of real risk but when the US Government is borrowing around $3 trillion per year to add to a debt of $16 trillion with growth of less than 1% being able to borrow for next to nothing in real terms is frankly insane. It is able to do so only because of the Fed's intervention. The market is effectively rigged. I don't claim to know if this is sustainable or not but the reason it's called QE and not just monetising the debt is that in theory the Fed will resell the bonds it's sold. They certainly can't do this in the short term.

2. The label issue... Is Bernanke persuing a monetarist or Keynesian policy? You might perhaps argue that only Governments persue a Keynesian policy and central banks do not and to some extent I'd agree. The point is that a Government can only persue a Keynesian policy in so far as it can borrow. How much 'stimulus' spending could Obama afford if the bond market reflected a true value without the Fed's interventions? Of course we'll never know thanks to Bernanke. If the Fed is not itself persuing a Keynesian policy it is enabling and encouraging the Government to do so. Everything that the Japanese Government plans to do is just a more explicit statement of what Obama and the Fed has done. Whether you call this monetarist is upto you but I would call it Keynesian stimulus spending based on a rigged bond yield rate. The sequester is a mere drop in the ocean and in my opinion hits the wrong areas but that again is another debate we could have. Yet it seems you do not really want to discuss this label issue even... After I clearly pointed out that the I had referred to such criticisms of the Fed as 'Austrian' you ignore that incovenient fact and put words into my mouth about pointed eared academics. The fact that Freidman advocated the abolition of the Fed is again ignored and his apparent endorsement of some QE in Japan in 1970 is considered sufficient to prove that he would endorse Bernankes current policy. It is as if we were discussing falling fish stocks in the North Sea this century and you argued that a fisherman commented that fist stocks in the Pacific were rising 40 years so therefore any fisherman today speaking about declining stocks in the North Sea must be incorrect.

3. The British debt case that you bring is interesting as you seem you think that this should be regarded in isolation almost. I don't happen to know what British bond yields were in 1820s nor what the GDP growth rate was but the level of sustainable debt and the amount a country can afford to borrow is directly linked to these factors. If you are busy borrowing to add natural resources and new markets to an Empire and have a history of success in such ventures then it is just speculation with a view to accumulation - a risk no doubt but one which creditors felt confident in taking. As I have said the US economy grew 0.1 in the last quarter of 2012 and is adding to it's debt at $3trillion per year yet it pays around 0.1% interest in real terms. Is this realistic? Of course another factor that influences would be lenders is where else can they keep money? Where is safer? In this regard I would suggest that US has benefitted from recent turmoils in the euro, where they are attempting Austrian economics on an artificial currency peg, precisally forbidding true valuation of each countries worth for a political agenda.

I hope this clarifies what we are discussing and perhaps induces you to answer. I can see that we fundametally disagree on state interventions but I'd like to hear how you feel Fed policy has helped the US economy and when it this intervention/distortion can end. If you chose not to reply any further that is your choice but as you have not yet addressed the real point anyway I remain none the wiser. All I can actually say for your opinions is that you do not believe inflation will rise though you have not offered any argument why this should be. Since you seem unwilling to offer to an explanation of why this belief of your might be the case let me offer you one: Inflation is based on money supply - money actually in circulation within the country. M0 supply has risen relatively little while M2 has risen more. See; http://www.tradingeconomics.com/char...tedstamonsupm2

The point is that a great deal of the actual paper $s are exported - when Government bonds are bought by China the interest payed on them in $s is sent abroad and of course all oil transactions are settled in $s. To a certain extent some of the excess money in circulation has been exported. Nor does all QE actually entail the printing of more paper... it's a purely 'on paper' transaction taking bonds from the Governments liabities accounts to the Fed's asset account but the Government has already spent the money - no new notes are printed. It like arguing that when Japan experienced deflation someone must have been burning yen notes but of course nothing of the sort happened. Nor really do I believe the current CPI rate. The statistics are clearly hiding real inflation. See this Peter Schiff video where he estimates real US inflation being between 7-10%; https://www.youtube.com/watch?v=pwI3Nya5L9g If you calculated US inflation last year in the same way as it was done prior to 1980 it would have been 11% (see;Alternate Inflation Charts). Even if you disregard all this and deny that currency is exported and instist that CPI valuation is correct you must still answer what is likely to happen when the bond bubble bursts but I have not heard you address this issue.

As for the currency war that is under way... you seem intent on refusing to see what you wish to ignore; “China is prepared. In terms of both monetary policies and other mechanisms, China will take into full account the quantitative easing policies implemented by central banks of foreign countries.” Yi Gang, deputy Governor the Chinese central bank. According to the China Times; "China is fully prepared for a looming currency war should it, though "avoidable," really happen, said China's central bank deputy governor Yi Gang late Friday."
China Central Bank Says It Is "Fully Prepared For Looming Currency War" | Zero Hedge
China 'fully prepared' for currency war - Telegraph

As for butter cookies I wasn't aware that we had agreed a deal. I certainly never claimed to be able to bake them and I have said to you at least twice before but again you chose to ignore thanks to the benevolent wisdom of unelected Brussels bureaucrats the importation of any form of diary produce or food containing is from North America to Europe is verbotten lest you sneaky devils try to poison us.

Look, I would genuinely like to hear your views on whether the Fed is feeding a bond bubble, if it is whether this is justifiable and how it might be possible to escape such a bubble without causing chaos. I am less interested whether we should call it monetarist or Keynesian but have replied to all the subsiduary issues you have raised. Will you now address the substantive issue?

They lost India but gained Germany.

Lost India and also wrote off with others (including ironically Greece) a lot 'West German' debt in 1953. "The 1953 agreement reduced the repayable amount of Germany’s external debt by 50 percent and spread out its payment by three decades. It allowed Germany to return to international capital markets and join the International Monetary Fund, World Bank and the World Trade Organization. While the rest of Western Europe in the 1950s struggled with debts of about 200 percent of GDP, West Germany, because of the restructuring, enjoyed a debt of less than 20 percent of GDP." History Shows Why Germany Should Help Greece - Bloomberg

[astralis]

snapper,

the point is, if you wish to debate economic policy-- and that's what you're doing-- then some understanding of the various economic schools is essential.

it helps to be accurate, for instance,

You say that Bernanke policy is 'monetarist' and that based on what Freidman said about Japan in 1970 he would endorse Bernanke policy;

no, he said this in 2000 about 2000-era japan, and the policies he advocated were -exactly- the same as what bernanke executed later, in eerily close economic conditions.

and seeing as how the father of monetarism, whom also feared inflation (overly much) didn't think it would cause a bond bubble, this is something for you to take into advisement.

now, to address what you call the main point.

The low interest rates after the dotcom bubble fed the property bubble and now with QE they are artificially keeping bond yields low. Whether this is justifiable or not is another matter and no doubt you would argue that it is while I would argue that the consequences of this bubble bursting outwiegh any risk of short term recession and in fact makes the future burst of this bubble even worse.

whence did the low interest rates before the dotcom bubble come from? not primarily the fed, but by the huge outgrowth from china. chinese policymakers invested huge amounts in the US because their own market was saturated and the US is a safer harbor than europe. this fed low interest rates, not the fed.

this is different from the actions taken by the fed with the recession, and in a different time. inflationary pressures in an inflationary environment causes bubbles, and this is where we were from approximately 2000-2006. understand that with the recession came a deflationary environment and a liquidity trap, which by definition counters the inflationary effects of QE as well as the lowering of bond prices.

what you've in effect taken is an austrian position, where any intervention in the market causes economic distortion.

i encourage you to read the following:

Bernanke And The Shibboleths - NYTimes.com

but I'd like to hear how you feel Fed policy has helped the US economy and when it this intervention/distortion can end.

this is why i've asked you to read up on the monetarist school and friedman.

conservatives used to believe in monetarism and central bank action as the alternative to direct government intervention in the economy. once you understand this basis of thought you'll better understand the role of Fed policy.

As for the currency war that is under way... you seem intent on refusing to see what you wish to ignore

ah, it's easy to thrown around quotes-- here's mine: christine lagarde, managing director of IMF: "We think that talk of currency wars is overblown." - Feb 16 2013.

the effects of a currency war is obvious; a general decline in international trade. so let's see.

Look, I would genuinely like to hear your views on whether the Fed is feeding a bond bubble, if it is whether this is justifiable and how it might be possible to escape such a bubble without causing chaos.

1. no, there is no bond bubble. 2. yes, QE is fully justifiable. 3. a leading statement, because there will no bubble to 'escape from'.

all of these statements have predictive power. as i said, if you are right, then we should see hyperinflation, a collapse in the bond market, and a general global recession if not depression. there will be competitive currency devaluation.

in short, all the predictions that the austrian school made in 2008.

i'm willing to give it another year. i'll admit i was wrong and my economics need re-assessment should this happen-- are you willing to do the same?