Greenspan's Successor?

[The Rabbi]

Alan Greenspan, the Fed Chairman, will be retiring I think this year.  Any thoughts on who his successor ought to be or what kind of person would be good for the job?
Historically the position has gone to a German Jew (Volker and his predecessor) but with those folks hitting their 70s and 80s it might be time to break precedent.

[Nathaniel Firethorn]

http://money.cnn.com/2005/08/04/news/economy/fed_greenspansuccessor/

- NF

[Art Eatman]

I've read some commentary that Bernanke might be the heir-apparent.  If so, it is speculated, times oughta get interesting.  He's even more in love with the printing press than Greenspan.

Regardless, get outta debt and stay out for a few years.

Art

[Paddy]

What does the Fed chairman do that a computer program couldn't?  Just plug in all the variables and spit out the options:
1) Raise the rate
2) Lower the rate

[Nathaniel Firethorn]

He's even more in love with the printing press than Greenspan.

What does that mean?

- NF

[Guest]

Historically the position has gone to a German Jew...

...so let's avoid making that blunder again.

The Fed should be abolished and the governors fed to alligators. Maybe Pat Robertson will issue a directive on them.

[Paddy]

He's even more in love with the printing press than Greenspan.
What does that mean?

Funny money.  Issued currency not tied to anything tangible, like gold or silver, backed by the 'faith and credit of the United States' ie; it's good because everybody accepts it, not because it's worth anything of value.  Plus borrowing, debt, the issuance of treasury notes to raise spendable cash now to be repaid at some future time when the tax revenues come in.  

All that's an oversimplification but you get the drift.

[Art Eatman]

The Fed is trapped in push-pull situation.  To keep the dollar from getting too weak, interest rates must be higher than in the recent past.  But, as rates rise, it puts a squeeze on all those folks with ARMs and interest-only house payments.  These people and the refis are the main source of consumer spending.  Consumer spending is about 2/3 of our economy.

But if the dollar gets too weak, the prices of imports will rise.  That's depressing.

Over-simplified, lower interest rates get people to borrown money; banks "borrow" the money from the Fed and give IOUs and the Fed prints more paper.

Confused?  Don't be alone.

At any rate, Bernanke has no fears of inflation, and will happily work with lower interest rates and a higher money supply to avoid any chance of deflation, a fear engendered by the Great Depression of the 1930s.

Art

[The Rabbi]

Thats kind of over-simplified.
The Fed controls short term rates but not long term ones, which are set by the market.
I am afraid the Fed has done such a good job whipping inflation that people have forgotten and gotten complacent about inflation.  Those of us alive and sentient during the 1970s remember it well and I sure wouldnt want to see a return to that.  The current spikes in oil prices feel depressingly familiar.  They ushered in a high inflation era in the US.  In Germany btw, which imports all of its oil, inflation in the 1970s was probably half what it was here.

[Art Eatman]

True, Rabbi, over-simplified.  But I ain't gonna try to write a book.

The Carter era inflation, at least, had an obvious trace-back to LBJ's guns'n'butter policy of his part of the Vietnam era.  Nixon didn't help matters, and the best that poor old Ford could do was his "Whip Inflation Now" button. :barf:

It wasn't until Volcker raised the FedFunds rate that that particular inflation cycle was broken...

Count me among those who believe the true inflation rate is closer to six or seven percent than to the Official Numbers.

Art

[Sindawe]

The Fed should be abolished and the governors fed to alligators.

That is SOOOO cruel.  What have you got against alligators?

I am SOOOO glad I never fell into the ARM/Interest only trap.

[The Rabbi]

Count me among those who believe the true inflation rate is closer to six or seven percent than to the Official Numbers.

What evidence do you have for that?

[Paddy]

Consumer spending is about 2/3 of our economy.

That right there is our biggest problem IMO.  As large as our economy is, we should be producing more than we consume.  Instead we have huge trade deficits with other (mostly third world) countries, exposing us to needless vulnerability.

Another thing I've read somewhere (think it was on rense.com-a weird website with some sort of anti-everything agenda I haven't figured out, but that's a horse of a different color) is that our standard of living is largely supported by petrodollars.  That fact that the entire world trades oil in dollars, rather than some other currency gives us, by way of the dollar, a huge buffer against the vagaries of our economy.   The assertion was that if major oil producing countries were to begin accepting say, Euros instead of dollars for their oil, we'd be in a world of hurt.

I remember the inflation of the 70's, the long gas lines (you could only fill up on odd or even days, depending on your license plate number).  Nixon insituted wage and price controls.  It was not a good time.

[Art Eatman]

Not "evidence" particularly, but a few points:  For one thing, the CPI calculators assume that if the price of a brand-name food increases, the housewife will substitute generic.  That's total BS.

Note that when housing and car prices started the rapid climb over the last 25 years, they were dropped from the CPI.

Other?  My wife has a better memory than any computer when it comes to prices.  I hear unending bitching.  I also notice price increases in a lot of stuff I buy, whether it's gun related items or car repair stuff.

Powder and primers and bullets are way up.  Hydraulic oil is way up.

Motel costs and restaurant prices have jumped a good bit in the last two years.  I'm talking 20 to 40 percent in some cases.  This contributes to the cost of doing business, a good bit of which is passed on to the consumer.  Same thing for diesel prices and delivery costs which are added on to the price of consumer items and to services.

With the higher appraised values on real property, ad valorem taxes are climbing rapidly.

None of the above are down in this mythical 2% or 3% range.

Art

[The Rabbi]

OK, all of those are pretty good reasons.  I agree that the CPI seems to think that people buy computers every month.  An interesting exercise would be to develop a personal CPI to see what your costs are month by month.  That would be a lot more meaningful to most people.

[Nathaniel Firethorn]

Well, now we know: it's Bernanke.

http://www.nj.com/news/times/index.ssf?/base/news-0/1130227580160741.xml&coll=5

- NF

[Waitone]

Regardless of who is picked, the person will be a globalist and concerned with the health of the US economy only to the extent it drives the world economy.  His policies will be directed at a world effect as opposed to aiming for the benefit of the US.  He will be a big advocate of international trade agreements.  He will support criminal alien immigration as a way of driving labor costs in the US down.  In short, the pick for the FED chairmanship will be the chief facilitator and cheerleader for globalization of the US economy.  His primary allegiance will to to something other than America.

BTW, why does the president get to pick the CEO of a private corporation?  And yes, CPI figures are routinely diddled.  Its been happening since the advent of the current version of the welfare state.  Welfare benefits are indexed according to CPI figures.  CPI goes up (and it won'd decline) and government has to pony up more payments to welfare recipients.  It therefore pays the government to diddle the numbers to ensure a level rate of growth in inflation (c.f. central bank functions).

[Stand_watie]

Hey, German Jews know their money.

No, it's not neccessarily true, but it's kind of a fun positive stereotype, like rednecks know NASCAR and southern blacks are great cooks. Definitely not neccessarily true in any given instance, but any of the three isn't a bad bet.

I know that stereotyping is wrong, but if I have nothing else to go on and I want mutual funds, I'm asking Greenbaum. I want to know how whether to bet on JJ or Stewart I'm asking the guy with the skoal ring in his back pocket, and if I want to know how to cook flatheads I'm asking the guy down at the fishing hole. Yeah, he's black. So what? There's a reason it's a stereotype.