Ben Bernanke’s Hyperinflation And Economic Collapse

Ben Bernanke‘s Hyperinflation And Economic Collapse
By Greg Hunter        
Dec 4 2009


Yesterday, Federal Reserve Chief Ben Bernanke was in front of the Senate Banking Committee trying to hold on to his job. Some Senators were complimentary on Bernanke’s job. Republican Senator Judd Gregg from New Hampshire gave the Fed Chairman a warm welcome.  Judd said, “If you hadn’t been there, and hadn’t been willing to take extraordinary action last fall, last winter, and even early spring … it’s very likely we would be experiencing a depression…”  I look at Bernanke’s performance during the financial crisis the same way I would look at a drunken bus driver who crashes and then stumbles around pulling a few children out of the wreckage.  In my eyes, Bernanke is hardly a hero.

Republican Jim Bunning from Kentucky, on the other hand, couldn’t have given a colder reception if he greeted Bernanke in the North Pole.   Bunning said, in part, “Rather than making management, shareholders, and debt holders feel the consequences of their risk-taking, you bailed them out.  In short, you are the definition of moral hazard.”  Bunning, a former Major League pitcher, hurled another fast ball at Bernanke’s head when he said, “Because you bowed to pressure from the banks and refused to resolve them or force them to clean up their balance sheets and clean out the management, you have created zombie banks that are only enriching their traders and executives.”  Senator Bunning vowed to do everything possible to stop Bernanke’s nomination and to “end the Fed’s failures.” 
(Complete video of Senator Bunning’s comments below)

Nice speech, but according to economist John Williams of Shadow Government Statistics, it is too late.  In Williams latest report he writes “The United States Economy and Financial System Face an Eventual Great Collapse.”  Williams told me in an interview this week that because of all the bailouts, stimulus packages, giveaways and short-term debt, the U.S. has to finance nearly $5 trillion in 2010 alone.  That’s about $96 billion in debt auctioned off each and every week!!  Williams said, “Someone has to buy those Treasuries, and if no one does, then the Federal Reserve will become buyers of last resort.” The Fed buying that much in Treasuries is the same as printing huge amounts of money.   Williams says that “is the tipping point that will start a dollar crisis.”  According to Williams, this will produce a “high risk of an ultimate dollar crisis that will begin unfolding in year ahead.”  

Inflation created by this “dollar crisis” will turn into hyperinflation within 5 years.  Government and Fed actions have caused this problem and Williams sees “no way out,” and “hyperinflation is just a matter of time.” The hyperinflation forecasted by Shadow Government Statistics will look like Weimar Germany in the early 1920’s.  The dollar will rapidly lose value to the point it will take a wheelbarrow full of cash to buy a loaf of bread or a gallon of gas.  Anyone on fixed income or holding dollars will be wiped out according to Williams.



The Gold market seems to be reflecting the fear of inflation and a weakening dollar. Big central banks are buying Gold. India bought 200 metric tons of the yellow metal last month. Other countries, such as China and Russia, are also gold buyers. Retail investors are, likewise, beginning to flock to gold. Arthur Blumenthal of Stack’s Rare Coins in New York City has been in the gold and coin business since 1974.  Stack’s opened its doors in 1934 and is the oldest coin dealer in America.   Blumenthal saw the “go-go years” of the late seventies gold market firsthand. Blumenthal told me, “I have never seen anything like this before!  There are only buyers.”  He says many of his customers are “Wall Street types who are buying physical gold for the first time.” 
Williams says buying gold and silver “long term” will be your best defense against a “great collapse…dollar crisis… and hyperinflation.”  Williams also says you should stock up on food and other necessary supplies because the coming crisis will create shortages in all sorts of things.   
I predict Mr. Bernanke will keep his job at the Federal Reserve.  That might be poetic justice because this Fed Chief should witness his handy work firsthand. What is coming to America might go down in history as Ben Bernanke’s Hyperinflation and Economic Collapse.
Greg Hunter
How Do I Protect My Assets?
Obama’s big sell-out


Ron Paul was excellent on C-SPAN’s ‘Washington Journal





8 Responses to “Ben Bernanke’s Hyperinflation And Economic Collapse”

  • Mick says:

    Bernake is now going after Social Security, trying to shut it down. He told Congress they have the power to end the program.

    Someone needs to remind Bernake Congress has the right to end the Federal Reserve.

    You can read about it here:

  • Mick says:

    Senate Banking Committee
    Thursday, December 3, 2009

    The Remarks of Sen. James Bunning (R-KY)

    As Prepared For Delivery:

    Four years ago when you came before the Senate for confirmation to be Chairman of the Federal Reserve, I was the only Senator to vote against you. In fact, I was the only Senator to even raise serious concerns about you. I opposed you because I knew you would continue the legacy of Alan Greenspan, and I was right. But I did not know how right I would be and could not begin to imagine how wrong you would be in the following four years.

    The Greenspan legacy on monetary policy was breaking from the Taylor Rule to provide easy money, and thus inflate bubbles. Not only did you continue that policy when you took control of the Fed, but you supported every Greenspan rate decision when you were on the Fed earlier this decade. Sometimes you even wanted to go further and provide even more easy money than Chairman Greenspan. As recently as a letter you sent me two weeks ago, you still refuse to admit Fed actions played any role in inflating the housing bubble despite overwhelming evidence and the consensus of economists to the contrary. And in your efforts to keep filling the punch bowl, you cranked up the printing press to buy mortgage securities, Treasury securities, commercial paper, and other assets from Wall Street. Those purchases, by the way, led to some nice profits for the Wall Street banks and dealers who sold them to you, and the G.S.E. purchases seem to be illegal since the Federal Reserve Act only allows the purchase of securities backed by the government.

    On consumer protection, the Greenspan policy was don’t do it. You went along with his policy before you were Chairman, and continued it after you were promoted. The most glaring example is it took you two years to finally regulate subprime mortgages after Chairman Greenspan did nothing for 12 years. Even then, you only acted after pressure from Congress and after it was clear subprime mortgages were at the heart of the economic meltdown. On other consumer protection issues you only acted as the time approached for your re-nomination to be Fed Chairman.

    Alan Greenspan refused to look for bubbles or try to do anything other than create them. Likewise, it is clear from your statements over the last four years that you failed to spot the housing bubble despite many warnings. Chairman Greenspan’s attitude toward regulating banks was much like his attitude toward consumer protection. Instead of close supervision of the biggest and most dangerous banks, he ignored the growing balance sheets and increasing risk. You did no better. In fact, under your watch every one of the major banks failed or would have failed if you did not bail them out.

    On derivatives, Chairman Greenspan and other Clinton Administration officials attacked Brooksley Born when she dared to raise concerns about the growing risks. They succeeded in changing the law to prevent her or anyone else from effectively regulating derivatives. After taking over the Fed, you did not see any need for more substantial regulation of derivatives until it was clear that we were headed to a financial meltdown thanks in part to those products.

    The Greenspan policy on transparency was talk a lot, use plenty of numbers, but say nothing. Things were so bad one TV network even tried to guess his thoughts by looking at the briefcase he carried to work. You promised Congress more transparency when you came to the job, and you promised us more transparency when you came begging for TARP. To be fair, you have published some more information than before, but those efforts are inadequate and you still refuse to provide details on the Fed’s bailouts last year and on all the toxic waste you have bought.

    And Chairman Greenspan sold the Fed’s independence to Wall Street through the so-called “Greenspan Put”. Whenever Wall Street needed a boost, Alan was there. But you went far beyond that when you bowed to the political pressures of the Bush and Obama administrations and turned the Fed into an arm of the Treasury. Under your watch, the Bernanke Put became a bailout for all large financial institutions, including many foreign banks. And you put the printing presses into overdrive to fund the government’s spending and hand out cheap money to your masters on Wall Street, which they use to rake in record profits while ordinary Americans and small businesses can’t even get loans for their everyday needs.

    Now, I want to read you a quote: “I believe that the tools available to the banking agencies, including the ability to require adequate capital and an effective bank receivership process are sufficient to allow the agencies to minimize the systemic risks associated with large banks. Moreover, the agencies have made clear that no bank is too-big-too-fail, so that bank management, shareholders, and un-insured debt holders understand that they will not escape the consequences of excessive risk-taking. In short, although vigilance is necessary, I believe the systemic risk inherent in the banking system is well-managed and well-controlled.”

    That should sound familiar, since it was part of your response to a question I asked about the systemic risk of large financial institutions at your last confirmation hearing. I’m going to ask that the full question and answer be included in today’s hearing record.

    Now, if that statement was true and you had acted according to it, I might be supporting your nomination today. But since then, you have decided that just about every large bank, investment bank, insurance company, and even some industrial companies are too big to fail. Rather than making management, shareholders, and debt holders feel the consequences of their risk-taking, you bailed them out. In short, you are the definition of moral hazard.

    Instead of taking that money and lending to consumers and cleaning up their balance sheets, the banks started to pocket record profits and pay out billions of dollars in bonuses. Because you bowed to pressure from the banks and refused to resolve them or force them to clean up their balance sheets and clean out the management, you have created zombie banks that are only enriching their traders and executives. You are repeating the mistakes of Japan in the 1990s on a much larger scale, while sowing the seeds for the next bubble. In the same letter where you refused to admit any responsibility for inflating the housing bubble, you also admitted that you do not have an exit strategy for all the money you have printed and securities you have bought. That sounds to me like you intend to keep propping up the banks for as long as they want.

    Even if all that were not true, the A.I.G. bailout alone is reason enough to send you back to Princeton. First, you told us A.I.G. and its creditors had to be bailed out because they posed a systemic risk, largely because of their credit default swaps portfolio. Those credit default swaps, by the way, are the same over-the-counter derivatives that the Fed did not want regulated. Well, according to the TARP Inspector General, it turns out the Fed was not concerned about the financial condition of the credit default swaps partners when you decided to pay them off at par. In fact, the Inspector General makes it clear that no serious efforts were made to get the partners to take haircuts at all, and one bank’s offer to take a haircut was actually declined. I can only think of two possible reasons you would not make then-New York Fed President Geithner try to save the taxpayers some money by seriously negotiating or at least take up U.B.S. on their offer of a haircut. Sadly, those two reasons are incompetence or a desire to secretly funnel more money to a few select firms, most notably Goldman Sachs, Merrill Lynch, and a handful of large European banks. I also cannot understand why you did not seek European government contributions to this bailout of their banking system.

    From monetary policy to regulation, consumer protection, transparency, and independence, your time as Fed Chairman has been a failure. You stated time and again during the housing bubble that there was no bubble. After the bubble burst, you repeatedly claimed the fallout would be small. And you clearly did not spot the systemic risks that you claim the Fed was supposed to be looking out for. Where I come from we punish failure, not reward it. That is certainly the way it was when I played baseball, and the way it is all across America. Judging by the current Treasury Secretary, some may think Washington does reward failure, but that should not be the case. I will do everything I can to stop your nomination and drag out the process as long as possible. We must put an end to your and the Fed’s failures, and there is no better time than now.

  • Patriot says:

    Obama’s Big Sellout

    The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway

  • Patriot says:,0,7842580,full.story,0,6923745.story
    Ron Paul’s ideas no longer fringe
    With the economy still struggling, the lawmaker’s libertarian views are getting serious attention.
    By Don Lee

    January 2, 2010

    Reporting from Washington

    For three decades, Texas congressman and former presidential candidate Ron Paul’s extreme brand of libertarian economics consigned him to the far fringes even among conservatives. Not a few times, his views put him on the losing end of 434-1 votes on Capitol Hill.

    No longer. With the economy still struggling and political divisions deepening, Paul’s ideas not only are gaining a wider audience but also are helping to shape a potentially historic battle over economic policy — a struggle that will affect everything including jobs, growth and the nation’s place in the global economy.

    Already, Paul’s long-derided proposal to give Congress supervisory power over the traditionally independent Federal Reserve appears to be on its way to becoming law.

    His warnings on deficits and inflation are now Republican mantras.

    And with this year’s congressional election campaign looming, the Texas congressman’s deep-seated distrust of activist government has helped fuel protests such as the tea-party movement, harden partisan divisions in Washington and stoke public fears about federal spending and the deficit.

    “People are wondering what went wrong. And they’re not happy with what the government is offering up,” said James Grant, editor of Grant’s Interest Rate Observer, offering an explanation for why seemingly wonkish arguments over interest rate policy and the money supply are spilling over onto ordinary Americans.

    Some of Paul’s most extreme views are still beyond the pale for most economists. Despite the eroding value of the dollar, no one expects the U.S. to return to the gold standard, as Paul advocates; most economists think that could wreck the economy.

    In their less drastic forms, however, Paul’s ideas are being welcomed by conservatives and viewed with foreboding by liberals. For conservatives, runaway inflation constitutes the biggest potential threat to the nation’s future. Liberals worry that cutting back stimulus efforts too soon could slow or even halt the current recovery.

    The debate over that question — what the basic thrust of U.S. economic policy should be — is likely to dominate the coming elections and Washington policymaking.

    And so far, Paul and his fellow conservatives are on the offensive. President Obama and congressional Democrats are repeatedly pledging not to increase the deficit and to begin cutting back soon.

    “I think we’re going to be in for more revival of fiscal responsibility,” said William Niskanen of the Cato Institute, who headed the Council of Economic Advisors under President Reagan.

    Niskanen sees the Texas Republican’s increasing influence as stemming from the continued economic weakness. “To this extent, Ron Paul gains voice,” he said.

    Paul would go a lot further in cutting back the government’s role than even free-marketers like Niskanen support. If Paul had it his way, for instance, he would do away with the Fed entirely. In his bestselling book “End the Fed,” he lambasted the central bank as an “immoral, unconstitutional . . . tool of tyrannical government.”

    Such rhetoric might once have been dismissed as extremism. But Paul’s anti-Fed message has drawn broad support because of the central bank’s failure to restrain the flood of cheap money and excessive risk-taking in the years leading up to the financial crisis.

    It has stirred rallies on college campuses and supportive commentaries from Wall Street pundits. More than 300 representatives in Congress have embraced Paul’s ideas for reining in the Fed.

    The response “is even more than I ever dreamed,” Paul said in an interview, reminiscing about one evening during his 2008 White House run when University of Michigan students chanted “End the Fed” and burned dollar bills.

    Paul, a skinny 74-year-old with a hangdog expression, understands that historical circumstances have thrust his ideas to the fore. “An intellectual fight is going on,” he said.

    Paul traces his economic views to his frugal upbringing in Pittsburgh at the tail end of the Depression. He saved pennies from delivering newspapers and helping out his father’s small dairy business.

    And his first economics class at Gettysburg College was an eye-opener, Paul said. When a professor explained how banks keep only a tiny part of their deposits on hand and earn money by lending out the rest, Paul discovered one of the “tricks” of the financial system.

    Beyond that, Paul’s ideas are grounded in the work of economic thinkers from an earlier era who focused on problems similar to those besetting the U.S. today.

    In particular, Paul is a disciple of Ludwig von Mises, an Austrian theorist born at the end of the 19th century who contended that government intervention in an economy would fail because free markets were better at allocating resources and fueling growth.

    Having lived through Germany’s devastating hyperinflation in the early 1920s, which helped pave the way for Hitler, Mises wrote long before the Great Depression that over-generous credit policies would encourage excessive borrowing, creating a boom and then a bust.

    Mises’ ideas became central to what is known as the Austrian School of economics, which emphasized tight controls on credit and money supply, a strategy that discouraged financial ups and downs but tended to slow growth.

    By 1940, when Mises arrived in America, most Western economists had embraced the competing theories of Britain’s John Maynard Keynes, who called for government to stimulate the economy by spending on infrastructure and cutting interest rates.

    Obama has largely followed the Keynesian script, as President George W. Bush did when the economic crisis broke.

    Paul’s once-lonely espousal of the Austrian School’s ideas has gotten new impetus from conservative economists and Republican political strategists.

    “A lot of good ideas were shoved aside because of the Depression and the rise of the Keynesian view of the world,” said George Selgin, an economics professor at the University of Georgia.

    Paul contends that Austrian economics explains the most recent financial meltdown: “It says if you inflate too much, if you have no restraint on monetary authorities, you’re going to bring on a crisis.” Now, Paul says, administration policies are leading the country toward disaster.

    Selgin and many mainstream economists agree that pumping too much money into the economy can lead to trouble, but they say Paul goes too far.

    In the 1930s, say Selgin and many other economists, including Fed Chairman Ben S. Bernanke, the U.S. economy began pulling out of the Depression thanks to federal easing of monetary policy.

    The economy tipped back into depression after the reins were tightened too soon.

    “In this aspect of the monetary system, he’s just blown it,” Selgin said of Paul.

    However, like Mises, whose portrait hangs on his Washington office wall, Paul is intransigent, and that has earned him an ardent following.

    “His views are strong and hardheaded, but you’ve got to stand firm or you’ll get blown over in this world,” said Mark Skousen, editor of the newsletter Forecasts & Strategies and a former economics professor at Columbia University.

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