Ben “Willy-Nilly” Bernanke

On November 21, 2002 Bernanke delivered a speech titled “Deflation: Making Sure "It" Doesn't Happen Here”. Despite saying he wouldn’t do a “willy-nilly” disbursement, he turned around and did exactly that. Dr. Bernanke missed the economic veins with his 14 trillion dollar willy-nilly injection, and created what he was fighting against - deflation.

With this great debacle he prolonged the inevitable; exacerbated the adverse ramifications; sentenced our currency to a worthless death; crucified our economy and signed our fate with a very ugly date known as Hyperinflation.

He said three notable things in his speech:

  1. “But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
  2. “If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.”
  3. “Of course, the U.S. government is not going to print money and distribute it willy-nilly...”

“Of course”.

There are about 100 million houses in the United States, of which about 70 million are primary residences. Jim Quinn wrote an excellent piece titled: “The Great Deleveraging Lie”. In it was this fine chart:

As we can see, there is about $8,800,000,000,000.00 (8.8 trillion) in mortgage debt.

The bailout money Bernanke injected into the system was $14,000,000,000,000.00 (14 trillion).

The problem with the bailout money was that it wasn’t injected into the veins of the economy. Face it, 14 trillion could have paid off every-ones’ mortgage, HELOC, credit cards, student loans and car loans.

In 2006, 7,000,000 - 10,000,000 (7-10 million) originators were subprime borrowers. That created massive demand for housing. Increase the demand and the prices go up. This market never had so many new buyers.

The supply of money via mortgage credit was increased.

Increase the supply of anything and the value of it goes down. Along with it went its purchasing power.

When things went south, Bernanke began his Willy-Nilly injections. The subprime fallout was 1.5 trillion. Its collateral damage was another 1.5 trillion in prime mortgages. He could have injected a few billion into the veins of the dying patients, capped interest rates and frozen their ARMs. Instead, he chose to instead inject trillions it into the hearts of the morons who invented these disasters, chopped them up and mixed them together, then got them a Triple A rating, and then sold them to pension funds and countries as investments.

One of these lunatics boasts that he is “doing God’s work”.

Nice job fellas. Hope you got the bonus money me and my great grandkids signed for, because despite what Willy-Nilly Bernanke thinks - essentially there is a cost. Lunatics

What Bernanke obviously failed to understand (well in addition to everything economic) is that inflation is the size of the money supply. That size includes credit.

Mortgage credit to be specific.

Bernanke’s willy-nilly injection failed to keep mortgage credit from deflating.

Worse, all the consumers who were foreclosed on, and all the consumers who did the “Jingle Keys” return with the bank won’t be buyers for at least 7 years.

They got 7-10 million new buyers in 2006 with subprime loans. They probably took away 14-20 million buyers when the house of cards collapsed and they injected the money haphazardly into the system. If you want to keep prices from deflating you have to keep demand (read: qualified home buyers) and credit flowing to them.

Afterall, 1 in 6 jobs were housing related.

The keyword being were.

Budweiser should do a real genius commercial with these insane architects of disaster.

Now we are left with homes being sold short or on the courthouse steps. This is leading to massive asset price destruction. Try selling a home for $250,000.00 when the neighbors was sold on the courthouse steps for $100,000.00.

Dr. Bernanke couldn’t find an economic vein if his life depended on it.

Oh, 22% unemployment doesn’t help the buyer pool either.

The term willy-nilly really has two meanings and different origins. One is whether it is with or against your will. As Shakespeare’s “The Taming of the Shrew” when Petruchio said to Katharina

“That you shall be my wife; your dowry 'greed on;

And, Will you, nill you, I will marry you.”

[I.e. I will marry you, whether you like it or not.]

The other is an unplanned, haphazard fashion'.

Like the rest of the bailout crap these insane lunatics say the second whilst they stick us with the first. And the way they get away with it was detailed in my last write “Why We Are Totally Finished.”

In the “Taming of the American Servant” Bernanke said to us:

“That you shall be my slave; ALL your wages ‘greed on;

And, Will you, nill you, I will enslave you to my debt based money system.”

[I.e. You’ll be my debt slave, whether you like it or not.]

In Summary: My faith in the 5Gs: (G*(religious edit)d, Gold, Guns, Grub & The Government Will Continue to Screw It Up) remains strong.

Disclosure: Thanks to "J" for editing my atrocious grammar and spelling.

About the Author

davossherman [at] gmail [dot] com ()