Why Bernanke is not panicking

The stimulus is finally taking effect.  As Zimbabwe and the Wiemar Republic demonstrate, one thing that governments armed with the ability to print fiat money really can do is stimulate.

From 2009 May to 2011 November total business sales in dollars rose twenty six percent, ten percent a year, which to me, though not to Bernanke, looks like good reason to scream panic and hit the brakes, to raise real interest rates to at least normal levels, and arguably higher.

The reason Bernanke is not panicking is that from 2008 July to 2009 May, total sales fell by the same amount, so, Bernanke presumably figures, we are just getting back to normal, and indeed still have not gotten to back to anything like the old normal, because these are inflated dollars.  Continue at this rate for a a year and a bit, then we will be back to the old normal, in terms of real value of goods sold,

So he proposes to continue at this rate for another year and a bit, to early 2014.

Which makes perfect sense if you think the US economy is still as capable of producing wealth as ever it was.

I don’t think we can get back to the old normal without fundamental political change, and by fundamental change, I don’t mean any of the current crowd of Obama look alikes that the Republican party is offering.

In a year and a bit, early 2014, it will become apparent whether I was right or Bernanke was right.

2 Responses to “Why Bernanke is not panicking”

  1. […] sales are rising ten percent a year in nominal terms.    Surprise surprise, shadowstats estimates ten percent inflation per year if we use the […]

  2. MountainHome says:

    I’m betting you’ll be right. I am aware of the Zimbabwe currency and it’s a laugh. Great article!! Thanks.

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