Yeah that hyper-inflation is just around the corner! The financial "experts" have been warning about bringing barrels of money to the grocery store for 4 years now.

Still waiting.

I know my 401k has sure appreciated his efforts.

The only way to pay the national debt down will be through massive inflation. When we finally start behaving responsibly toward debt, a loaf of bread will cost $20. It's just a question of when we are forced to do it.

Yes, and 401k's never go down.

I wouldn't hold my breath too long...there is still massive deleveraging left from the blowup of the derivatives bubble. Pumping money into the economy is the only thing that has kept us afloat.

Given the alternative of depression-era deflation I'd say the economy could use a little more inflation to encourage more growth and capital investment vs. big business hording its wealth like it has been.

We don't need massive inflation. We need growth, and we need modest inflation: 3-5%.

I love the "if people feel their houses are worth more, they will spend more. They might buy a car" shtick.

Demand is down down down. Jobs are gone gone gone. The only way we can pay for anything in the long run is high inflation, as Bojack points out.

Wrong - Pumping money into the system has only kept the zombie banks afloat. The economy is in suspended animation.

This can't go on forever. Probably after the election another big take down on the road to ruin will occur.

The only way to get out of this mess is to make the banks balance their books - which means they will have to be shut down.

There is no other solution, unless we let them start a whole new fiat money system, where we all have 1/10th the value of what we have now.

The Chinese will eventually foreclose unless they get paid in dollars. And so they will get paid in inflated dollars. And then World War III, presumably.

Glad to hear bank have that much money they they do NOT want to loan out at low interest rates - Not unless you think banks want to get stuck with loans at 3% five years from now.

Bernanke really needs to take his head out of the sand and realize that after doing the same thing for the past 4 years and not making the economy turn around is NOT working. I understand it's helping in/out investments like the stock market (you buy today and can sell tomorrow) and the govt to throw on more debt for the same payment (if you think they are using this opportunity to lower payments and decrease debt - faggedaboutit), but not helping long-term investments or the average guy.

Maybe he and the crew need to try something different.

If/when the economy turns there will be so many dollars chasing the same goods, inflation will be really ugly.

Most banks are selling those 3% loans to Fannie, Freddie, FHA, or to investors.

Steve, I don't know where you do your banking but it's not too hard to find mortgage loans in the 3% range now. Heck, we are even doing non owner occupied RE investment loans at 4%.

Bernanke is an apt student of the Great Depression and was the perfect guy for the job when he took the reigns. I'm amazed at how forgetful or just plain clueless people are as to how bad things were just 4 short years ago.

What do you suggest he do to "try something different"?

If/when we start seeing many dollars chasing goods then the QE will cease.

I suggest this article:
http://seekingalpha.com/article/864361-why-i-m-not-afraid-of-qe3

Steve, with interest rates at zero, the Fed only has one hammer, so everything looks like a nail.

Raleigh, if we start seeing too many dollars chasing goods, ending QE won't do us any good. Do you remember Greenspan the "Maestro" being nice and accomodating to end the recession in in the early '00s? That got us a giant housing (and stock) bubble. Now we'll have another stock bubble. Far from being maestros, the Fed seems to only know how to floor it and then slam on the brakes.

Ah yes, the Obama appointees at the Fed are helping me out again. People who have money invested (like myself) make money, while most everyone else's dollars are devalued and their purchasing power decreased. Ask anyone who is active in the real estate markets and they will tell you that interest rates are not a sales barrier; buyers just can't get credit due to new regulations (under the Dodd/Frank regime). To continue this game, re-elect Barack Obama. I'll do better and ordinary working folk (and their unemployed brethren) will stay stuck in the mud.

"Steve, I don't know where you do your banking but it's not too hard to find mortgage loans in the 3% range now."

Commercial real estate. Banks are 100% tougher than they were 4 years ago even though most comm RE is a lot better value (i.e. Higher rents and lower prices to buy.)

Try going to a bank to get money to expand your business and you'll run the gauntlet.

What do you suggest he do to "try something different"?

Something instead of making more money available to banks since its been this way for 3+ years and the average guy is not seeing a change in his employment opps.

I'll admit Bernanke has only one tool, but if it is not working, why keep hitting the same button? The down side is once inflation gets going, we'll have to do a Volcker (raise rates to 15% overnight) to correct.

What would be more interesting is if Congress put more money into consumer pockets with a tax reduction instead of blowing $1T on "stimulus". Most of the stimulus went to the states and then 90% went to fix deep PERS-type problems.

Yes Newleaf, if only we could click our heels and go back to the good old days of the mid 2000s when a hipster could write down "creative consultant" and list an income of $100,000 to buy that $400,000 Sowhat condo with no income verification checks. Maybe even flip a " fixer upper"in NW and unload it on a clueless guy from San Jose who just sold his 50s bungalow fora cool $1.5 million and decided to retire to Portland. These new regulations are a real pain in the butt. And the realtors! Won't somebody think of the realtors!

Snards- while stocks are on a nice run up, we are nowhere near the tech bubble levels. PE ratios are pretty close to their historical levels which is just an indication of how bad things are given the low cost of money. Going to keep a close watch if things keep frothing up though. As for now, dividend paying stocks are the new version of savings accounts. And with dividend tax rates the way they are would be foolish not to take advantage.

Steve- I underwrite commercial loans for a living at USB and loan volumes and commitments are at a record pace YTD. If things are harder now it's only because the bar was set so artificially low during the RE bubble. Most of the best have already refinanced and what we are starting to see now is the bottom of the barrel that couldn't get approved earlier. .

Ah, you're a banker. No wonder you feel so good about the Fed. Who does all that "liquidity" go to again? Mine must be getting lost in the mail.

Yes, Raleigh, we know large publicly traded corporations are doing well, so well in fact, they don't need all that much in the way of financing.

But I know independent businessmen with sterling credit histories and two to three decades of commercial success who are having trouble securing loans. There is more to this world than multinational corporations, politically connected developers and REITs who never lost access to credit markets in the first place.

The small and independent business person, who deals typically not with USB, but depends on regional and community banks for financing, is getting rolled and cut off in this new credit regime. The US economic engine is driven by small buiness and startups, at least when it is thriving and growing and generating, through that growth, the tax revenue that the government needs to survive. From where you sit Raleigh, you have a limited perspective.

Reilly, how many one or two outlet businesses have you factored receivables for in the last year? How many small ex/im companies have you backed up with letters of credit? How many business proprietors have you approved for residential mortgages? How many one-truck companies have you financed a second, third or fourth truck for recently. How many home equity lines of credit have you opened up for entrepreneurs starting a new business? These are a few of many small business examples. It is the little guys that are the US growth engine and they aren't growing.

"I underwrite commercial loans for a living at USB"

Its only anecdotal, but I have someone with 800+ credit score who wanted to assume a FNMA loan. He got turned down.

Re-fis are great since those are relatively risk-free if you underwrite them and probably sell them to FNMA. However, the economy grows when businesses take on more risk (like daring to expand) and banks are very averse to this, even with all the money they have.

If I get one more letter telling me I can have $250 for deposting $500 in a bank account, I think I'll scream.

Newleaf- I really don't feel comfortable talking about my place of employment but you do know that USB small business underwriting is located in Portland right? Safe to say, I've seen my fair share of small business loan applications.

Steve- an 800 credit score is decent but hardly tells the story of someone's cash flow capacity.

Raleigh, as refreshing as it is to see you post here, you are engaged in an exercise in futility. Here is where, for economics, the disciples of Rick Perry hang out.

Someone please start a website that explains all this s***, to everyone, so there can be something better than what we have, which is the vast majority of Americans staring at a picture that looks like a "where's Waldo" and "Amazing Machines" combo-tableau, looking like a herd of donkeys, flicking their ears and tails and mumbling...Waaaaa??..

The website should be quasi-pornographic. Art Crumb comes to mind. And VERY interactive, (in an explanatory way, let's not get our hopes up too high). Only in this way will enough people tune in to it enough to understand it.

I took Econ 101 in college. Samuelson was the textbook author. My memory suggests that the Econ professor's solution to everything was to run a deficit, which sounded, um, strange. Then I read another required text, a depressing, shocking little tome that affected me for months. "The zero-sum society". Never took much interest in financial affairs after that.

Gaye Harris I am sooooo glad you asked that. ... explain it all this 'economics'

Here is the definitive book, epic Scripture of Economics. 'Epic' as in: define 'money'. Web of Debt, Ellen Brown, and from there to Blog WebofDept.wordpress.com
MUST read. [spoiler alert: the def'n of money is: 'debt,' one word; and debt is made up, as in fancied, whimsy -- by royal-ruler authority for centuries and by banker authority since 1914, as to defining who owes how much (money) to whom and who owns what. Vestiges of both those authorities continue today, in today's 'market' economics, altho' not king nor banker nor market is among the three constituted branches of government.]

Last week had a richter-8 quake in Economyville, when George Soros published a screed for 'saving' the euro, the Euro-Union, and the World Economy. It is really a very good 'essay.' (I'm only half thru the 20 pages, written heavyduty concept slow slogging. After all, the guy is actually talking realWorld Economy pragmatics, and there are a ton of heavyduty world politics in world economy, real politick. My sense so far is Soros's scheme non-starts, or fails quickly, and the Euro-Union 'localizes' like USSR did and USA is about to ... into a half-dozen 'downsized' USAs, maybe USB, USC, USD, USE, USF 'regional' 'district' nations, with UN seats. With individual currencies and rates-of-exchange across borders of the baby-USAs.) Read Soros and see what you think: The Tragedy of the European Union and How to Resolve It, George Soros, September 27, 2012 [bias disclosure: I distrust and dispute Soros, his thinking is stuck in past 'pragma', and self-interested, and error-flaked -- he's wrong a lot.]

www.nybooks.com/articles/archives/2012/sep/27/tragedy-european-union-and-how-resolve-it/?pagination=false

Also last week, from Sino-Economyville this news:

China said ... Thursday, Sept. 6, any nation in the world that wishes from this point on, to buy, sell, or trade crude oil, can do using the Chinese currency [renminbies], not the American dollar.

On Friday, Sept. 7, Russia announced, that as of today, we will supply China with all of the crude oil that they need, no matter how much they want… there is no limit. And Russia will not sell or trade this crude oil to China using the American dollar.

Heh - and the USA credit rating has just been downgraded to "Hopes To Win Lottery" status.

When asked whether he'd like his pizza sliced into sic pieces or eight, Bernanke replied, "Better make it eight. I'm really hungry."