Bernanke Says Moderate Economic Growth to Continue in 2010

What do you do if you’re the Fed chairman and your actions are destroying the value of the dollar? If you wanted to disguise your actions – you might lie to the American people and tell them that economic growth will continue next year. You might also lie and tell the American people that this ‘growth’ coupled with the Fed’s actions will stabilize the dollar – in an attempt to momentarily stabilize our falling currency.

What is the truth? To find the truth (as I’ve said before) – we must look at actions and the results of those actions. We cannot depend merely on what we’re told – because we’re being told many lies on a daily basis.

Let’s disregard what Bernanke is saying since he’s only trying to prop up the dollar with meaningless talk – and look at what he’s actually doing. As you’ve seen – the Federal Reserve is propping up Treasury auctions, the Stock Market, the Banking system and Housing. Due to all of the recent Fed ‘actions’ over the past 1 ½ years – the Fed has basically become our economy. How do they do this? They do it by printing trillions of new dollars to buy assets. What affect does this have on our fiat currency? It erodes the value of the U.S. dollar. Anyone who is paying attention (China is certainly paying attention) can see that the Fed is directly monetizing our debt – on a massive scale. There’s only one way for the dollar to go – down - and it’s now heading in that direction at a quickening pace.

Is the real economy (jobs, housing, corporate sales/revenues, tax receipts – things we can actually measure) really growing? No – it’s not. Is there anyway under current conditions that the dollar will ‘stay firm’? Of course not.

You can see how ridiculous Bernanke’s statements are – they are nothing more than well concealed lies - lies that give us a false sense of security.

Remember Bernanke’s comments when things begin to head south – and then compare his new lies with the old ones.

Also notice the media spin on this article. What is causing the current decline of the dollar according to the article?

In a rare move, the Fed chief made several remarks on the U.S. dollar, which has fallen in value recently as global economic activity picked up and investors no longer sought the safety of dollar assets.

The reason we’re given for the dollar’s decline is that investors no longer seek the ‘safety of dollar assets’. I’m sure there are investors fleeing the dollar – but this isn’t the underlying cause of the dollar’s decline. You’re not going to see a mainstream media article telling us the truth. There is a coordinated deception playing out here.

The Federal Reserve is causing the decline of the dollar – plain and simple. Remember this.

jg – November 16, 2009
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NOVEMBER 16, 2009, 1:07 P.M. ET

Moderate Economic Growth to Continue in 2010, Bernanke Says

Wall St. Journal

By LUCA DI LEO

WASHINGTON -- The U.S. economy will continue to grow in 2010 and this expected strength will help ensure the dollar stays firm, Federal Reserve Chairman Ben Bernanke said Monday.

In a rare move, the Fed chief made several remarks on the U.S. dollar, which has fallen in value recently as global economic activity picked up and investors no longer sought the safety of dollar assets.

"Our commitment to our dual objectives [of maximum employment and price stability], together with the underlying strengths of the U.S. economy, will help ensure that the dollar is strong and a source of global financial stability," Mr. Bernanke told the Economic Club of New York.

The Fed chief stressed the central bank will keep a close eye on the dollar's recent slide, but at the same time reiterated that the key federal funds target rate is expected to remain at record lows for some time due to a fragile recovery.

To lift the dollar's value, the central bank would need to raise rates, thereby increasing the return investors get on U.S. dollar assets.

However, that could hurt the economy's recovery, which Mr. Bernanke cautioned was threatened by weakness in the labor market and tight bank lending.

"I expect moderate economic growth to continue next year. Final demand shows signs of strengthening, supported by the broad improvement in financial conditions," Mr. Bernanke said.

Holding his first official speech since the Fed voted to hold its key interest rate at a record low earlier this month, Mr. Bernanke said jobs are likely to remain scarce and inflation low for some time.

The Fed kept its benchmark interest rate at a record low Nov. 4, citing a sluggish recovery. The central bank said it expects to keep its federal funds target rate close to zero for an "extended period" in the face of high unemployment and low inflation.

For the first time, the Fed's rate-setting committee earlier this month spelled out the three key indicators it will be looking at to set rates: unemployment, core inflation and inflation expectations.

"Both the decline in jobs and the increase in the unemployment rate have been more severe than in any other recession since World War II," Mr. Bernanke warned.

The U.S. economy is slowly recovering from its worst recession since The Great Depression. Although the economy expanded in the third quarter for the first time in more than a year, the recovery remains fragile, with unemployment at a 26-year high of 10.2% in October.

Later Monday, Fed Vice Chairman Donald L. Kohn will talk about the central bank's policy challenges.

Write to Luca Di Leo at luca.dileo@dowjones.com