No Risk of Hyperinflation Says Federal Reserve Chairman Ben Bernanke. Rest easy Glenn Beck

The FED has a plan, an "exit strategy", but the question is will it work? I sure hope it does. They keep saying that we are in uncharted waters, and that is what has me worried. It's like they are practicing economics, like they are experimenting, and if their experiment fails, then we are the ones left holding the bag, whatever that means. Glenn Beck and others are very worried about hyperinflation, and so am I, but after hearing the chairman speak, I feel a little better. I have always felt that putting more money into the system would not result in hyperinflation because it, the extra money, will have just been filling a hole. But then again I've been told that you can't just keep printing money based on nothing; if the economy is not expanding, then how can your money supply expand. Of course I'm no financial genius, I can barely run Quick Books, but then again, does that not put me in the same category as our Secretary of the Treasury, Tim Geithner. I also was late paying my payroll deposits, and have received a penalty from the IRS. I had one quarter of the penalties waived based on their one time abatement policy, but I failed to get the following quarters penalties included. I thought they should be included because I received them in the mail within a week of each other. So now I will receive a bill from them within 14 days. I will have to pay it or I will be charged more penalties, and this time their will be interest. Although I do have the option of paying it, and then at the same time appealing the ruling, the ruling that I received by the IRS minion on the phone. I will of course be using the -Geithner Daschle- defense strategy. I haven't fully developed it yet, but I will. I hope it works, but I doubt it, because I'm just an average American, not a big shot politician. jbranstetter04 When asked about the risk of hyperinflation posed by the governments pumping billions of dollars into the American economy, Mr. Bernanke says he does not see any immediate risk of hyperinflation. In fact, the economy has experienced disinflation in recent months. But to ward of out-of-control prices increases, a goal that Mr. Bernanke says is important for the long-term health of the economy, the Fed will eventually need to wind down its balance sheet expansion. Randy Neugebauer, a Republican from Texas, wants to know what happens when no one wants to buy Treasuries anymore. He also complains about the way the Fed is characterizing its balance sheet. Youd be on a watchlist if you werent the Federal Reserve, he says. Mr. Bernanke responds that investments in Treasuries have gone up because they are seen as safe. Ron Paul says he takes issue with the fact that a small group of people can create money out of thin air. He says that, as a free marketer, he is also upset that Congress wants to prop up housing prices when there is a glut of housing on the market. Whats wrong with allowing the market to allow these prices to adjust, and drop quickly, so that we can all go back to work again? Barney Frank, the chairman of the committee, wants to know how much of the Feds balance sheet is at risk. Mr. Bernanke says only 5 percent of the Feds balance sheet, or about $100 billion, is devoted to preventing the failure of major financial institutions. The other 95 percent is safe and overcollateralized. Judy Biggert, a Republican from Illinois, asks about restoring confidence, and whether declining consumer and lender confidence are feeding a vicious circle. Mr. Bernanke says the reason banks and credit markets are currently frozen no longer has to do with the legacy about subprime mortgages; rather, sclerotic conditions have more to do with concern about where the economy is going. If the government can reverse those fears, he says, we can get a virtuous circle going rather than a vicious circle. Asked again to evaluate the effectiveness of the original TARP funding, Mr. Bernanke says that the infusion of capital into troubled financial institutions was important, and that it avoided a global meltdown. He said the biggest mistake in the execution of TARP was that the Fed and Treasurys efforts at communication and explanation were not adequate. He says he should have done a better job of explaining exactly what they were trying to accomplish. http://economix.blogs.nytimes.com/2009/02/10/live-blogging-the-bernanke-hearing/

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YouTube | February 23, 2009

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