Re: old news i'm sure for most of you

The Bernank has been kind enough to give us his entire playbook in his famous Helicopter speech.

Bernanke's 5 Monetary Policy Tools to prevent deflation given by the chairperson at his famous 2002 speech Deflation: Making Sure "It" Doesn't Happen Here as well as present the entire speech for your review.

The Bernank gave 5 monetary policy tools that could be used to make sure deflation doesn't happen here:
1. Drop interest rates to zero. Check.
2. Inject money into the economy by giving major banks zero-interest rate loans. Check.
3. Stimulate spending by lowering rates further out on the treasury structure (translation, lower mortgage costs to inflate housing prices) Check (Operation Twist).
4. The Fed could make unlimited purchases of treasury securities to control the rates (this is quantitative easing) Check (already attempted twice officially).

There's only one step left in The Bernank's playbook given in that 2002 speech. I'll give his entire quote on this final policy action.

5. "It's worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt's devaluation. "
GOLD REVALUATION is BEN BERNANKE's FINAL MONETARY POLICY TOOL to prevent the Greatest Depression after QE is proven ineffective.


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