What Bernanke does not know, since his statistics are always late, is that this economy is already in a stall. Ask the real estate brokers and the hard goods retailers. Better yet, ask the summer tourist destinations such as Maine, Quebec, the western national parks or the cottage rental companies on Martha's Vineyard or Nantucket what their summer bookings are like. I'll bet a weeks pay that, Bernanke, hiding behind that beard of his, has not got a clue. He will raise interest rates until we croak and the economy is in a deep recession. Or. could it be that he is really interested in attracting foreign curreny to the U.S. interest rate markes?

The Federal Reserve is not a part of the feaderal Government. It is privately owned and controls our economy. The Fed Chairman must be approved by congress and appointed by the President, but the Federal Reserve Bank is a privately owned company by the very wealthy that run this world...

After 16 straight increases the Federal Reserve should sit on its hands and observe for the balance of 2006. I can't believe anyone from Wall Street to Washington believes we need any more 1/4 pt decorations on this cake we call our economy! (Unless you make money from being short the stock market, of course.)

Ben Bernanke is facing an uphill struggle.First because he is the "new guy on the job" and secondly, the myriad effects of the inflation created by high oil prices cannot be measured, even reasonably. Reputation is one thing but the inflationary effect of oil and gasoline plus extraordinary demand for other natural resources is another. This is not simple stuff and I for one cannot see how Bernanke or anyone else, including Greenspan, can properly calibrate when to stop raising rates. Yes, his helpers can go around recording prices forever but the effect of raising short term rates as well as printing more/less money is a very slow, imprecise way to control things. For us investors, we can only hope he will not overshoot. He's a smart guy but not possessed of a crystal ball. Lets give him a chance.

There is no question that the Fed is engaged in price-fixing. In fact, they fix the price of the most basic commodity, money.
Interest rate manipulation is their only available technique for controlling the economy (ostensibly to control inflation). However, under current conditions there is an obvious flaw in their inflation correction technique. Most of the current increase in inflation is the result of a
domino effect caused by the high cost of oil. It would be interesting to learn how they expect to reduce the price of oil by increasing interest rates.

"Federal Reserve"??

The old saw is right on the money, so to speak, that the "Federal reserve" is about as "Federal" as Federal Express.

It is a PRIVATE enterprise. Private. Got that yet??

It's owned largely by US banks with "NA" after their names. Now, WHO owns said banks???

I'm sure your research will be very enlightening.

The "Fed" sets policy to enrich it's owners.

Period.

Ben Bernake. Ok let's get to the knitty-gritty. If your name was Ben Bernake wouldn't you too be mad at the world? I think so. Here is another guess of a Bush appointee who is ill equipped to handle his position. But then again most peopel would not have wnated to follow the reputation that Alan Greenspan had, except maybe Mrs. Greenspan.

Seriously if Bernake were smart he would absolutely not raise the rates at the next meeting. Isn't it intereresting that the Fed threw out a tease this week and state that they thought about it at the last meeting and decided to sit tight for another month. Then Uncle Ben opens his big fat pisk (Yiddish folks for mouth). Ah the days of Volker, the dreams of Greenspan walking up and saying what the hell did I do.

If you all aren't feeling poor after paying for gas or having breakfast for $10.00 at THE WAFFLE HOUSE, yes $10.00 for a waffle, bacon, juice and coffee pre tip, then you are luckier then I.

It is time that we wake up and open the windows and shoot like was done in NETWORK, I'm sick and tired and not going to take it anymore.

I'd love to hear your comments.

bernake is a pure asshole. He is finishing the work of the bush administration , destroying the pensions of hard working middle class americans who have found yet another way to enjoy the american dream. Gathering up the cash for those who can aford to play. He needs to step down. I miss the smart closed lip and minimal reports of greenspan.
Like everything else the bush administration touches, its like king midas in reverse. everything turns to shit. Why would they appoint this guy?

Bernanke is like Bush...... Run out of luck. he is a Bush cronie and as all they have no luck left. The fundam`entals are broken...... Foreign a

The goal of the FEDS is to reduce inflation and KILL the housing market.

When the stock market tanked and retirees lost billions the feds lowered rates knowing that home prices would climb saving the economy. The smart retirees sold and retired to areas of less expensive living costs.

The feds created this equity and inflation.

The middle class borrowed on equity to consolidate debt and or spent the equity on badly needed expenses for the kids college, cars, investments and a much needed vacation.

The up and coming saw an opportunity to buy thier first home at an affordable rate. Many got into housing with little or no money down. With the promise of long term low rates. (That was a scam)

Why didn't anyone have any money? Because the feds tanked the last boom as they always do. How? By being last to know that we were in a recesion, causing many to carry debt. And many carried this debt for years after they had been layed off.

The feds are like govener for a motorcycle rider that is running wide open and running low on gas not out of cash yet. Slow the guy down and he might just get to the next town before he runs out of cash. Or goes knee deep in debt again.

Oil runs America literally.

Credit is the median of excahnge these days not cash everyone is extended.

So in a sense the Feds are to blame for inflating our monthly mortages and credit cards.

Oil adds to our expenses causing goods and services to rise. A sense of panic leads to lower consumer confidence and spending slows or stops long before the fed realizes it.

Thus the feds are going to be late to the economic crash again as they always are, and people will loose homes, jobs and equity.

Thus killing inflation and the economy with it...

Mr fed there is more to life than controlling inflation, there is the need for long term prosperity and levels of advancement in society acheived by profits.

The housing market will cure its self, and as long as there is government spending, wars and tax breaks there will be an economy.

Lets hope the feds are not late to this party again..

Wake up and smell the roses! The Feds raising the interest rate has NOTHING to do with our economy. our economy is not over heated -- it's in trouble!The only inflation comes from price fixing by Oil Companies. So why is the Fed raising the interest rate? Simple! To support the worthless US Dollar. Stop raising the interest rate and the Dollar drops like a rock. Our government continues over spending; our treasury continues printing money; the Feds continue raising rates. It's a formula for survival..and the result will be doom for the middle class.

Dear Blog Contributors,

I can only hope that your busness wisdom is inversely proportional to your grammar.

Sincerely,
A retired children's doctor

Excellent comment the last poster... only thing I'd say different is the Main Inflation in the U.S. Economy comes not just from Oil Companies, but from Arab Oil Exporters GOUGING the rest of the world. The Fed. Reserve's use of higher interest rates is a "blunt tool", in that it also effects the multitude of American workers who by the way are NOW (if they are not government workers) MAKING LESS MONEY THAN THEY WERE TWO YEARS AGO. What the Government should be doing instead, to reduce the real price of Oil, is to PLACE A BIG TAX ON OIL. That's the way to sock it to the Oil-Iranians and Oil-Arabs, rather than socking it to the American Worker and Investor and Real Estate Owner, as the Fed's higher tax (i.e., higher interest rate) on borrowed money is now doing.

I am an accountant (CPA) in the northeast. I find it amazing that people seem to finally be waking up to the real economy of Walmart Jobs, few if any benefits , little job security and inflation that is running about triple Govt reports. It took a few years for people to realize what was going on. Businesses are in trouble. The jobs reporting is a joke.

Here is an example. Engineer working at a job for 90k with a family of 4. Loses job. Gets the best job out there quickly for 50k with a wait on benefits. He is not counted as unemployed since he never filed for it. He IS counted as one of the Presidents "new jobs" created since that is how companies report them. So even though his family income fell 50% and he worked through all his 401k in a year he is showing the booming economy.

I have clients with kids living with them post college. Yeah their jobs are going to pay for a 300k house and 120k in student loans! RIGHT.

Inflation is a nightmare. Take the cost of heating oil in the northeast up 250% in 5 years, gas up, housing doubled (but they dont count it that way they use payments and rates, so they dont count the extra debt you take on as long as your payment is similar what a joke), food prices are out of control as is everything else.

It appears that the basic fabric of society is ready to fall apart. Retirees are doing reverse mortgages to stay afloat and will not be passing much to the next generation. The savings rate is at the lowest level (its now negative) since the great depression.

I hope the people who voted for these morons are happy now.

The media is so messed up on this because they have become part of the elite as well. They all live in piles of money and noone reports what is really going on with middle income America.

There is something the Govt can do about Gas prices, that is tax the CARP out of them. Replace the Oil company revenues with Govt revenues to bring down the deficit. Use that money to pay down the debt, help with health coverage and encourage alternative fuels like other countries do. In Brazil they have no need to import oil its almost all ethanol. WE will never do it as long as the oil companies are taking all the money. Let those higher prices fund something for people.

Middle America is hurting . This is the worst I have seen things since I have been a CPA in the 80s and yet they say things are getting better, and the economy is booming.

I saw BULL, and that is not a reference to the market.

Last week I enjoyed my 28th vacation visit to Aruba. I have been there through economic growth periods as well as many periods of recession (9 out of 12 directly caused by the FED). I have never seen the place so dead. Hotels are only half full and there is no one around the swimming pools and very few on the wonderful beaches. It was horifying to see. Yes we all pay more for energy and fuel prices are rediculous, and yes Aruba may still be affected by the loss of Natalie. However, ask the locals and its not Natalie that is causing such a downturn in business. It is solely the American Economy.
I wish Mr. Biernacki would open his eyes and see that our economy is actally on a down turn and heading for disaster. Home sales, and resulting prices, are slowing to a crawl, personal incomes are raising at a snails pace, investment income and returns is and has been very low for many years, stock market returns are rediculously low compared to historical averages, and inflation is non existant.
Last meeting Biernacki mentioned that he once wrote a paper on how long it takes the economy to react to the change to interest rates. Who Cares what he wrote when he was a so called "Academic." That was yesterday and this is now. Wake up Birnacki, we are living in the 21st century. In today's environment the average American is losing money on his home, he is paying more for insurance, health care, pharmaceuticals and taxes, etc., and every inelastic demand product is raising in price. Yet inflation is still kept at very low levels. Energy prices tripled yet inflation is low. Taxes doubled yet inflation is low. And the list goes on and on.
What is Bienacki seeing that the rest of us are not? Maybe the fact that the Government makes money (essentially another tax) every time he raises interest rates.
I believe Biernacki went too far this time all in an effort a making his point...."his intention is to fight inflation at the cost of economic growth." He is trying to prove that he really knows what he is doing and he is trying to send the message that he is on top of the inflation fear. Realize Mr. Birnacki that any of the current inflation is the result of extraordinary high energy and food prices along with the unecessary, yet tolerated, increases to "ALL" inelastic demand products. Peanuts went up during Carters presidency, body bags during Johnson's, and now oil with Bush. Is that so surprising; two oil men in the white house and the price of oil triples....what did we expect????
I wish Biernacki and the rest of the FED would take a vacation. Maybe try Aruba. Then they will get a true handle on the economy. People are not spending money on themselves, they are spending it on the necessities. It is not increases to the interest rates that this economy needs, it is simply more competition in the marketplace.

So the Fed says oil "may" be pushing inflation higher. No kidding thats an amazing observation. I have to question the logic employed here. Petro prices are causing inflation so lets raise prime rates ? If oil price is driving the slowdown what positive effect will raising prime have other than further downward movement of the overall economy.

Beginning with Nixon killing the gold standard oil started up because oil producers knew the printing presses would be rolling out many more dollars. Who has your dollars now and why are gold prices high ?

We are just living on the edge of a vast change in lifestyle here in the United States. It's just common sense that no entity be it government or business can prosper long term by blowing smoke. Do you honestly think that your grandchildren will live as we do ? If so you may want to ask why is the penny considered practically worthless. My view is because the dollar has replaced the penny in actual buying power.

I am going to begin producing straw hats and cheap sandals for our grandkids to wear to their sweatshop jobs where they will produce cheap mass goods for the citizens of Asia who now have the resources we have handed them. Fortunately for them their governments employ long term plans and hard money reality. Take heart in another 10 generations they will have become like us struggling to fund giveaways with worthless currency.

Does history repeat itself ? It can not help but do so as the principles of human nature never change. It is only variations on a theme. This comment has been seasonally adjusted.

Wow. Some people need to take some economics 101 classes. First the definition of inflation:
>>>The overall general upward price movement of goods and services in an economy

Matt every Economics 101 class teaches:

After World War I, Germany was forced to pay war reparations of about $33 billion. It was virtually impossibly for the nation to produce that much actual output, so the government's only choice was to print more and more money, none of which was backed by gold. This resulted in some of the worst inflation ever recorded. By late 1923, it took 42 billion German marks to buy one U.S. cent! It took 726 billion marks to buy something that had cost just one mark in 1919.

I totally agree with the gentleman that hit the nail right on the head by saying that hiking interest rates are not going to lower the price of oil. The energy prices are the reason our prices are going up so high, not the "booming economy." I think we are currently in a recession with the data just released concerning new jobs. Analyst predicted roughly 336,000 new jobs for June and we barely broke $100,000. The nasdaq just pierced well below its 200 day moving average and looks like it is going to continue to fall. The NYSE is very close to piercing its 200 day moving average. With the interest rate hikes, companies are less inclined to take on more debt to expand their business, hire more employees, and effectively raise our Real GDP. Now we can look forward to high prices in a job market doomed to bring on a great deal of lay offs. Bernake, Please stop raising rates! Everytime the fed is raising rates, he is also lowering the value of people's homes. It is obvious the bond market doesn't agree with his hikes, the 30 year fixed rate for mortgages is right at about 6.5% when prime is at 8% which leads me to believe that they believe rates will go back down to correct his mistake of over-raising rates. I do think we have a serious problem with inflation and I agree with the guy who said our data is not reflecting it. Jumbo Jacks are 1.29 rather than 99 cents, a bottle of water is 1.19 instead of 99 cents, a energy drink is 2.29 to 2.5 rather than a 1.99. The signs are all over the place. What can we do about it? Control prices of oil somehow or rely less on it. The textbook economics 101 strategy of raising rates over and over again is not going to lower oil prices. The good news is we can make money shorting the dollar by investing in silver, gold, and oil stocks and commodoties. I also think housing prices are going to completely tank and there will be a great deal of forclosures that can be bought for pennies on the dollar in the next decade. In a nutshell, I don't think Bernarke has a clue either guys!

As my high school economic teacher told us in the 70's the U.S. will eventually become a third world country. We are headed there ass backward on a jet ski. Now that Bushes' daughter is headed overseas to teach (?) I'm sure the other one will follow for one reason or another and they will all end up overseas on a humble after he starts the draft back up and finishes off the country by sending us to war with the North Koreans whom we can't and don't want to handle. I say to all who voted for him please be the first to sign up no matter what age, just go get killed for being so damn blind. This man is the anti christ for sure, and he's sending the U.S. straight to hell.