In order to understand what is really going on in the economy one must have some understanding of the Federal Reserve. It is a truly amazing and diabolical institution created not for the public good as we are told, but in fact Murray Rothbard asserts, for the private good of the world’s largest banks.
RIP Mr. Gandolfini, I enjoyed your show.
In the attached essay Robert Wenzel makes the point that the Fed is engaging in unhealthy behavior. Though the economy keeps puttering along it’s not like all the money printing and various other manipulations won’t have long term effects, they will. It is very possible that the Fed’s actions will result eventually in the economic equivalent of what felled Tony Soprano.
So the Fed is going to “taper” away the quantitative easing, the printing of money, in which it is currently engaged. Bernanke (or Larry Summers—shudder) will one day allow interest rates to rise back to normal levels. Don’t worry, the economy will emerge from this radical economic experiment and all will be well. You’ll see. Ben promises.
Since the dollar continues to be the world reserve currency, and since the mega banks float like clouds over the entire planet paying little attention to borders, we shouldn’t be surprised. But that the Fed has essentially given away $1 trillion to non-American banks is pretty amazing . (Not that American banks are any better than the foreign ones of course.)
The budget may be a doomsday machine, and the Federal Reserve a bubble machine, but David Stockman is a quote machine. When he gets rolling he is highly entertaining- while explaining why the current economy is headed for very choppy seas.
In Congressional testimony last week, Fed Chairman Ben Bernanke slipped something in that no one much noticed. He said that the Fed might eventually choose to exit from its current monetary expansion binge, not by selling US government securities, but by letting them mature.
Sowell’s right. The Fed over its 100 year history has been consistently wrong and has often exacerbated crises not ameliorated them. Both the Great Depression and the Great Recession are examples of this.
But don’t tell a Keynesian this.
This video has clips of Bernanke from 2007 just before the collapse.
All the actions by the Fed since the financial crisis which started in 2008 (and really long before that) have basically amounted to a giant safety net for big business. Small business and savers have been left in the cold.
Guess what Bernanke is now suggesting as a good way to control federal spending?
There is a lot of smoke and mirrors in mainstream economic news these days. There always has been. The wizards always seek to manage expectations and manipulate public sentiment in what they consider to be the right direction. But things have gotten much worse over the years, especially since the Federal Reserve began its “Magical Monetary Tour” as David Stockman calls it in 2008.
A new Bloomberg View (editorial) tells us that lack of fiscal stimulus (more government borrowing to spend) “is plainly holding back growth in the US, the European Union and Japan.”
The hedge funds and the big banks have done better than anyone under the Fed’s printing regime.
The Fed is a mystical entity for most Americans, a place where economic shamans conjure up money and master the universe that spins around us.
The Wall Street Journal got this right in an editorial today: