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Tag Archives: Bernanke

Influential Economist Warns, Civil Unrest Is Rising Everywhere: “This Won’t End Pretty”

Truly it will not end well if people keep buying into the simple minded notion that the government is somehow their friend. That the state will mete out justice on behalf of the “people.” That somehow by expanding the power of the politicians life will be made better.

The government is to be tolerated. There are things it must do. But it is not your friend unless you are in the political class. Most of us are not.

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End the Fed: “We do not need ‘monetary policy’ any more than we need a paintbrush policy, a baseball bat policy, or an automobile policy.”

Indeed we don’t. But we are so conditioned to the idea that the cost of renting money fundamentally should be determined by a central bank that most don’t think anything of monetary policy. When the economy tanks, the Fed’s supposed to ease, when the economy gets too hot it’s supposed to raise rates. This is what we were all taught in our macroeconomics courses. Makes sense…I guess.

Actually not at all. These fluctuations, the business cycle, are created by the world’s central banks.

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Malinvestment: “Today’s asset bubbles in stocks, junk bonds, housing, art, bat guano futures, etc. are being driven by the Federal Reserve”

Malinvestment is a very important concept to understand. It simply means the allocation of capital in ways which appear to be (and may be) rational in a period of artificially cheap credit, but in ways which in the end prove to be inefficient once the market corrects for artificially low rates. (Created by a central bank.) Malinvestment is a symptom and a driver of economic bubbles.

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Tim Geithner is no hero, no matter how many times he says that he is one.

TARP was the absolute height of crony capitalism. Many of the big banks should have gone down, but in the midst of a “Blackberry panic” – as David Stockman puts it – the masters of the masters of the universe lost sight of reality and the nature of markets. Yes, Goldman Sachs would have gone down. But this would have been a GOOD THING. The blood which should have filled the the streets of Downtown Manhattan would have washed the unsustainable leverage clean from the system (for a while). Giants are meant to fall. It would have been good for the economy.

It would have been terrible for Wall Street of course. Banks, livelihoods, careers, and reputations hung in the balance that fall of 2008. For the bankers the world was indeed ending. So in a selfish act of desperation they forced the American public to save them.

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WSJ Book Review: ‘Stress Test’ by Timothy F. Geithner

According to this review Mr. Geithner thinks quite a lot of himself. He takes credit (credit?) for the lion’s share of the TARP bailout, which he sees as a success and not as many have come to see in the years since, an overreaction to a meltdown brought on by easy money which fundamentally undermined our economy.

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It’s (nearly) official: Wall Street GOP cronies fear Rand Paul, would support Hillary instead

We’ve been saying this for months. If Wall Street Republicans can’t get Christie or Jeb Bush they’ll defect to Hillary Clinton. They won’t support Paul. Clinton will protect the bankers and is already nice and cozy with them. Clinton has defended the bailout paid for by taxpayers which enriched much of lower Manhattan.

Rand Paul in contrast has said that the Wall Street bailout was “anything but conservative.” The banks don’t want anyone who will question the banking system as it is now. They certainly don’t want a president which is as informed as to the workings of Wall Street as Rand Paul. It was Rand’s dad after all who popularized the call to  “End the Fed.”  Wall Street and the Fed are inseparable. Ending the Fed would mean ending the current era of crony Wall Street. And that friends, simply can’t happen.

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