Federal Reserve “independence” is a convenient untruth for the Fed and for many in the Washington political class. The Fed is absolutely influenced by politics. This is evident even to the fairly casual observer.
(From The Dallas News)
Carnegie Mellon University’s Allan Meltzer, a distinguished monetary economist, had this to say about Fed policy during the crisis: “Under Mr. Bernanke, the Fed has sacrificed its independence and become the monetary arm of the Treasury.”…
…Bernanke’s Fed seemed to care just as much about the health of prestigious financial houses as the state of the economy.
We have said before that no Fed Chair was ever “free market.” This absolutely includes Mr. Greenspan. His legacy is one of a price fixer, an economic manipulator, a bubble blower, and ultimately one who in many ways ushered in the crony era we live in today.
But as we see in the attached piece from Sebastian Mallaby, Allan Greenspan, the one time “Maestro,” knew better all along. He knew that Fed policy could and typically did destabilize the real economy.
One of the reasons I so enjoy Ron Paul (and there are many reasons) is because he raised the Federal Reserve as an issue in the eyes of the public. The Fed would have been very pleased to stay just as it was, a collection of supposed economic wizards gathered around the monetary cauldron in the Eccles Building. Obscured from view. In the shadows, where the “secrets of the temple” were shared with a select few and in hushed and important tones.
The answer to the question is – no. However Japan is going to go the long route before it gets to this answer.
Americans are debt addicts. They love to spend. The politicians love to spend. Everyday Americans love to spend. Spend, spend, spend. And we wonder why many things, our society even, feels so cheap.
People live on credit. They finance cars, houses, vacation – cell phones – think about that – PHONES. They don’t save.
And why should they? They get nothing for saving. There’s literally no real return on socking money away in a bank these days.
This goes nicely with the previous post.
People are waking up. They are using the information at their disposal. Do not take this information for granted.
Uh oh. Here comes the Federal Reserve to “save” us.
(From David Stockman’s Contra Corner)
If you don’t think the current central bank driven economic and financial bubble is going to end badly, recall a crucial historical fact. To wit, the worldwide race of central banks to the zero bound and NIRP and their $10 trillion bond-buying spree during the last seven years was the brain child of Ben S Bernanke.
He’s the one who falsely insisted that Great Depression 2.0 was just around the corner in September 2008.
Abolishing the Fed shouldn’t really be considered a radical idea. Increasingly it is not.
More people understand the underpinnings of the Fed, why it exists (as a backstop for the banks) and are aware of its century of failures than ever before. Saying this however, many many more people need to really learn about the Fed for progress to be made.
So in other words 7% of the market’s upside since 2008 is real. (I’ll bet even that is generous.) This should concern anyone who thinks that economics is more than smoke, mirrors, and animal spirits.
The economist who did this speaks of a tech bubble, housing bubble, and now Fed bubble. But it is really Fed bubble 1, 2, and 3.
They actually already have plenty of socialism.
He makes a good point. The next economic downturn is likely to be nastier than the last and in an effort to “save” the world central banks will probably buy up everything in free fall, bonds, stocks, real estate. It is sad that we are talking about such a scenario. The statists think there is nothing to hold them back.
This is socialism which will help the asseted, the rich. A deeply crony economy.
Image: Socio-Economics History Blog
You’ve been warned for the better part of a decade that it was coming. Now get ready. Manna from heaven. (Well not from heaven.) Free money. It’ll be like that movie “Cloudy with a Chance of Meatballs” only instead of pizza falling from on high it’ll be cash! Oh happy day. I am already dumping the cisterns out so I can get as many of those greenbacks (if they aren’t outlawed) as I can.
Well, we’ll believe it only when we see it. It looks like Trump is using the issue to pry away Nevadans with a libertarianish disposition from Cruz.
Libertarians are kind of a wandering constituency right now.
This is an issue which we need to revisit soon, and we will at greater length. And there is is some validity to this fear.
First, the Crash of 2008 was a crash caused by central planning. It was the Federal Reserve which created the necessary climate for the Crash. The planners screwed up royally. They kept interest rates too low for too long and everyone came to believe that there was a “Greenspan Put” built into the stock market.