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Tag Archives: Bernanke

Modern central bankers have things upside down, This is why they fail

Money isn’t wealth. It measures wealth the way a ruler measures length, a clock measures time and a scale measures weight.

Boy is this true, but so many people, including the supposed shamans at the Fed  fail to grasp (or choose oddly to ignore) this basic concept. Dumping “money” into the economic system isn’t going to make the economy grow, it will only make the money currently in the system worth less.

It’s not quite that simple. But it’s nearly that simple.

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To get real jobs back why don’t we consider real money?

Say what you want about gold but it has held its value for thousands of years. The fiat dollar? Well let’s just say its been a steady march toward becoming trash.

If we want a high value economy, if we want high value jobs, we should have “high value” money. Sound money. Gold backed money. We should have money which can’t be eroded at the whim of our central bank.

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Memo to the Political Class: You Can’t Be a Hero and a Thief

Washington and the Fed think they can plan out society. That they can manipulate the levers of the economy to elicit positive outcomes (mostly for them). That leaving the world to the “whims of the marketplace” is madness. That dispassionate managers (no one is dispassionate, especially political managers) can and will make the world anew. There is no God. Government is God and it will giveth and taketh as it pleases.

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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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