We have a copy of this book and will be doing a review of it soon. In the meantime, if you’re headed to the beach or lake this summer this might be a good one to take along.*
As I watch the calamity in Greece and the chaos in China I am struck by how much things have changed in 10 years. “Wealth” looks very different to many people these days.
Wealth is time with one’s family. Wealth is time to think. Wealth is a good roof over one’s head. Wealth is good food and good friends. Wealth is walking through a field first thing in the morning with few bills to worry about. Wealth is swimming in the ocean and catching flounder in the surf. Wealth is peace of mind.
Be thankful you aren’t an unskilled worker in Athens or a newly middle class manager in Shenzen who has leveraged his home to play the stock market. Be thankful that you are not feeling the hottest of the world’s economic flames. At the same time be aware that fires do spread.
The a new front opens up for the Federal Reserve.
Also one definitely gets the sense that the recent decline in gold is looking more and more like an opportunity to put away some real wealth at relatively low cost. This is definitely on the mind of the Chinese, and perhaps the guys in 10 gallon hats.
As we’ve said before, the Fed is independent. It is NOT sovereign.
But the Fed thinks that it is above Congress, and the law in many regards. That any effort to shine light into the dark halls of the Eccles Building is too much to ask. That even a little bit of sun would undermine the system.
Consider that for a moment. If that were true, which it’s not, but if it were, I ask whether we should be concerned that Federal Reserve system is so fragile.
If you really want to understand why the crony capitalist system is so insidious as well as ubiquitous I highly recommend listening to this bit from the master Murray Rothbard. If you really want to get what is so messed up about government and the “privavte sector” partnering up, one must know at least a little bit of his work.
Warning though. Rothbard can rattle one’s whole understanding of politics and economics.
We are beginning to see the Great Experiment, the post 2008 Crash experiment, disintegrate. A crack here. A crack there. A hairline fracture. A fissure. The underpinnings of printed money have always been unsound, but now the edifice appears to be unstable. Will a hard Greek gale bring the thing down, or will winds from somewhere else finally do this fiat superstructure in?
Guess we’ll find out soon enough.
Notice how there seems to be a collection of negative global data points kind of clustering? I have.
How does the Fed get dollars to European banks when said banks run out of dollars in which to do dollar denominated business? Print some new ones, then have the euro banks swap euros for the new dollars. A little of this. A little of that. And presto, mini euro-bailout. (Or maybe not so mini depending on the circumstances.)
The reason we had the Crash in 2008 was because the Fed kept rates too low for too long. In response to the tech implosion and then the 9-11 attacks Allan Greenspan and the FOMC panicked and ended up inflating a worldwide housing boom which morphed into the disaster (to put it mildly) which is the Great Recession. There’s more to it than that but that’s basically what happened.
Consider now that Ben Bernanke (and Janet Yellen) have kept interest rates much lower for even longer than Greenspan did.
Yeah, the reckoning has been coming for a very long while. The Fed is out of control and lost. The stock market as it is is not sustainable. Many other markets are in the same boat.
Any market which reflects the wants and desires of the rich (aka those closest to newly “printed” money) is pretty much in a bubble. Art, wine, etc. Even residential real estate in places like London and New York are bubblicious.
It isn’t going to keep going. When this bubble bursts there will be serious dislocation economically and politically.
Below Marc Faber opines on Carl Icahn’s comments.
Congressman Hensarling deserves some praise. He has spearheaded the effort to kill the Export-Import Bank (let’s hope that thing gets put in the grave) in the face of massive lobbyist firepower and now he’s putting the Fed squarely in his sights.
Hensarling’s area of interest with regard to the Fed is the 2012 leak of Fed Minutes to prominent insiders 19 hours before the the public got to see the information. This is important, market moving information which if gotten early could have been very “helpful” to traders. (We’d love to know if any of the banks involved moved on the early information.) This is what Bloomberg had to say about the incident in 2013.
The Fed initially said recipients were primarily congressional staffers and trade organizations. A list of 154 recipients released later by the Fed show that banks also were among them. The list included Barclays Plc, BB&T Corp., BNP Paribas SA, Capital One Financial Corp., Citigroup Inc. (C), Fifth Third Bancorp, Goldman Sachs Group Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Nomura Holdings Inc., PNC Financial Services Group Inc., Regions Financial Corp., U.S. Bancorp, UBS AG and Wells Fargo & Co.
Other financial firms included IntercontinentalExchange Inc., the Atlanta-based owner of the world’s largest credit- default swap clearinghouse that has agreed to buy NYSE Euronext for $8.2 billion; buyout firm Carlyle Group LP (CG), and financial- market data provider Standard & Poor’s.
You can read the entire article HERE.
This supposedly was an accident. Boy, what an accident. I sure think the American people deserve to know the details of this accident. So does Congressman Hensarling. But the Federal Reserve is fighting to keep things secret. Why?
In 1937 after years of a meager “recovery” the economy slumped again as artificial economic props were taken away. The Great Depression was born anew. 4 years later we were in a global war.
Let’s see, depression, then mediocre growth underpinned by artificial economic stimulants, sounds pretty familiar.
This is what happens when interest rates are set by a politburo instead of by the market.
Is the Federal Reserve above the law? It sure seems to think it is. In the name of “independence” the Fed thinks it can do whatever it wants including ignoring a congressional subpoena. (Really this is probably one of the least of its “crimes.”)
“Independent” does not mean “sovereign.” Someone should remind the Fed of this.
The key drivers for the increased inequality (as we have said many times before) are the financialization of the economy and the emergence of a truly crony capitalist system. The two are of course entwined. The cronies enjoy bailouts and bonuses from banks which get bailed out. The unconnected get to do the bailing. (In various ways.) That’s basically the gist.
Ole’ Helicopter Ben put this long emerging trend into overdrive. But don’t blame him for inflating the assets of the already wealthy while the rest of the country was left behind. And don’t blame him for waging a war on savers. (Basically the prudent middle class.) Nope, he’s not to blame at all for the gulf in the economy. That just happened. Ben explains that over the long term monetary policy is neutral.
Man, if only.