Where do modern economic bubbles come from? They come from the world central banking system, chiefly the Fed, the prime mover of crony capitalism.
I have to say that I was saddened by Pope Francis’s recent assertion that “rampant capitalism” is a source of many of the world’s ills.
It’s easy to make a pile of dough if you get it for nothing and then lend it out at interest.
The 0% interest rates of the past 5 years have made the wealthiest people in America and the world much wealthier. At least in (fiat) dollar terms.
This in an interesting take on why Reid moved when he did. From one of the best connected people in politics, Ron Paul. (He does have a son in the Senate.)
3 key components to wealth which lasts generations are said to be gold, land, and art. The first 2 classes are somewhat obvious, but art is less so. Yet the rich over the centuries have always invested in paintings and sculpture.
Anyone voting for Yellen is a Keynesian and therefore an “old” Republican. Anyone voting against her is a “new” Republican like Senators Rand Paul or Ted Cruz. We will be able to identify clearly the players on each team.
Why does any of this matter to the average American?
I was just at a conference in Downtown Manhattan and things are good there. My hotel (which thankfully I didn’t have to pay for) was modest but cost a sum far beyond what one might pay for a comparable room in another large city in the US. A beer pushed 11 bucks. Everything was more expensive because the money printed by the Fed practically spilled out onto the street around the part of town I was staying in.
The further one gets from the Federal Reserve spigot however, the more austere the world gets. Remember, each dollar printed by the Fed reaches the guys in New York and DC first – while prices are relatively cheap. By the time these debauched dollars reach the rest of the country prices are rising and the dollar buys less.
When Ron Paul called for ending the Fed, this is one of the chief reasons why.
One of the least discussed, but potentially most significant, provisions in President Obama’s budget is the use of the “chained consumer price index” (chained CPI), to measure the effect of inflation on people’s standard of living. Chained CPI is an effort to alter the perceived impact of inflation via the gimmick of “full substitution.” This is the assumption that when the price of one consumer product increases, consumers will simply substitute a similar, lower-cost product with no adverse effect. Thus, the government decides your standard of living is not affected if you can no longer afford to eat steak, as long as you can afford to eat hamburger.
Sure the Community Reinvestment Act (a totally crony law) had something to do with housing’s abrupt rise and fall in this country. And there were other factors besides Fed policy. But the primary reason why the global housing bubble, and before that the tech bubble, blew up and then collapsed is because of the easy money policies of one Alan Greenspan.