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“The Troubles with The Federal Reserve” you must admit that Bernanke is a well educated and intelligent fellow but I have seen so many people who could fit this description but alas they make terrible choices.
What will happen if they decide to taper and actually commit themselves. If you are an investor we know that stocks or investments can fall much faster then they will go up. Okay they start to taper and the market which is a huge collection of trading individuals and institutions starts to see a downturn they will panic, and The Federal Reserve which has it’s reputation on the line will decide almost immediately that they must buy, after all Bernanke studied the collapse in 1930 and wrote his thesis on the failure of The Fed to increase liquidity to prevent the collapse of the great bull market of 1930.. My question is if you are that intelligent why didn’t you figure out that without a gold backed currency as is now the case and knowing that fiat currencies always self destruct how could this time be different. The thing to remember is that self serving individuals are very selective in thought and actions; maybe they should have a panel of at least twelve men or women similar The Supreme Court. These questions are to important to be left to one individual. DT
Great comment DT. I agree with your main points. If the Fed does decide to taper the market will get hit and they will be forced back in. I still believe that the Fed will taper a small portion (I would be surprised if they do this in January though) and simply start up a new program that they hope will keep interest rates low and the market at its highs. This will be another bad timing and decision by the Fed.
A final point. I think there needs to be a shake-up of the high ranking Fed officials… too bad this will not happen anytime soon.
The more I see of the inner workings of any institution it always comes down to the good old boys club and not the good of the
I have to agree with both you and my esteemed colleague.
Dt……..since, the internet is being saved for history…..and all thought are recorded , we should not deprive the future generation from our true thoughts at this time……
MR. BEN ….is a moron….and has caused and will cause the entire planet to suffer from his ill conceived notion of printing more fake fiat currency than the entire planet can digest………..
I personally believe that he and the Fed are doing everything they believe is correct to keep the ship afloat. I also believe that they are hoping for a miracle which will probably not ever happen.
Here is a quote from Alan Greenspan:
“Under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth… The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit… In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.ā€¯
Now I read that and I come away with two things…
(1) They know the truth; and (2) for whatever reason, they sell out to the powers that be, to promote the fractional reserve banking system and the never-ending expansion of credit and debt that feeds it.
Hundreds of years from now, it will be generally understood that the creation of the Federal Reserve sowed the seeds of the dollars demise and that men like Alan Greenspan and Benjamin Bernanke helped to quicken its death.
So why does the Fed get its timing wrong? After beng in business for 100 years you would think they understood cycle theory better (wouldn’t you?). We might also assume they have the resources available to build the biggest and best models of the economy and hire the most brainy of people to analyze it all. We have heard this argument before Cory and it always gets a chuckle from me. A similarly themed idea is the one that revolves around gold purchases by Central Banks. Why indeed do CB’s sell gold at the low point only to buy it back when it is high? I would counter that they are doing things exactly right but that the agendas and programmes of the Fed and CB’s are quite different than what the general public sees as being most beneficial. To appreciate why they are functioning in a way that often appears to be contra cyclical we really need to better understand who benefits from those actions and why. Applying the logic of markets or Joes Public and what is beneficial for the broad economy may not really be a great starting point because those priorities likely conflict with the reasoning that takes place behind the scenes. In any event I highly doubt Mr Bernanke is pulling the strings directly. He was hired to be a communicator and a figurehead. There are other more serious interests behind him exactly as there are powers behind Barrack Obama calling the shots. Doesn’t anyone not yet seriously question how Ronald Reagan got the top job in politics? Sheesh…. he was an actor for gosh sakes. Says it all.
To assume that the central banks know what they are doing is utter nonsense. If they had to stand on their merits most of them would be long gone and the people who are running them now would be facing stiff penalties for their actions, instead they get entitlements and are feeding at the trough. I wonder who advised Gordon Brown to sell most of The LBMA’s gold for $250 an ounce.
General Motors is another case in point I saw them headed for bankruptcy long before it happened. Our system is only served well when we insist that people and companies are held accountable for their actions. DT