Central Banking Refuted in one Blog — Thanks, Ben!
Here, Reagan Administration O.M.B. Director and, more recently, author of The Great Deformation, David Stockman, eloquently dismantles the first attempt by past Fed Chairman Ben Bernanke to sanitize his image by becoming a blogger. Using his trademark combination of irrefutable history and caustic wit, Stockman points out that the central bankers of a century ago wouldn’t even recognize today’s manifestation of the Fed.
FRANCISCO (MarketWatch) — Move over, bitcoin! Anthem Vault is getting ready to launch a large-scale digital currency. But this one’s backed by gold.
The new cryptocurrency, which debuts in May, is dubbed the “HayekCoin” after Nobel Prize-wining economist Friedrich Hayek. Anthem Vault’s Chief Executive Officer Anthem Blanchard also claims Hayek as his middle name.
“We think the cryptocurrency community is going to really embrace” the gold-backed digital currency, Blanchard told MarketWatch.
Presently, there isn’t a cap on the number of HayekCoins that will be available, Blanchard said. “The only limitation is the amount of physical gold available on the planet,” he noted.
Thanks Chris. That was, as usual, an interesting read from David although I would differ with him on so many points it would take a few thousand words to even begin to address the problems in this article.
In short though he is mixing apples and oranges when discussing time frames and economic outcomes, growth, the free market impulses and interest rate setting. He has used random bits of data to support a case against Fed rate-setting without giving consideration to the reasons many of those data outcomes came into being and were entirely unrelated to the Fed on any level.
For example he refers to falling incomes without mentioning off-shoring of labour and the way in which incomes are being flattened by globalization. Nor does he touch on the fact that hourly rate compression was impacted by the failure ofthe labour movement and deceasing power of unions.
Neither does he give any consideration to the major issue plaguing labour today that it is actually the growth in technologies such as computerization, automation and robotics that are behind the elimination of millions of jobs and incomes during the past four decades.
Those issues are so huge that you simply cannot make a case on economic performance without taking them into account just as you cannot lay the blame of falling consumption or so-called mispriced rates without considering the impacts of demographics.
The Federal reserve had nothing to do with any of those major macro themes.
My complaint with this Stockman article is that he is brushing in such broad strokes and mixing in so much discordant information in an attempt to make his case that he ends up discrediting his entire thesis and leaving the reading wondering what the hell his original point was even about.
Sorry, but two thumbs down on this Stockman article. He failed to make his case.
Greece is quiet. Is it the silence before the storm?
They will work it out. There is no other choice.
I don’t think they can, Bird. Sure, they will try to muddle through as long as possible, but ultimately it’s austerity or default.
The word austerity is incorrect…..it’s live within your means or bankruptcy.
I have to agree with Bird regarding Stockman’s take on things. He is too often paraded out by right-wing & libertarian Hayekian pundits who blame our current problems on the neo-keynesian position of the West. If the world was a simple as Stockman suggests, we would have solved a lot of our problems before Regan’s credit bubble got started. Having said that he can be a convincing rhetorician; especially if you are not a fan of the “grey” areas of our problems.
A little “disclaimer” is in order here from Yours truly. As is evident, Stockman likely would not go so far as to call for the abolition of the Fed, let alone for an institution of social credit, interest-free currency NOT controlled by bankers, etc.
That’s not why I wanted to share this.
Instead, the history he provides is instructional and in some cases VERY fascinating in the context offered. That is, even the nefarious parties who brought us “The Creature from Jekyll Island” had a drastically different view a century ago of what the central bank’s role in the markets would be, compared to what it has grown to in the last three or so decades.