Dallas Fed. President Fisher Points to the Feds Real Problem in Speech at University of Texas.
Remember our discussion about Human Action in a previous post, Mises’ “Human Action” Explains Lies About Libya. Use the lens of “Human Action” to analyze the actions of the Federal Reserve. These are quotes from a speech in late September by Richard Fisher Dallas Fed President, excerpted from an article from Fox Business.
“We’ve never been here before so none of us know how we’re going to navigate out of this particular quadrant of the liquidity pool in this ocean of money. And what I’m concerned about is that we may be painting ourselves into a corner,” he said.
“We’ve done a lot … It’s not clear to me despite our theoretical ability to understand the tools very well, in practice, how we are going to get out of this. Read more here, Fed’s Fisher:” Were drowning in unemployment”
These are the kinds of admissions which result in finding a horse head in your bed. You are not supposed to speak this honestly even when trying to hide the truth in coded language. The first quote states, “we’ve never been here before..”, translation, we have no idea where we are. Then he wonders, “how we’re going to navigate out of this..”, which means they somehow navigated into a place they’ve never been. Then he says, “out of this particular quadrant of the liquidity pool in this ocean of money.” I have to ask, if you can’t navigate out of a fourth (quadrant) of a pool of money, how can you possibly navigate out of an ocean of money? Then this statement, “I’m concerned…we may be painting ourselves into a corner.” So, let me see if I understand. You’re painting yourself into a corner of a quadrant of a pool. You have no idea where the corner of this pool in this ocean of money is located. You don’t know how to get out of this corner, even if you could find it. I have to ask, don’t you think you should have stopped, found out where you were, and asked for directions, before you went any farther? I’m guessing your hubris wouldn’t allow for the possibility that your original directions may have been wrong?
What do you think the underlined quote above could possibly mean? Does it mean, “We understand the abilities of our tools to theoretically work in practice, but in the real world, it’s not clear to me how we are going to get out of this”. Or does this mean, “Despite using our tools in theoretical practice, our ability to understand them in reality, makes it unclear to me how we are going to get out of this”. Or put simply, “I think we’re screwed”
Why waste time with all of those extraneous words unless you’re trying to obscure the message and make it vague so it can mean anything you want after events start to unfold. This is what the quote means. We don’t know how we are going to be able stop printing money. We have inflated far beyond what any of us has ever experienced. We have to keep up the steady injections of money or there will be a bigger crash then we experienced in 08. We have no other options, there aren’t any more tools in our tool box. We thought the money injections to stimulate spending and restart the economy would have worked by now. We were all taught in our economics classes in college it’s “aggregate demand stupid”, Keynes rules the day. For some reason the real world of constantly changing values and variables, applied to the allocation of scarce resources, won’t cooperate with our sterile laboratory theories. So we are hoping that printing more and more money will keep the economy propped up until something magically happens to restart the economic engine. We don’t know what that something will be, but we will take credit for it when it happens and point to our policies as the reason we came out of this economic malaise, which we would have come out of sooner if not for all the heretics who wouldn’t allow us to inject more money than we did.”
Here is the problem. I have talked to many college grads and have asked them if they took econ. classes. To the one’s who have, I’ve asked, so you’ve heard of Keynes and Marx? They reply yes. Then I ask if they’ve heard of Hayek , Mises or Rothbard? A handful said they think they had heard of Hayek, none have heard of the other two. Here is the difference, the people who have read Hayek, Mises or Rothbard not only know who Keynes and Marx are, they have read many of their writings. Who has a wider knowledge base when it comes to economic analysis, people who have nothing more than the narrow view of Keynesian and Marxian theory’s, which are taught at universitys, or people who have read not only Hayek, Mises, Rothbard and the Austrian school, but Keynes and Marx, Adam Smith and other classical economists, Milton Friedman and the monetarists, and many others. Many of these politicians, bureaucrats, economists and intellectuals don’t even realize that in the words of Thomas Sowell “They are on their tiny island of knowledge surrounded by their sea of ignorance.” They can’t possibly make good decisions if their base of economic knowledge is neither wide nor deep.
This is a quote about Human Action from the article mentioned above. “Human action is purposeful behavior. Action is not simply verbal preference, it is the individual choosing and acting to reach a particular end. Action is a tangible thing and cannot be confused with wishes or hopes or after the fact quarterbacking. Men act to substitute what they think will be a more satisfactory state of affairs for a less satisfactory state. We wouldn’t want to change our existing state of affairs if we didn’t think the result would be better. Our action reveals the correctness of our thinking.” Either the Fed’s actions are not correct in the attainment of their goal, or their stated goal is not the true end they seek.