Let The Counterfeiting Continue! The Fed Is Stuck In Their Feedback Loop!
Peter Schiff does his impression of a salmon swimming against the current in the video below. Of all the “experts” in the video, he is the only one who understands the trap the Fed has snared itself in. Does he have the ability to predict the future? Don’t be awed by his crystal ball gazing because he understands the Austrian Business Cycle Theory (read and watch video here), and the other “experts” probably have never heard of it,or if they have they don’t understand it. The Fed has electronically printed massive amounts of counterfeit money, and has artificially kept interest rates below what they would be in an unhampered market. Scarce resources, labor, and capital, have been misdirected into activities that wouldn’t stand up under normal market conditions. The only thing that keeps these activities viable is the fact that the Fed continues to inject counterfeit money into the market. If the Fed quits electronically printing counterfeit money, there will be a liquidation of these nonproductive activities, similar to what happened in the 08 collapse. The Feds only political solution, which means a solution that saves their skin, is to keep counterfeiting so they don’t get blamed for the collapse. They don’t understand that stopping the counterfeiting is the only cure for the artificial inflationary boom they created when they injected billions of electrically counterfeited money into the economy in the first place.
In this post, Incremental Steps to The New Normal, I say the Fed hopes their taper, no taper, strategy will get them out of the mess of their own making. Here are a couple of quotes by Ludwig von Mises, and Murray Rothbard from an article below.
Ludwig Von Mises: “Credit expansion is the government’s’ foremost tool in their struggle against the free market. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous.”
Murray Rothbard: “What makes us rich is an abundance of goods, and what limits that abundance is a scarcity of resources: namely land, labor, and capital. Multiplying coin will not whisk these resources into being. We may feel rich for the moment, but clearly all we are doing is diluting the money supply.”
Here are some short articles and videos showing what a fine mess the Fed has gotten us into.
The Treasury Secretary On How Unstable US Government Finances Are, at economicpolicyjournal.com
Is Bernanke Looking For A New PR Director? at economicpolicyjournal.com
Albert Edwards Asks You To Spot The Difference, (There Isn’t One) at zerohedge.com
The Fed’s Reflexive Catch 22 In One Sentence, at zerohedge.com
Five Years Of Hard Work By The Federal Reserve, at zerohedge.com
Bill Bonner Announces His Candidacy For The Federal Reserve Chairmanship, at economicpolicyjournal.com
David Stockman Warns ” ‘Calamity Janet’ Yellen Has No Clue” at zerohedge.com.
Baupost Summarizes Today’s “Investment Process” in 50 Words, at zerohedge.com
This is from, “Is Bernanke Looking For A New PR Director?”