AUSTRIAN ECONOMICS ADDICT

ARE CENTRAL BANK SCHEMES COMING TO AN END?

Investors Are Thwarting The Bank Of England’s Latest QE Scheme, by George Pickering, at mises.org. What is the next step for central planners when people won’t go along with their original plans?

The Bank Of Japan Has Nationalized The Japanese Stock Market, at zerohedge.com. The Bank of Japan is using printed money to prop up the Japanese Stock market. Nothing is real.

Bullard’s Bubble Warning: “I could See This Getting Away From Us”, at zerogedge.com. St. Louis Fed President James Bullard said the unintended consequences of Fed policy could be asset bubbles. I contend that asset bubbles are the intended consequences of Fed money printing and low-interest rates.

Fed Vice-Chairman Admits Fed Sponsors Wealth Inequality, at zerohedge.com. Stanley Fisher admits that negative interest rates hurt savers although negative rates seem to work in today’s world. Hey Stan, negative interest rates seem to work, in the world you created. That’s because they are the nest step after a decade of zero interest rates. The Fed’s  ZIRP policy helps banks and the equity markets at the expense of the rest of us.

The Importance Of Interest Rates, by Emile Woolf, at misesca. Interest rates reveal the time preference of individuals. This means people are consuming less now and saving more for future consumption, or they are consuming more now and saving less for future consumption. This “less” that individuals are willing to save or consume are real resources. Real resources are scarce. They have to be rationed between present consumption and future consumption. Interest rates coordinate what will be produced now for present consumption and what will be saved now for the production of future consumption. Any attempt by the Fed to artificially set interest rates sends false signals through the production process about the availability or unavailability of scarce resources. Present and future production is no longer coordinated according to the reality of individuals time preferences. It is miscoordinated by edicts of the Fed. Can the members of the fed possibly know the subjective and ever-changing time preferences of hundreds of millions of individuals in the market? Free market interest rates are the only way this time preference knowledge can be sent through the market to work its magic of coordination. The hubris of Fed members isn’t a replacement for this knowledge.

The Fed Launches New Facebook Page, by Ryan McMaken, at mises.org. Now that people are starting to realize the Feds policies aren’t working, the Fed is going to spout propaganda on their new Facebook page. Although this experiment in social media may be backfiring looking at some of the comments about their posts. Here is an example from the article: “Can you guys please help me get some of the QE? I’m trying to buy 16 cars, 4 houses, 2 jets and a yacht,” one commenter wrote. “I swear it will stimulate the economy. I’ll spend it all and cycle it back. I know velocity needs to pick up so I’ll  make sure to pay lots of models to live in my houses and travel with me. Thanks Fed! You are such a moral and upstanding institution!” They’ve made a living working in secrecy, they should stick to it.

This entry was posted on September 14, 2016 at 8:05 am and is filed under Leftovers. You can subscribe via RSS 2.0 feed to this post's comments.

Tags: Bank Of Englands Scheme, Bank of Japan Nationalized Their Stock Market, Bullards Bubble Warning, Fed Launches New Facebook Page, Fed Sponsers Wealth Inequality, Importance Of Interest Rates, The Fed