Posted tagged ‘Jeff Deist’

Danielle DiMartino Booth: “The Fed Has Crippled Our Middle Class. Completely Gutted It Out”

April 27, 2017

Danielle DiMartino Booth was a Dallas Fed Staffer. Her knew book – Fed Up: An Insider’s Take On Why The Federal Reserve Is Bad For America”, gives incite into the incestuous intellectual relationship Fed policy makers have with each other. She calls it “group stink”.

Dimartino Booth is interviewed by Jeff Deist of the Mises Institute in the video below.

Here are some excerpts from the video.

Deist:The fed is almost exclusively staffed by academics, by phd’s. That wasn’t always the case. Could you summarize this impact of academization of the Fed for us?”

Booth: “I think the end result of all of this, which stands in direct contrast to the mandates of the original 1913 Act…to insure intellectual diversity and industrial diversity on the board and among the fed leadership. But is has created what I call “Group Stink”. It is the inability to decent, the inability to say no. Most people inside the Fed think the same. They don’t take the complications of a global and very modern financial system into account…… It is a lack of appreciation for anything that you and I would consider to be on planet earth. And it is what has made the Fed so very out of touch, and angered so many people. They might not know it’s the Fed. But they know something has gone very very wrong with their financial well-being and who is in control of their financial well-being.

4:50 – Deist: “A huge percentage of these Fed economists are Ivy League graduates. So despite all thier book learning, do you think people in the Fed have read Austrian stuff…..have they read Mises and Hayek. Or is this just completely outside of their orbit?

Booth: “You know I think it might have in the index of one of their economic text books. But I would bring up the word ‘malinvestment’ and their eyeballs would roll into the back of their head.

My Take From 2013: Thomas Sowell calls it “credentialed ignorance”. He is being rather nice. I would call it an example of intellectual inbreeding. These Federal Reserve policy makers have earned their economic credentials from some of the “best” Universities. That fact means we should stand in awe of them? Unfortunately I don’t give my respect to people with “status” that easily. I think respect is earned. What I have observed is these people live in a continual feed back loop. They all think pretty much the same way because they were taught by professors who all think the same way. They are hired to work for people in Government who think the same way. They are very rarely challenged to think outside of their small tunnel of knowledge protecting them from their mountain of ignorance. A mountain that would crash down on them if their tunnel wasn’t there.

Deist: “Do you think they really in their hearts, believe that …..monetary policy can create economic growth in and of itself?

Booth: “If they don’t believe it, they do a really good job of faking it…. Because it is clear that they do not understand the damage that’s been done to the social fabric of this country, to the culture, to have driven down multiple generations throats the idea that the only way to get growth is through the creation of debt. That is not the American was. It is not what capitalism is based on….. And it has crippled our middle class. Completely gutted it out. While at the same time corrupting all manner of institutions; corporations, banks, pensions you name it.”

6:58 – Deist: “Do you think that your average Fed economist would view what the Fed does in terms of interest rate targeting as something that’s not capitalism. That sounds like something out of a Soviet Politburo?

Booth: “I think that… part of the problem……where a disconnect is born that the Fed leaders …..have to be on the receiving end of the policies they make. It is like congress not having to deal with the worst vestiges of Obamacare. They have platinum health plans….. So I think a lot of the leaders at the Fed can delude themselves into thinking that they are doing good-by the people whose financial situations they shepherd, when in fact they are not. But to your other point, they all study the same basic schools of thought and that is what is broken inside of our higher learning institutions.

12:55 – Deist: “Do you think there is any way the Fed can really unwind all the $4 trillion treasury debt or worse on its balance sheet?

Booth: “Unfortunately I think markets have become addicted to the notion, if you will, that every single bond that central banks, world-wide, have purchased. Every single bond has been expunged from the supply forever. Otherwise I don’t think we would have interest rates where they are. I think that the Fed can talk tough about reducing the balance sheet if it wants to play politics and push the economy into recession. But they consider that 4.5 trillion dollars to be their fortress, their power base. The balance sheet has gone to their head.”

13:42 – Deist: “Yellen is in a tough spot…..If she wants to raise interest rates the debt service for Congress can double…..But without raising interest rates, how does she continue to create a market for US treasuries…….She’s in a ship saw.

Booth: “It is an absolute dilemma. But it is a corner into which the Fed has painted itself. There were people on the inside saying it’s a slippery slope if you go to zero. This will not end well. The market is not screaming for lower interest rates. The market is telling you there is a liquidity freeze going on and that it needs other things. If you go to zero, you’re going to introduce distortions and make it extremely difficult, one day, to ever exit. And guess what’s happened. It has become the Achilles heel not just of Janet Yellen and the Federal Reserve, but I would argue the Bank of Japan, Bank of China, The European Central Bank, Mario Draghi. This is a shared global phenomenon.

15:00 – Deist: “Who becomes the central banks banker? Is it some sort of IMF scenario if they can’t work their way out of this?

Booth: “Yes but who funds the IMF. Again there’s nothing elegant I can suggest to you as a way out of this situation……If you speak to the academics who have the same school of thought they will tell you that we will just have to monetize the debt away. that there will be a gentleman’s agreement between the developed countries that have lots of debt ad that we will just walk off into the sunset and everything will be fine. I consider that the last stop on the currency war train and the next stop to be an actual world war…….I don’t think countries that don’t have high debt levels would stand still for it.”

Link to her web site – dimartinobooth.com.

 

EXPLAINING THE FED AND INTEREST RATES.

Related ArticleFederal Reserve Policy Makers Have An Incestuous Intellectual Relationship With Each Other, at austrianaddict.com.

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Related ArticleThe Role Of Interest Rates In A Market Economy, at austrianaddict.com.

Related Article0% Interest Rate x Eight Years = The Fed’s ZIRP Doesn’t Work, at austrianaddict.com.

Related ArticleWe Can’t Recreate The Garden Of Eden, at austrianaddict.com.

Related ArticleCapital Consumption, aka, Eating Our Seed Corn, at austrianaddict.com.

The Greatest Economic Myths by Jeff Deist

June 3, 2016

Jeff Deist of the Mises Institute gives a 20 minute talk about the myth that we can consume before we produce. He slams the central state for spending, and central banks for electronically printing counterfeit money. These two things promote consumption before production. Watch the whole talk. It is outstanding. The talk begins at 2:40. Below are some excerpts from the video.

Here are some excerpts:

If there is one over-riding economic myth that seems to plague us every election cycle….is the motion that society can do collectively what we can’t do individually. Namely get rich by living today at the expense of tomorrow. This is the doctrine of the political class, of central bankers, of professional economists…..and I would like to term it monetary and fiscal hedonism. It’s really hedonism masquerading as economics and technical analysis.”

“When the cumulative effects of certain bad government spending policies are for off into the future, It makes sense that voters are going to vote for them because it’s just a matter of time preference….Voters are going to support things when they don’t necessarily feel the pain themselves.”

“As recently as 15 years ago we still could have dealt with the debt. Now I’m not that the political will existed at that time. I’m saying mathematically it was still possible to cut benefits and do other things to make that debt or restructure that debt to deal with it mathematically….There is nothing that’s going to come along that’s going to make us pay off this debt in any real sense…No change is coming that’s going to have a huge spike in federal tax coffers….The world knows that we are never going to pay off this debt in any real sense.”

“The world is awash in dollars especially Asian creditors of ours. So they’re caught between a rock and a hard place. On the one hand it’s not in their short-term interest for the dollar to sink rapidly but it’s very much in their long-term interest to no longer have the dollar as the worlds reserve currency because the people behind the dollar, the U.S. congress, is completely out of control, and they know this. The debts never going to be paid. Entitlements are never going to be paid….and this is the result of the myth that we can live for today at the expense of tomorrow….This is what congress is doing this is what democracy leads to….”

“There is also a monetary element to this. I’ll call it monetary hedonism. The increase in the money created by the Fed is unprecedented in human history. We have no idea what this is going to lead to. We have never had an example like this in human history where the worlds reserve currency, not a national currency, has done this….We’ve been monetizing debt for so long that it’s beginning to feel like it could go ion forever and ever….It’s monetary hedonism…it’s kicking the can down the road and saying instead of taking the bullet today we’re going to push it off to some time into the future….Is this the new normal, because I think it’s hard to conceive of an event where the Fed would ever reverse this trend or even significantly raise interest rates.”

“The desire to build things beyond ones life time is innately human. We are hard wired as human beings to build societies….Building lasting modes of living is not possible unless people work toward a future that you will not be around to enjoy themselves….. We can see the congress and the Fed are encouraging us to do the opposite.”

“Healthy societies produce capital and consume less than they produce because capital accumulation produces the upward spiral, increases productivity, increases investment and makes the future richer and brighter. Capital accumulation is what’s made it possible for human population to rise up out of subsistence and create agricultural revolution and industrial revolution the digital revolution…..Production Precedes Consumption…We have to produce before we consume. That’s what real world scarcity means…..Society produces goods or we return to subsistence living.”

“The two most powerful forces in the modern world, central states and central banks, work tirelessly to force us into this economic hedonism….. At the root of our problem is mythology. We’ve cast aside our most human impulse to save for a rainy day and build a better tomorrow for ourselves and for future generations and we bought int the myths of politics and political money. We’ve bet them get away with this economic hedonism…..We’ve lived at the expense of our grandchildren. It’s been a great party for America but good luck electing someone who will talk about the hangover.”

Make sure you invest the time to watch the video. Below are some articles related to what Jeff Deist is talking about.

Related ArticleWhat Comes First, Production Or Consumption? at austrianaddict.com.

Related ArticleCapital Consumption, aka. Eating Or Seed Corn, at austrianaddict.com.

Related ArticleSay’s Law And The Permanent Recession, by Robert Blumen, at austrianaddict.com.

Related ArticleReal Savings vs. Counterfeit Savings, at austrianaddict.com.

0% Interest Rate x Eight Years = The Fed’s ZIRP Doesn’t Work

September 18, 2015

High above us in its ivory tower the Fed claims the ability to see what lies over the horizon, allowing it to dial-up just the right interest rate to steer our economy to a safe harbor. For eight years the Fed has dialed up the same interest rate of 0% and we are no closer to safe harbor than when we started. Which begs the question. Is the Fed actually in an ivory tower; or is it wandering around in a desert, riding its 0% interest rate camel toward the mirage of a robust economy that’s always disappearing right in front of its eyes?

I think the second scenario is what is actually happening. If the geniuses at The Fed don’t think our economy can handle a quarter point increase in the interest rate, what does that tell us about the strength of our economy. If they want to see what is causing our economic problems they need to look no farther than their zero percent interest rate policy. It is the cause and the effect of the problem.

JEFF DEIST: IN THRALL OF THE FEDERAL RESERVE

In his short article titled, In Thrall Of The Federal Reserve, Jeff Deist covers a lot of ground about the economic reality concerning the Feds zero percent interest rate policy. Here are some excerpts.

“Perhaps no economic pronouncement in history has been anticipated, discussed, predicted, dissected, and reported like the Federal Reserve’s momentous decision today not to raise interest rates..”

“This is not to say the hype is unwarranted. On the contrary, the decision to raise interest rates even just 25 basis points would have represented nothing less than the end of an era…”

“After so many years of the “new normal”, we have to be reminded just how extraordinary – and unprecedented – the Fed’s actions since 2008 have been…..these actions have set America on a hopelessly dangerous and unsustainable path…… placing so much economic power in the hands of a select few might not end well.”

In The Theory of Money and Credit, Ludwig von Mises made the case more than 100 years ago – before the Fed ever existed – that monetary interventions cannot create prosperity:”

Mises -“Attempts to carry our economic reforms from the monetary side can never amount to anything but an artificial stimulation of economic activity by an expansion of the circulation, and this , as must constantly be emphasized, must necessarily lead to crises and depression. Recurring economic crises are nothing but the consequences of attempts, despite all the teachings of experience and all the warnings of the economists, to stimulate economic activity by means of additional credit.

 

Related ArticleIf The Fed Is Always Wrong, How Can It’s Policies Ever Be Right? at zerohedge.com.

Related ArticleThe Role Of Interest Rates In A Market Economy, at austrianaddict.com.

Related ArticleA Tornado vs. The Fed, Which Is More Destructive, at austrianaddict.com.