Posted tagged ‘Zero Interest Rate Policy’

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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 Article – Federal Reserve Policy Makers Have An Incestuous Intellectual Relationship With Each Other, at austrianaddict.com.

Related Article – A Tornado vs.  The Fed. Which Is More Destructive, at austrianaddict.com.

Related Article – The Role Of Interest Rates In A Market Economy, at austrianaddict.com.

Related Article – 0% Interest Rate x Eight Years = The Fed’s ZIRP Doesn’t Work, at austrianaddict.com.

Related Article – We Can’t Recreate The Garden Of Eden, at austrianaddict.com.

Related Article – Capital Consumption, aka, Eating Our Seed Corn, at austrianaddict.com.

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Must Reads For The Week 2/11/17

February 12, 2017

Human Action Beats Stats In The Super Bowl, by Jeff Deist, at mises.org. Being able to predict the outcome of events relies on how many variables are constant. When human beings are the variables, the predictive nature of stats becomes less effective, if not impossible, because human beings are not constant. Who thought the Patriots were going to win when they were down 28-3? When you looked at the statistical possibilities, you had to conclude there was no way. The face that individual human actors on the field and on the sidelines were making the decisions in the second half made this impossibility all too real. If one of the Patriots 2 point conversions was not successful, or if the Falcons decision to pass late had been successful, the outcome could have been different. The clarity of hindsight allows us to judge if the decision was ultimately correct in bringing about the desired result. But at those particular moments, each decision maker, on the sideline or on the field, thought his action would bring about success, or he wouldn’t have taken his decision. People who say that they wouldn’t have made that decision are speculating about something that can’t be recreated. Can all the particular knowledge and experience of a particular person be recreated in another person? Can the situation at the moment the decision had to be made be recreated? No. It is pure speculation to say you would have taken a correct decision at these particular moments in this game. You may have taken a different decision but that doesn’t mean it would have been successful. There is also another variable that enters into whether a decision turns out as planned. The other team gets a vote on whether you are able to execute your decision as you’ve  planned it. Here is the lesson we should take away from the Super Bowl. If the coaches and the 11 players on one side of the ball can’t make their decisions turn out exactly as planned; Why would we think that the decisions by politicians and bureaucrats, that affect 330 individual actors (non constant variables) aka people, possibly turn out as planned? Thinking that politicians and bureaucrats could make better decisions for people than these people can make for themselves is ridicules. Third party decision making doesn’t work as well as allowing the decision to be taken by the individual most affected by the results of the decision.

Bill Belichick: Entrepreneur, by Tho Bishop, at mises.org. This is a great article about Bill Belichick’s decision making as the general manager and the coach of the Patriots. He has a skill set that makes him “…not only America’s greatest football mind, but one of its greatest entrepreneurs.”

“There’s A Global Riot Against Psuedo-Experts”, Nassim Taleb Explains, “This Is Not About Fascism, at zerohedge.com. Excerpt from the article: “I often say that a mathematician thinks in numbers, a lawyer in laws, and an idiot thinks in words….I think you have to draw the conclusion that there is a global riot against pseudo-experts. I saw it with Brexit,  Nigel Farage….. said “the problem with the government was that none of them had ever had a proper job. Being a bureaucrat is not a proper job”.”…….. “When Trump was running for election, I said what he says makes sense to a grocery store owner. Because the grocery guy can say Trump is wrong because he can see where he is wrong. But with Obama, he can’t understand what he’s saying, so the grocery man doesn’t know where he is wrong.”

Tightening The Money Supply Will Inevitably Lead To A Bust, by Frank Shostack, at mises.org. The last 8 years of a zero interest rate policy by The Fed, was intended to stop the correction (bust) of the housing bubble. But this housing bubble was caused by the previous money pumping by The Fed via their previous low interest rate policy. The bust is the correction. The correction is good for our economic future. But no one wants it to happen on their watch. In our present political climate, The Fed has a scapegoat in Trump if they want to be released from the blame of crashing the market.

US Government’s 2016 Net Loss “More Than Doubled” To $1 Trillion, at theburningplatform.com. Just another trillion dollar deficit that has to be paid back by the Federal Government taking the first fruits from future production.

Cash No Longer King: Europe Accelerates Move To Begin Elimination Of Paper Money, at zerohedge.com. Central planners want to control everything you do by making everything a digital transaction. Because of this many people will barter for goods and services in a black market system. Over all productivity will decrease which means the standard of living will also decrease. Central planning an economy doesn’t create more wealth. All it does is redistribute the lower of wealth produced by their interventions.

16 Fake News Stories Reporters Have Run Since Trump Won, at the federalist.com. No comment needed. Search this story (click here) and let me know if it is fake or real. I’m not quite sure either way.

CARTOONS from theburningplatform. (More Here)

 

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

Related Article – The Role Of Interest Rates In A Market Economy, at austrianaddict.com.

Related Article – A Tornado vs. The Fed, Which Is More Destructive, at austrianaddict.com.

 

 

 

 

 

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Why Has Classical Capitalism Devolved Into Crony-Capitalism, by Charles Hugh Smith

September 16, 2014

In this article, Why Has Classical Capitalism Devolved Into Crony-Capitalism, Charles Hugh Smith, (oftowminds.com) makes the point that the Elites, consisting of ; people in Government and central bankers, lesser institutions that are closest in orbit around Government and central banks, and organizations and individuals who are orbiting these lesser institutions, think the economy will eventually “heal itself” even after all they have stolen through zero percent interest rates, electronically printed counterfeit money, and Government debt. These three legs of theft are, quoting CHS, “…crippling the market’s self-healing immune system: Price discovery. Thanks to ceaseless interventions by central banks, the price discovery mechanism has been shattered: want to know the price of risk? It’s near-zero. Yield on sovereign bonds? Near-zero. And so on. Prices have been so distorted (the ultimate goal of Central Planning everywhere, from China to the EU to Japan to the U.S.) that the illusion of stability is impossible without more intervention.”

Here are his six factors of how, “...free market capitalism becomes state-cartel crony-capitalism, a Ponzi scheme of epic proportion...”

1. “Those who control most of the wealth are willing to risk systemic collapse to retain their privileges and wealth. Due to humanity’s virtuosity with rationalization, those at the top always find ways to justify policies that maintain their dominance and downplay the distortions the policies generate. This as true in China as it is in the U.S.”

2. “Short-term thinking: if we fudge the numbers, lower interest rates, etc. today, we (politicians, policy-makers, money managers, etc.) will avoid being sacked tomorrow. The longer term consequences of these politically expedient policies are ignored.”

3. “Legitimate capital accumulation has become more difficult and risky than buying political favors. Global competition and the exhaustion of developed-world consumers has made it difficult to reap outsized profits from legitimate enterprise. In terms of return-on-investment (ROI), buying political favors is far lower risk and generates much higher returns than expanding production or risking investment in R&D.”

4. “The centralization of state/central bank power has increased the leverage of political contributions/lobbying. The greater the concentration of power, the more attractive it is to sociopaths and those seeking to buy state subsidies, sweetheart contracts, protection from competition, etc.”

5. “Any legitimate reform will require dismantling crony-capitalist/state-cartel arrangements. Since that would hurt those at the top of the wealth/power pyramid, reform is politically impossible.”

6. “Understood in this light, it’s clear that central bank monetary policy—zero-interest rates, asset purchases, cheap credit to banks and financiers, QE, etc.—is designed to paper over the structural problems that require real reform.”

 

CHARLES HUGH SMITH INTERVIEW

If you want to hear an interesting and in-depth explanation about the rise of crony capitalism, listening to Charles Hugh Smith’s interview with Gordon T. Long would be well worth your time ( it also has some great graphs and diagrams).

Related Article – Central Bank Monetary Policy Enables Us To Put Off Real Reforms, by Charles Hugh Smith, at oftwominds.com.

Related Article – Is There Capitalism After Cronyism?, by Charles Hugh Smith, at oftwominds.com.

 

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Must Reads For The Week 6/28/14

June 28, 2014
The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

FEDERAL RESERVE,  MUST READS OF THE WEEK

 

Lets start with some humor, because the rest of the post isn’t very funny. I saw this video, Money Is Our God, by Tom Simmons, on Libertas Project / Facebook. Tom Simmons has the Federal Reserve figured out.

 

The State Of The Union: A Friendly Reminder Where We Stand Now, at zerohedge.com. These charts show how the Fed is attempting to keep the economy propped up with electronically printed counterfeit money. Their original money pumping caused the very problem their present money pumping is supposed to cure. It’s like an NFL player getting a concussion from a helmet to helmet hit, and trying to cure it by punching him in the face..

The Fed’s Hobson’s Choice: End QE And Zero Interest Rates or Destabilize The Dollar And The Treasury Market, by Charles Hugh Smith, at oftwominds.com. The Fed has been printing counterfeit money to purchase debt, and artificially keeping interest rates low in order to incentivize borrowing which is at record pace over the last 5 years. Policy makers at the Fed believe in the Keynesian theory that spending {consumption} stimulates production. But Say’s law of markets states, “One can only buy with what one has produced….The one product constitutes the means of purchasing another….”  In the market, production spending is always ahead of consumption spending. But when the Fed stimulates Keynesian consumption, without any corresponding production, it misallocates resources. Economic forces are trying to correct the misallocations brought about by the Feds counterfeiting. These forces will eventually prevail no matter how much the Fed tries to prop up it’s false reality with fake money.

The Civilian Employment -Population Ratio Chart, from the FRED {Federal Reserve Economic Data}. This chart represents the proportion of the civilian noninstitutional population that is employed. This next chart shows the total Civilian Noninstitutional Population, which includes two groups of people who are not working, 1) people under 25,  2) retired people. This chart, Civilian Noninstitutional Population – 25 to 54 years, shows people in their prime working years. Now look at the M2 Money Stock chart. If we look at all of the charts starting from March of 95 to the present, here is what we see. The Fed has increased M2 money stock from $3.49 trillion to $11.22 trillion which is almost $8 trillion. During the same time period the ratio of employed people has decreased from 63.1% of the civilian population working, to 58.9% of the civilian population working. The civilian population has increased  from 198 million to 247 million. These numbers show that the Feds policy of electronically printing counterfeit money is a miserable failure, if its goal is to increase employment and keeping inflation in check. But the Fed’s zero interest rate policy, along with its policy of Quantitative Easing {electronically printing counterfeit money},works perfectly if the goal is to enrich the people who have access to this money first. But it doesn’t matter if that’s the goal or not, the result is still the same. ( The two articles below help explain fake inflation numbers, and enriching those with first access to this counterfeit money.)

Former Fed Governor Warsh Slams Fed’s “Reverse Robin Hood” Policies, at zerohedge.com. Reverse Robin Hood is a great way to explain this. People who don’t have access to this counterfeit money have had the value of what they own stolen. Counterfeiting is theft, even if, in the case of the Fed, it is legal.

Wow: Fed Economist On Fudging Price Inflation Data, at economicpolicyjournal.com. You can make the aggregate inflation rate look great if you don’t count sectors of the economy where the prices are obviously skyrocketing. You can’t believe the numbers stated in the headlines. You have to dig into the numbers to find what is really going on.

 

UNFORTUNATELY THE JOKE’S  ON US.

 

 

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Observations From The Margin

April 30, 2014
Observation Tower

Observation  (Photo credit: mooglet)

The Federal Reserve electronically prints counterfeit money and loans it to member banks at zero percent interest. These banks purchase guaranteed investments, like U.S. T Bills, with this counterfeit money. When the bonds mature, they pocket the interest and pay back the borrowed counterfeit money. Why can’t you or I get a $100 million dollar loan from the Fed at zero percent interest, purchase 5 year U.S. T Bills at 1.6% interest, and after they mature, pocket $1.6 million after paying back the $100 million? Better yet, why can’t you or I counterfeit $100 million dollars, go through the above process, keep the $1.6 million of interest and burn the $100 million we counterfeited? Better yet, why can’t you or I just skip the 5 year process and counterfeit $1.6 million and use it immediately? The simple answer is, counterfeiting is theft and theft is illegal, except when the Fed counterfeits, then it’s legal. The truth is counterfeiting results in theft whether it’s legal or illegal.

This article titled, Alaskan P0lar Bears Threatened…By Too Much Spring Ice, leaves me scratching my head. I thought polar bears were threatened by melting sea ice because of global warming. Apparently if the ice is too thick, ringed seals, which are the polar bears favorite meal, can’t create the breathing holes they need to survive the frigid winter. The male seals mysteriously arrive in the early spring for the purpose of breeding, which is curiously about the same time the female polar bears are emerging from their maternity dens with their cubs, having not eaten for six months. So should I be for global cooling or global warming?

I read a story about 40 veterans dying after the VA  put them on a secret waiting list for the purpose of making the VA wait list times look better. Bureaucrats at the Government run VA decided that looking competent, as opposed to being competent, was more valuable to them than the lives of these veterans. Welcome to Government run healthcare. This is an example of death panels, and what we can look forward to as Obamacare is incrementally forced upon us. Death panels are nothing more than third-party bureaucratic decisions makers making trade offs under a different set of incentives and constraints than the patient and the doctor normally operate under. No one should be surprised by this, unless you are a true believer in the government’s ability to create a utopian world.

The EPA is going to regulate the greenhouse gases emitted when cows burp and fart (read here). I was very sceptical when I heard about this because I thought it was probably a parody from The Onion. I searched The Onion for any article about cow farts and there were none. Sometimes you can’t even make this stuff up.

The FDA is getting its regulatory foot in the door concerning E-Cigarettes. Health advocates and their puppets in congress want the FDA to go farther. But they shouldn’t worry, we all know this is the first goose step of many more goose steps to come. E-Cigs are a safe way for people who are addicted to nicotine to get their fix while reducing the chance of cancer. Shouldn’t the FDA and the CDC be promoting this safer way to inhale nicotine? Don’t cities and counties across the US have needle exchange programs? Isn’t the purpose of these programs to reduce the chances of getting HIV or hepatitis C while the addict enjoys the drug of his choice. Government prohibits safe addiction on the one hand, and promotes safe addiction on the other. What am I missing here?

 

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“The Fed Has Failed”, Analysis by Charles Hugh Smith

March 18, 2014

Here is a great article by Charles Hugh Smith, at oftwominds, titled, The Fed Has Failed, (And Will Continue To Fail), Part I. His analysis of what is the result when the Federal Reserve electronically prints counterfeit money through their policies of quantitative easing (QE’s) and  artificially low-interest rates is spot on. He sums it up in this statement;

“The Fed….. is handing guaranteed returns to the banks and financiers while strip mining what’s left of the middle and working classes’ non-labor income, i.e. interest and savings.”

The charts he uses show that the Feds policies have worked to bolster the financial sector {wall street and banking}, while stealing from the bottom 80% of the people who hold financial assets, decreasing the total number of people actively working by 4%,  and shrinking real wages and purchasing power of the people who remain in the labor force.

Before you read the article lets first give a brief explanation of how the Fed first creates and then injects counterfeit money into the economy, and then look at the result of the Feds counterfeiting.

COUNTERFEITING: 1) THE FED SETS THE DISCOUNT RATE IT CHARGES BANKS

The Fed sets the discount rate which is the interest rate it charges banks for loans. The zero interest rate policy {ZIRP}, that has been in effect for some time now, allows a member bank to borrow electronically printed counterfeit money from the Fed at zero or near zero percent interest. They can take the money and invest it in a bond, stock or other financial instrument that yields a higher interest rate than the rate charged by the Fed. It’s not hard to find a security that yields a rate higher than zero. Banks can also loan this money to individuals, at a low-interest rate, for mortgages on home purchases. So banks either purchases interest baring securities {bonds, stocks, etc} or create their own interest baring securities {mortgages} with the counterfeit money from the Fed.

COUNTERFEITING: 2) FRACTIONAL RESERVE BANKING

The banks can loan out more money than they get from the Fed because we have a 10% fractional reserve banking system. What this means is the bank can loan out 10 dollars for every 1 dollar they hold in reserve. So if the bank holds 1 million dollars in reserve it can loan out 10 million dollars. It can actually counterfeit another 10 million dollars in loans on top of the 1 million the Fed counterfeited and loaned to the bank. The bank is receiving monthly payments of interest and principle on the 10 million it counterfeited and loaned out. These payments can now be held on reserve which allows the bank to create more counterfeit loanable funds.

COUNTERFEITING: 3) PURCHASING SECURITIES THROUGH QE

Quantitative Easing is a fancy name for the Fed creating more counterfeit money and purchasing government bonds and mortgage-backed securities from banks on the open market. The Fed will buy the government bonds the bank originally purchased, and it will also buy the mortgages the bank originally created. The bank can now use the new counterfeit money the Fed created to purchase these securities, hold it in reserve and create 10 times that amount in counterfeit dollars.

To sum it up, the Fed counterfeits money and loans it to banks at zero percent interest. The banks can counterfeit 10 times as much money as they hold in reserve because of our 10% fractional reserve banking rules. The Bank purchases Government bonds, and creates mortgages with these counterfeit funds. The Federal reserve purchases these Government bonds and mortgage backed securities from the banks with more counterfeit money, and this money can be increased by a factor of ten, and the whole process starts over again. Where can you sign me up for this sweet deal.

FED COUNTERFEITING MISALLOCATES SCARCE RESOURCES

The counterfeit money injected into the economy allows first receivers to purchase something without any corresponding production. It is an exchange of nothing for something. It sends false signals through the economy propping up economic activities that would never be supported in an unhampered free market. The tech bubble of 2000, the housing bubble of 08, and the current level of the stock market are all examples of bubble activities that would never have happened if the Fed had not printed counterfeit dollars. The Tech bubble of 00, and the housing bubble of 08 were created by the Feds printing and artificially low interest rates. The counterfeit money injected since 08 has stopped the fall in housing prices, and has also created the stock markets five year bull run. All economic activities that have been created and/or maintained by this counterfeit money will eventually have to be liquidated sooner, if they stop counterfeiting, or later if they continue. One way or another the economic forces trying to correct the Feds  interventions will win out.

Click on the article above and read Charles Hugh Smiths analysis of the Feds failure. The charts are very good. Here are a few excerpts.

“The Fed’s policies have been an unqualified success for financiers and an abject failure for the bottom 99.5% who have to work for a living.”

“Keeping interest rates near-zero for five years and pumping $4 trillion into the system are both completely off the scale of central bank policy in the U.S.”

“The most charitable assessment we can make of Fed policy is that the “prosperity” it created is at best, ahem, grossly concentrated in the most parasitic and politically powerful sector: finance. Why should we be surprised that the Fed, itself a servant of the banking sector, should devise policies that enrich the bankers and financiers”.

Also read, “How The Fed Has Failed America”, Part II, by Charles Hugh Smith. Here is an excerpt from this article,

“The only way to eliminate the financial parasites is to stop subsidizing their skimming and scamming, and the only way to stop subsidizing the financial parasites is to shut down the Fed.”

Related Article – Counterfeiting by the Federal Reserve, Although Legal, Still Results In Theft, by austrianaddict.com.

Related Article – Let The Counterfeiting Continue! The Fed Is Stuck In Its Feedback Loop, by austrianaddict.com.

Related Article – A Tornado vs. The Fed, Which Is More Destructive? by austrianaddict.com.

Related Article – Capital Consumption, aka, Eating Our Seed Corn, by austrianaddict.com.

Related Article – Thomas Woods Explains The Austrian Business Cycle Theory, at austrianaddict.com.

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