Monetary policy has an impact on inflation, output and employment. But it also has a major impact on stock market prices. Any central banker raising interest rates is reducing stock market values and thus eroding the bonuses of top bankers and other chief executives.And thus, the price inflation.
Those people will lobby, asserting that higher interest rates will undermine the economy and cause us to plummet into recession, or worse.
In principle, the Fed could stand up to the bankers, pushing back against all specious arguments. In practice, unfortunately, the New York Fed and the Board of Governors are quite deferential to financial-sector “experts.” Bankers are persuasive; many are smart people, armed with fancy models, and they offer very nice income-earning opportunities to former central bankers.
We have lost track of the number of research notes from major banks pleading for easier credit, lower capital requirements, delay in implementing financial reforms or all of the above.
In recent decades the Fed has given way completely, at the highest level and with disastrous consequences...,As the American economy begins to improve, influential people in the financial sector will continue to talk about the need for a prolonged period of low interest rates. The Fed will listen.
This time will not be different.
Thursday, March 29, 2012
Why the Fed Will Keep on Printing
The Federal reserve is a captured animal, captured by the banksters. Daron Acemoglu,Elizabeth and James Killian Professor of Economics at the Massachusetts Institute of Technology and Simon Johnson, the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management, get it right:
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The FED is not captured by the banksters. The FED is the very entity in which the bankster cartel is established and given social legitimacy.
ReplyDeletethese are the beginnings of the "nationalize the fed" movement. they only have something valid to say to the extent it gets them a new fed, run by congress, which does "stand up to the bankers."
ReplyDeleteno fed at all isn't even remotely on their radar.
Can you smell the "solution" right around the corner?
ReplyDeleteA IMF ran world central bank is the "solution". These "renegade" MIT economists will be pushing for some variety of this soon.
ReplyDelete"In an unhampered market economy the capitalists and entrepreneurs cannot expect an advantage from bribing officeholders and politicians. On the other hand, the officeholders and politicians are not in a position to blackmail businessmen and to extort graft from them. In an interventionist country powerful pressure groups are intent upon securing for their members privileges at the expense of weaker groups and individuals. Then the businessmen may deem it expedient to protect themselves against discriminatory acts on the part of the executive officers and the legislature by bribery; once used to such methods, they may try to employ them in order to secure privileges for themselves. At any rate the fact that businessmen bribe politicians and officeholders and are blackmailed by such people does not indicate that they are supreme and rule the countries. It is those ruled--and not the rulers--who bribe and are paying tribute." - Ludwig von Mises, "Human Action"
ReplyDelete"In CNBC interview Wednesday, Schiff called Bernanke “public enemy number one” and warned that banks would crash if the bond market collapses."
ReplyDeleteDo you suppose central banks would hyperinflate at this point in desperation? Even though it might result in their destruction?
After all, it is a mad mad mad world, and they probably think this time is different?