Wednesday, December 11, 2013

Taking A Ride On The Monetary Titanic

By, Chris Rossini

Dallas Fed President Richard Fisher says the Federal Reserve should begin to scale back (i.e., taper) its bond-buying “at the earliest opportunity.”

He then paints a picture as to what QE is doing, and why keeping it on is dangerous:
“Money is cheap and liquidity is abundant. Indeed, it is coursing over the gunwales of the ship of our economy, placing us at risk of being submerged in financial shenanigans rather than in conducting business based on fundamentals”.
This is not an unusual metaphor for a central planner to create. After all, their fantasy consists of themselves being the captains of a ship (that evidently we all get to ride) in the vast ocean known as the economy.

It's a shame that such people aren't confined to just being university professors, or some wild-eyed dreamers sitting around in coffee shops. The unfortunate reality is, that for the last 100 years, such individuals have been able to live out their delusions.

Until they sink the "ship" (which is inevitable) we all must remain as passengers on this monetary Titanic. Just make sure, as a fellow passenger, that you're fully stocked with lifejackets (gold, silver, etc). They'll come in handy, and will keep you afloat, as the others are feverishly doing the doggie paddle.

But back to Fisher. His metaphor is riddled with errors.

Fisher says that QE is "placing us at risk" of creating "financial shenanigans". No! That's already the reality! "Risk" waved bye-bye long ago. Quantitative Easing is the epitome of financial shenanigans. It has already distorted the marketplace. It is the crisis.

The true "risk" that clear thinking individuals should be considering is this: Should we have a voluntary and functional free market economy, that is grounded in sound money?...(Or)...Do we have a coerced and centrally planned economy, that is grounded on nothing but the whims of the planners?

That's the real "risk." Make the wrong choice (and it has already been made) and it leads to economic disaster.

Fisher worries that businesses won't be able to operate "based on fundamentals". Again, already a reality. Too late! Falsifying interest rates and pumping new money wreaks havoc on business calculation. Total havoc.

It's only after the Fed engineers the bust that we find out which businesses and individuals have been swimming with their pants down. Many of them will claim that they were just responding to consumer demands. That's why they built that second location. That's why they hired those extra workers. That's why they took out those loans.

How is a business supposed to decipher between genuine consumer demand, or the Fed's funny money stimulus? It's impossible.

So businesses try to make the right decisions based on what they see in front of them. New competition moves into town. More people are buying their stuff. Little do most of them know that "fundamentals" have been placed into a kaleidoscope. And even less will know that The Fed is the culprit (although that's slowly changing).

Fisher is totally in the dark. The "risk" has been taken, and the damage has been done. There's no reversing it. The extent of the damage will be revealed when the Fed brings on the bust, and then promises to save the world (yet again) by showering everyone with more of its filthy pieces of paper.

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  1. You need to be a little more direct. Simply say the Fed is violating the Bible. You're paraphrasing Gary North's "Honest Money" and leaving out the foundation for his argument which is the Bible.

    1. Bizarre little man. How fixated you are on Gary North. Chris Rossini is applying the teachings of many economists to our current predicament, few if any of whom derived their insights from the Bible. Broaden your reading habits, and for the sake of your own mental well-being, seek professional help to shake your fetish with Gary North.

  2. We can only hope that the looming correction will once and for all time lay to rest the insanity called Keynesianism. The notion that creating currency out of nothing is the source of prosperity is simply too stupid for words.

    How could the entire world buy into such a fanciful and destructive belief?

    1. We thought stagflation in the 70s, which Keyensian theory of the time claimed was not possible, would be the last nail in its coffin. But the neos have found convoluted ways to raise it from the grave. Why? Because more than any other economic system, it is so wonderfully useful to statists.

    2. Yes, it allows for the illusion of a "mixed" economy and government that "cares" about its people, while avoiding the negative perperception of outright socialism. It's the perfect economic model for "liberal democracies."

  3. Neo-Keynesianism lives because the government could not exist without it. After the 70s the media spun, spun, SPUN to make sure that nobody questioned Central Banks.

    I fear that when the wheels of this century long experiment in "funny (non)money" finally come flying off that a lot of innocent people are going to suffer. I hope that blogs like this, and LRC and will have educated enough people so that they know who to blame and punish for their destruction.