Time to End the Fed, finally admits Evans-Pritchard

[Senator Libertas]

Shut Down the Fed (Part II)

I apologise to readers around the world for having defended the emergency stimulus policies of the US Federal Reserve, and for arguing like an imbecile naif that the Fed would not succumb to drug addiction, political abuse, and mad intoxicated debauchery, once it began taking its first shots of quantitative easing.

My pathetic assumption was that Ben Bernanke would deploy further QE only to stave off DEFLATION, not to create INFLATION. If the Federal Open Market Committee cannot see the difference, God help America.

We now learn from last week’s minutes that the Fed is willing “to provide additional accommodation if needed to … return inflation, over time, to levels consistent with its mandate.”

NO, NO, NO, this cannot possibly be true.

Ben Bernanke has not only refused to abandon his idee fixe of an “inflation target”,  a key cause of the global central banking catastrophe of the last twenty years (because it can and did allow asset booms to run amok, and let credit levels reach dangerous extremes).

Worse still, he seems determined to print trillions of emergency stimulus without commensurate emergency justification to test his Princeton theories, which by the way are as old as the hills.  Keynes ridiculed the “tyranny of the general price level” in the early 1930s, and quite rightly so. Bernanke is reviving a doctrine that was already shown to be bunk eighty years ago.


Inflation targeting: is Bernanke the new Von Havenstein, head of the Weimar Reichsbank?

So all those hillsmen in Idaho, with their Colt 45s and boxes of krugerrands, who sent furious emails to the Telegraph accusing me of defending a hyperinflating establishment cabal were right all along. The Fed is indeed out of control.

The sophisticates at banking conferences in London, Frankfurt, and New York who aplogized for this primitive monetary creationsim – as I did – are the ones who lost the plot.

My apologies. Mercy, for I have sinned against sound money, and therefore against sound politics.

[...]

Another former apologist for the Fed and the fools who run it sees the light...

[A cowboy always follows his beard]

And what do you suppose should take its place?

[Gustaf]

He seems a bit confused. Who opposes inflation targeting in the modern world? Price level targets (which I presume is the alternative) makes very little sense to me.

[opebo]

But Libertas, we're in a terrible deflation, not an inflation.  We should be so lucky as to be in an inflation!

[Frink]

He seems a bit confused. Who opposes inflation targeting in the modern world? Price level targets (which I presume is the alternative) makes very little sense to me.

Economic journalism is notoriously horrible in most instances.

[Snowguy716]

But Libertas, we're in a terrible deflation, not an inflation.  We should be so lucky as to be in an inflation!

Terrible deflation as the investor class tries to not lose the hundreds of trillions in fake derivative assets that are quickly draining down the poop hole... which will be followed by extreme inflation as oil prices spike.

We're in a "plateau" economy.  Our access to energy will limit us from growth.  We will see fits of growth.. but energy prices will rise with them.. then they'll get too high and we'll be back in recession and repeat the cycle until we find a magical, cheap alternative, find a magical huge supply of new oil, or oil gets so expensive we simply can't afford it and the economy collapses.

This is why I believe huge investments in infrastructure are key.  If the economy were to collapse, the only thing we can rebuild upon is a good infrastructure.  While we're teetering on the edge.. we might as well borrow more and more from China and plunk it down on railroads, highways, bridges, electric grids, sewer lines, power plants, and pretty walking paths.

If the sh**t hits the fan and we just tell China "sorry.. we won't be paying you back"... what are they gonna do?  Send their hundreds of thousands of troops over here to invade us on sail boats?

And as long as I'm on the doom and gloom conspiracy wagon:  Something piqued my interest.  In the 2010 Bilderberg agenda, one of the key parts of the agenda was "Global cooling".

Now this is two-sided:  Either the top business and political people of the world are brainstorming ways to cool the globe because of runaway human induced global warming... or they know something Al Gore doesn't... that the earth is entering a term of global cooling.

As they say:  A warming world is an inconvenience.  A cooling world is a catastrophe.  Afterall, everything that many scientists pin on global warming would actually be worse with global cooling:  heatwaves, flood events, hurricanes, severe cold, unseasonable crop killing frosts, drought, famine, disease, pestilence, starvation, reductions in biodiversity...

When you cool the world.. you dry out the air.  So if the world is 3˚F colder, you can still have heatwaves.. and they can be even worse because there is less moisture in the air... so temperatures can skyrocket even higher.. which dries out the soil, which dries out the air further, and inhibits rainfall more, which leads to fewer clouds, which leads to more heat!  Then once the sun retreats south for its Austral vacation, all that dry soil can't hold moisture to keep the cold away.. so you get blistering cold.  It's be like 1936, but every year.. and when summers weren't blistering hot.. they'd be punctuated with frosts and huge gyrations from hot to cold.

Also, hurricanes would be worse... since hurricanes transfer energy from the tropics to the higher latitudes... in a colder world, the tropics would still be about as warm as they are now.. maybe a few tenths of a degree cooler.. while the Arctic would be on the order of 10-20˚F colder... in a colder world, the oceans have a harder time distributing energy.. so the atmosphere picks up the slack.  More hurricanes, more insane wind storms, stronger cyclonic winter storms that, while precipitation being reduced overall, would dump copious amounts of snow on land given the much colder air available.

So yes... perhaps the Bilderberg group is onto something.

[opebo]

...railroads, highways, bridges, electric grids, sewer lines, power plants, and pretty walking paths.

Dude, what possible use will railroads, bridges, electrical grids, sewer lines, and power plants be if we run out of energy?  The walking paths might be, but if we run out of energy, most of us will die and the country will return to being one big walking path.

[Snowguy716]

...railroads, highways, bridges, electric grids, sewer lines, power plants, and pretty walking paths.

Dude, what possible use will railroads, bridges, electrical grids, sewer lines, and power plants be if we run out of energy?  The walking paths might be, but if we run out of energy, most of us will die and the country will return to being one big walking path.

Nobody said we'd run out of energy.  I said that oil prices would go so high that it would cause economies to collapse.  Trains can run on electricity provided by coal burning power plants... and America has lots of coal left.

The economy would have to be completely restructured to use drastically less oil.  And the oil would have to go mostly to critical plastics (like those in some medical supplies) and fertilizer for our crops.  We will have to drive either electric cars or hybrids that run on fuel cells or compressed natural gas.  Most freight will have to be carried by boat or by train...

I'm not talking about a catastrophe like in the armageddon movies... more a substantial decline in quality of life as energy eats up a huge part of our earnings.  Poverty, unemployment, homelessness would all rise as we restructured our economy back to more efficient ways (especially with food.... food will have to become much more local).

Oil rich nations in the Middle East would face invasion from 1st world nations as well as from China.. which would be hit hard by oil shocks.  In their favor, however, has been their very dense development patterns.... biking and walking or using transit powered by electricity from hydro-electric or coal fired plants is a viable option for most in the large cities while those in rural areas are still used to getting around by foot or by bike and by bus and train for long haul trips.

The U.S.'s car-centric development would mean we'd have to very quickly come up with an alternative fuel for our cars.

[crypto-fascist superhero]

we're in a terrible deflation, not an inflation.

That would seem to be belied by the dollar hitting new 8-month lows.

[Lief]

lolpeopleworryingaboutinflation

[Senator Libertas]

lolpeopleworryingaboutinflation

LOL, I know, those stupid middle class idiots worrying about their futures. Don't they know being robbed on behalf of big banks is a good thing?

[Sam Spade]

Pritchard has finally opened his eyes to a few things - read this a few days ago.

[opebo]

we're in a terrible deflation, not an inflation.

That would seem to be belied by the dollar hitting new 8-month lows.

This is the only thing that is keeping us from really shocking, dramatic, free-fall deflation.  As it is we are having rapid, destructive deflation.  The dollar needs to fall much more, and many more need to be printed if that's the way we want to go to prevent the collapse.

We should be at around 20-25 baht/$, $1.70/euro, about 5 yuan/$, and about 100 yen/$.

[Lief]

lolpeopleworryingaboutinflation

LOL, I know, those stupid middle class idiots worrying about their futures. Don't they know being robbed on behalf of big banks is a good thing?

They're right to be worrying about their futures, but inflation will have little to no effect on that. If anything a little inflation might help them out in the short term.

[opebo]

lolpeopleworryingaboutinflation

LOL, I know, those stupid middle class idiots worrying about their futures. Don't they know being robbed on behalf of big banks is a good thing?

Dude, the banks are only a tiny fraction of the problem - the problem was capitalism.  Without ongoing, heavy-duty government involvement in the economy, primarily to counteract inequality, the economy cannot function optimally.

[Senator Libertas]

lolpeopleworryingaboutinflation

LOL, I know, those stupid middle class idiots worrying about their futures. Don't they know being robbed on behalf of big banks is a good thing?

They're right to be worrying about their futures, but inflation will have little to no effect on that. If anything a little inflation might help them out in the short term.

No it won't. Inflation punishes responsible middle class people by robbing their purchasing power and lowering their quality of life. The only people who stand to benefit are the politicians, the banksters, and reckless debtors.

[Gustaf]

lolpeopleworryingaboutinflation

LOL, I know, those stupid middle class idiots worrying about their futures. Don't they know being robbed on behalf of big banks is a good thing?

They're right to be worrying about their futures, but inflation will have little to no effect on that. If anything a little inflation might help them out in the short term.

No it won't. Inflation punishes responsible middle class people by robbing their purchasing power and lowering their quality of life. The only people who stand to benefit are the politicians, the banksters, and reckless debtors.

Are you even aware of the difference between anticipated and unanticipated inflation? Because it really sounds like you aren't when you write things like that. The effects you describe only result from unanticipated inflation and unanticipated inflation is precisely what we avoid through an inflation target.

[Lief]

lolpeopleworryingaboutinflation

LOL, I know, those stupid middle class idiots worrying about their futures. Don't they know being robbed on behalf of big banks is a good thing?

They're right to be worrying about their futures, but inflation will have little to no effect on that. If anything a little inflation might help them out in the short term.

No it won't. Inflation punishes responsible middle class people by robbing their purchasing power and lowering their quality of life. The only people who stand to benefit are the politicians, the banksters, and reckless debtors.

What the hell is a responsible middle class family? Is that just a code word for an upper-class family who pretends they're middle-class? The fact is that very few middle-class families have any real savings, not due to lack of responsibility, but due to stagnating real wages and increasing costs of healthcare, college, etc.

[opebo]

Correct, Lief.  All but the very rich are mere twigs floating along with the State-dictated economic current, and 'personal responsibility' has virtually no bearing on economic well being.  Libertas is living in a fantasy world, but alas, its the one accepted as real by the majority of americans.