Editorial
Monetary Lunatics: Is QE3 Ahead?
Austrian School economists have often explained the business cycle using the metaphor of liquor or drugs. The expansion of paper money and credit gives a sense of exuberance, an economic high that leads to excessive risk-taking and ballooning production. But it can't be sustained. There is a morning after.
Then what? There is a choice: more drugs and liquor or sobriety. Sadly, the economy – meaning the choices made by you, me, and billions of others – is not permitted to make the choice. It is made for us by our lords and masters in Washington. Here are the meth dealers. Guess what choice they make.
And so we had Bush's QE1 (QE stands for "quantitative easing," a euphemism for printing money), but the effects didn't last that long. Then there was Obama's QE2, and the effects of which are likely to run out sometime this summer. (As an aside, maybe we should just start referring to the QE[n] administration, inserting the appropriate number, since otherwise these presidents are mostly interchangeable.)
Note the following important point. These various attempts to restore the inebriated happy time have unpredictable and uncontrollable effects, and the metaphor helps here, too. The body is weakened. It might take more of the drug to get the same effect. The drug promotes underlying disease. Each new dose makes the person ever less rational and coherent.
The stimulant can land everywhere but where it is intended to land by the money printers. The Fed wanted to lift housing prices and re-stimulate the entire real estate sector. But guess what? Housing prices are still falling, and new home construction just tanked at a faster rate than at any time in 27 years.
What is being stimulated? Stock prices, certainly, but that is not wealth. Stock prices are just prices. They are no different from apple prices, coffee prices, and gas prices. When these go up, do we say: fantastic news, we are wealthier! Of course not. The belief that a rising stock price is great news remains one of the most wicked of all economic myths.
Then there is the problem of price increases more generally. The producer price index for February has generated terrifying results, though you probably haven't heard about them. Predictions were for a 0.6% increase but the reality was 1.6%, which points to double digits on an annualized basis.
And that's just the beginning. Food prices rose the most since November 1974. Prices of raw materials rose by 3.4% in February from the previous month. Intermediate prices climbed 2.0%, with diesel fuel up a monthly 12.6% in February. These huge increases were counterbalanced by falling prices in cars, trucks, warehousing, and other areas that are already showing signs of a post-boom slump.
Will there be a QE3? Most likely. Look at this exchange with Bernanke at the National Press Club:
Q: Will there be a Q3?
Bernanke: In the end, we'll just ask the same questions. Where's the economy going, and what do various inflation indicators look like? We'll ask those questions. If unemployment is still too low, then we may continue. If we're moving towards full employment, then we won't need to stimulate more.
And what is full employment? The Fed's statisticians believe that it is 6% or so, and we are nowhere near headed that way. Plus, Bernanke is wholly wrong to believe that somehow employment can be used as a measure of economic health. For many decades, socialist economies bragged about zero unemployment, but the economies regressed year after year. Even in mixed economies like ours, high employment is most often an effect of prosperity and never a cause.
Plus, we can't believe Bernanke that employment data alone will drive the decision. He is an errand boy for the big banks and Wall Street. That will drive his decisions, along with politics. And we can be all-but-certain that there will be plenty of bad news around by the summer, which will provide enough cover for another round of stimulus.
Meanwhile, what's anyone going to do about the problem of much higher prices, which is the ghastly beast waiting around the corner? The truth is that the Fed pretends as if it has nothing to do with this. Bernanke routinely says that prices are formed by supply and demand – which is true enough in a free market, but money creation complicates the picture.
Another truth is that the Fed doesn't really care about inflation as much as it cares about the solvency of the banking and financial systems. Bernanke would drive us right into hyperinflation to save his industries. Savers living on pensions just don't have the political clout to stop the money machine.
And contrary to Bernanke's promises, he does not have the ability to turn off the monetary spigot once prices start zooming. The economy is too globalized for that. Keep in mind that though the Fed has loads of power, it has no power to control inflationary expectations and the demand for cash generally – and in hyperinflationary environments these are the driving factors.
History is littered with monetary managers who believed they were in total control, until the disaster they caused hit. It is hubris of the first order to believe themselves masters of the universe – but hubris is epidemic in Washington.
QE3 is playing with fire. Or with a third dose of meth. Or another bottle of Four Roses. Choose your metaphor. It is a bad and deeply dangerous policy, all built on the insane view that if you stimulate a zombie with enough fiat money, it will start to live and breathe on its own.
Reducing this even more, consider:. If you drink enough, does your body start to generate its own liquor? The Fed and the government have hooked the American economy on a wicked drug. Our job is to drive the dealers from their seats of power.
This editorial was provided courtesy of LewRockwell.com.
l 
|
You must be a site member to submit suggested edits or post feedback. In addition to submitting edit suggestions and posting feedback, your Free Membership to The Daily Bell gives you access to our Member Zone where you will discover a plethora of other member benefits. Want to learn more? click here |
|||||
|
|
||||
 |
Posted by Onebornfreeatyahoodotcom on 03/18/11 07:25 PM
4irw4y said: "Hi, great rave. Does anybody here has more than two Semantic Dynamic Hashes at Click to view link What do you think as a known specialist, 1b0rnfr33?"
Assuming that "1b0rnfr33" refers to myself, I have to say that i would not know a "Semantic Dynamic Hash" if it bit me in the a$$ :-) , regards,onebornfree
|
Posted by Onebornfreeatyahoodotcom on 03/18/11 07:18 PM
@The Ultimate Sagging Mattress : thank you for your thoughts], regards,onebornfree.
|
Posted by The Ultimate Sagging Mattress on 03/18/11 02:41 PM
A desert rock. Maybe this Texan's uncivilized perspective could benefit a mind burdened by its tradition and civility. Maybe reflecting upon this perspective, the wise little elves could find a less juvenile approach to their retorts.
"Right so nothing is to be done.."
The suggestion here is that maybe the conspiracy lies closer to home than you think: that outward change happens ONLY when there is inward change, a priori. You will have to stand corrected: the inward change, the change of heart and mind, isn't nothing. In fact, this writer submits it is the driving force of human action.
If there were or is a PE, then they would or do have no difficulty in executing their plans because most people are delusional: most do not care to face the truth. Excuse the "rhetorical missile," but what excuse does a considerate person have, a baby boomer even, for remaining asleep in dreamtime in March 2011? As a child growing up in the late 80s and 90s, this guy had clued in to how dispicably modern society operates, or is operated upon.
The DB finds it shocking that a small group of greedy little men with small phalluses--warped from a lifetime of power and the violence of privilege--seeks to rule the world?
This poster finds it shocking that the people--educated and sophisticated people--are content to allow this totally corrupt, totally violent command and control societal system to perpetuate. Worse, most ape-men and ape-women have substituted their psychological security from a belief G-d to a belief in the state. The small tyranny of the family has been replace with the large tyranny of the byzantine system--the government/corporate/church war machine--with which you so mightily struggle against.
If your purpose is the growth of freedom, I applaud you, but don't let your righteous cause morph into intellectual rigidity. The Daily Bell is a provocative, heavy hitting website with the prowess to synthesize disparate information and publishing that information. Kudos. But that mirror with which you so effectively reflect the world should sometimes be turned towards you as well.
One last word. Assuming that the elves at the Bell are thoughtful, intelligent people, it is puzzling that you chose to quote the phrase: "anarchy of thought, the removal of the state from society." Maybe it the editing experience that engenders such obsession with detail, but if the person or persons who reply to these comments is not a sloppy thinker, then the misrepresentation was intentional. Very classy.
For the record, the entire sentence from which that heavily edited quote was taken is: Until there is anarchy of thought, ideological anarchy, the outward expression of anarchy--the removal of the state from society--is a pipe dream at best and is bullsh*t at worst.
This writer never implied that anarchy of thought is the removal of the state. The implication was that it is the seed. Either learn to read or resist the urge to quote.
From a long time reader who chooses not to comment upon everything he reads. Cheers.
Reply from The Daily Bell
"Until there is anarchy of thought, ideological anarchy, the outward expression of anarchy--the removal of the state from society--is a pipe dream at best and is bullsh*t at worst."
Here. It was unintentional. Now we have quoted the full sentence. And we add, as we did before, that we do not believe it to be a worthwhile strategy to sit around and wait for people to experience appropriate anarchical epiphanies. Take human action. Educate. Protest. Speak out as best you can. Perhaps there will in fact be changes BEFORE everyone wakes from Dreamtime.
|
Posted by 4irw4y on 03/18/11 02:29 PM
Hi, great rave. Does anybody here has more than two Semantic Dynamic Hashes at Click to view link What do you think as a known specialist, 1b0rnfr33?
|
Posted by The Ultimate Sagging Mattress on 03/18/11 03:08 AM
@ one born free,
When I discovered the "libertarian" or "anarcho-capitalist" or "miniarchist" school of thought, I felt as though I had finally found an intellectual home with the Austrian economist. As I began to study the ideology through reading the works of the "founding fathers," VonMises, Rothbard, Hazlitt, Hayek, and, my personal favorite, Hoppe, I became more impressed. These men were, no offense to Dr. Hoppe who is still dishing out a profound perspective, truly brave thinkers, intellectual vigilantes.
Their progeny, however, is less impressive. Now, a group of academics, if you want to call them that, especially given this group's schizophrenia regarding its obvious disdain for for the educational establishment while modeling its instituitions and publications along the same lines, has taken up the mantle left by these masters and, playing the role of the good discipile, is spreading the "message" to dolts such as me. Most of this group's authority, if it has any, lies in its members association with, or life long study of, the mindful cavaliers who paved a road of intellectual freedom.
See onebornfree, you are only a creative and open-minded thinker as long as you have renounced your previous subscription to any previous political ideology "paleolibertarianism," or, for that matter, any ideology, is set against and confirmed the only logical conclusion to be drawn (sarcasm intended). The treatment of Joe Sobran is one example: the conservative turned "reluctant" anarchist--I believe he was even an editor for the National Review-- was eulogized gracefully on the website Click to view link after his death last September.
Why was this "National Review" conservative, the type of consevative who is villified, and rightly so, by the Ron Paul sect, spoken of so fondly? Because he changed his mind and AGREED with them. That's all. If Joe Sobran were to have had the audacity to remain skeptical of anarchism late in his career, there would have been no eulogy from Lew Rockwell. Maybe from Michael Medved. Point: you are only good if you hold similar conclusions.
The further and more extensively I observe and examine this group, the more I realizet hat all ideas, once thought, can only be coveted. For new ideas to grow, someone must DISAGREE in the face of ridicule and bullying. The lives of Murray Rothbard and Ludwig VonMises are very good lessons here, along with a multitude of other historical examples.
Your suggestion that ending the Fed could end up just being window dressing, or worse, is summarily dismissed because you have broke a tenant of the dogma: "End the Fed." Watch some video of a Ron Paul speech or Tom Woods speech and you can't miss the chanting. Where would the followers be without their chants? Where would they be without thier leaders?
Drawing conclusions is dangerous business. It's even more dangerous to question conclusions drawn. Especially if you are questioning the conclusions of smug, priggish know-it-alls.
@DB (probably will be labeled a heretic for these):
1) How can a PE control the world when there is no such thing as control and only the illusion of control? I agree with the premise that there is probably an attempt by a small cadre to seize or maintain "control" of people and resources, but I also understand that the attempt is futile because the branch doesn't control the vine.
Obvious fact, a priori even: the Earth will swallow man at some point. The natural forces that have aligned to allow apes and men to flourish dictate. Man will either observe and move with these forces or perish. Regardless of the power of the "House of Wroth," it is meaningless and useless against the dynamics which shape our environment.
The PE elite are as likely to control the future of the world as Stewie Griffin. Take it from Athanasius Kircher, there are simply too many factors for the human mind to even begin to understand something as simple as a mesocyclone, much less control the direction and force of a hurricane from a sailboat.. It is the hurricane that controls the sailor. Only dillusion could blind one of this fact.
2) Regrading this article and the feedback, how would stopping Ben Bernanke and ending the Fed really accomplish anything? For one, if the premise of the DB is accepted, how would removing the puppet end the manipulation of the puppet master? Wouldn't the puppet master just role out a new puppet? Maybe, the PE is behind all the animous towards the Federal Reserve (maybe those vile Koch brothers) and have a plan to install a new institution that will allow them to even more freely confiscate the wealth of the citizenry. Once I begin this line of thinking seriously, where and when does it end?
Those who bodly advocate for a society that is free from the burden of the state are rarely willing to see that the problem is not so simple as exterminating or toppling an institution. They often fail to see that the state is a manifestation of man's heart and mind. The flaws of society cannot be separated from the individual.
The hypocrisy seems obvious to this writer when the ideological blinders are removed: as long as the anarcho-capitalist movement, or any movement, relies on the leader-follwer dynamic in which the follower is atrophied by the act of being led and the leader is corrupted by the idolatry of the flock, the psychological impetus for the state will remain. Until the co-dependant feedback loop can broken by enough people, who see through the command and control paradigm that is loathed, yet perpetuated, and these ideas and their generators can be brought down fromg their pedestals, man can only hope. And the best that he can hope for is revolution. Personally, I just say no thanks to that.
Until there is anarchy of thought, ideological anarchy, the outward expression of anarchy--the removal of the state from society--is a pipe dream at best and is bullsh*t at worst. From one who is not a part of the Ron Paul Revolution or any other revolution.
Reply from The Daily Bell
Right so nothing is to be done until there is "anarchy of thought, the removal of the state from society." In the meantime all is a just a "pipe dream" and one ought to spend one's time lobbing rhetorical missiles at those who are actually trying to encourage the growth of freedom, not just for themselves but for others. What rock exactly did you crawl out from under?
|
Posted by Pete 8 on 03/17/11 08:27 PM
Dr (The) Bernanke's Palliative prescription still leads to the same mortician, who he works for.
Thus the problem is rather easy to fix.
Political gridlock is giving the human machine such acute constipation by 'their' Design. So the problem is solved when the 'augmentation' of our leadership, assists in a successful and sustainable mandating & validation process.
I am learning to like the transparent architecture seen in parts of the city.
There is no 'I' in the word 'VOTE', even when typed. Nor when answering as a question pertaining to others; becomes 'Y'es, 'N'o, 'M'aybe, or any accessible equivalent, only bettered by mutually beneficial 'contribution'. Non-sub-prime perhaps.
See the needle, there is no camel interface?
 |
Posted by AmanfromMars on 03/17/11 03:58 PM
Methinks that thread has Onebornfreeatyahoodotcom outed as troll in the pay of the Fed* for the views expressed are certainly apologist for it. ..... " Daily Bell: "Getting rid of the Fed would be a heckuva start."
Maybe,maybe not."
Most definitely would it be a heckuva start.
* That may or may not be metaphorical. And the world is full of sad souls and trojan horses bent on preserving the status quo rather than realising that progress is always something different, and such is wholly natural.
And if all of that is wrong, then just forget about it, and move on to greener fields where conflict is not necessary, and all are treated better than just equals and sequels.
|
Posted by Onebornfreeatyahoodotcom on 03/17/11 01:25 PM
Daily Bell: "Getting rid of the Fed would be a heckuva start."
Maybe,maybe not. Because it is merely a symptom of a disease, and not the disease itself, the "symptom" would only reappear under a different, possibly worse, guise ,at some point, as always happens when symptoms are suppressed....Not that I'm necessarily against things getting worse :-).Regards,onebornfree
|
Posted by Onebornfreeatyahoodotcom on 03/17/11 01:00 PM
My last sentence should have read :" The two [i.e. disease PLUS symptom {the Fed}], go together "hand in hand" in my opinion.Regards,onebornfree
|
Posted by Onebornfreeatyahoodotcom on 03/17/11 12:57 PM
Daily Bell: " We didn't get that from the response but it is possible we didn't read it closely enough."
For the reading/comprehension challenged,in essence, all I said originally in response to Mr Rockwell's selected statement was that the Fed is a symptom of a disease, not the disease itself.
Therefor getting rid of the fed accomplishes little, or nothing in the long term.
The Unalterable Nature of All governments:
Due to their inherent,unalterable core nature,if you have [the disease of]a government in the first place, you must inevitably have a "symptom" such as the Fed or something just like it that performs the exact same function [counterfeiting,basically]to ensure it's survival/growth .
The two [i.e. disease symptom {the Fed}]go together "hand in hand" in my opinion. Regards,onebornfree.
Reply from The Daily Bell
Therefor getting rid of the fed accomplishes little, or nothing in the long term.
Getting rid of the Fed would be a heckuva start.
|
Posted by Onebornfreeatyahoodotcom on 03/17/11 12:39 PM
Daily Bell said: "Groupthink! You don't know how funny that is."
I'm pleased that the big "we" is amused.
Daily Bell said:
Strictly speaking I'm a problem-solver who deals with personal freedom issues,including mental/physical health.
See:www.onebornfree.blogspot.com/" target="_blank" onclick="if (this.getAttribute( 'href' ).indexOf( '://' ) == -1){ this.href = ('http://' + this.getAttribute( 'href' )); }">Click to view link
As such I deal with personal freedom,financial and investment safety issues,personal privacy, psychology [politics/worldview etc.], and yes, personal fitness and health, including so-called"naturopathic" "cures" for various ailments.Regards, onebornfree
|
Posted by Dr. Don on 03/17/11 12:23 PM
I think Onebornfree makes a good point. I would make this analogy...
government is a cancer and the Fed is a tumor. Both are a danger to the body and should be treated and/or removed. The DB reply was a bit snotty, like an overactive immune response, (teh body attacking it's own cells). Can't we all get along? Stress is not a good therapy.
Thanks to both DB and 1born...
Reply from The Daily Bell
Well, if that's the case, we apologize. We didn't get that from the response but it is possible we didn't read it closely enough.
|
Posted by Onebornfreeatyahoodotcom on 03/17/11 11:31 AM
Daily Bell said: "Ha, you made the gnomes cackle."
Well I guess that would make you all snotty little $hitz then wouldn't it? Hmm? :-)
For the record, I've never claimed : "The Fed is fine", that "the Trade Towers were holographs", or that "planes were part of a larger video game technology".
Any one of you [or anyone else] who is genuinely interested in discussing what I _have_ said about those subjects is free to email me for discussion.
Nor do I take any medication, for anything at all. Simple ad hominem and crude attempted character assassination, nothing more.
All in all your transparent replies to me here and in the Peter King thread reveal an outstanding example of the inevitable results of the "groupthink" disease.
Basically DB moderators are nothing more than bunch of self-deluded socialists; deluding themselves on a daily basis,into thinking that what the big "we" says means more because:
[1]"we" speak as a group,[yet we still think individually!]
[2] "we" are individuals conveniently/anonymously hiding our individuality and "individual" thoughts behind the all-powerful, all-thinking[as one], all-knowing "we" at the Daily Bell.
My [Free!] Analysis
You are all suffering from a dangerous disease called "groupthink" for which there is no known cure except cold-turkey withdrawal[i.e. leave the group and get out and work for yourself in the real world, if this truly concerns you-which it probably does not.]
Somewhat ironically you all work [or pretend to] for a publication that supposedly champions individuality and none "groupthink".
Recommended Medications
These will not cure your disease, only complete withdrawal from the groupthink mentality will do that, however, alcohol and other plant-derived substances that alter/distort thinking processes will allow you to continue to delude yourselves into believing that you are _not_ involved in mindless groupthink on a daily, hour by hour basis, provided that you continue to take sufficient quantities. Regards,onebornfree
Reply from The Daily Bell
Groupthink! You don't know how funny that is. So you are a naturopath? Interesting ...
|
Posted by Onebornfreeatyahoodotcom on 03/17/11 10:38 AM
Daily Bell said:
"Yes, the Fed is fine, the Trade Towers were holographs and the planes were part of a larger video game technology. You are ill this week and taking medication? ..."
Are you the same snotty little all-knowing s--t that replied to my earlier posts in the Peter King hearings thread with misrepresentations/ad hominems, or a different one, pray tell?:-)
regards,onebornfree
Reply from The Daily Bell
Ha, you made the gnomes cackle. Somewhere out in the farthest wilds of the most perfervid jungle, a black, apelike thing is born, bawling.
|
Posted by Onebornfreeatyahoodotcom on 03/17/11 10:08 AM
Lew Rockwell said: "Our job is to drive the dealers from their seats of power."
Sounds wonderful in theory but in my view this "solution" is based on a fundamental misunderstanding of the nature of government[s], so it won't work, in the long run .
Fact: governments are not businesses in the normal sense of the word. They are incapable of making a profit in the strict business sense, or of even breaking even, fiscally speaking.
This is because they operate in direct contradiction to the [Austrian derived]laws of human action, and must always generate fiscal losses in toto-which means that to survive, they must always have at their disposal a way to make it appear that they are actually capable of paying for what they supposedly do [i.e their "services"], via an authorized system of counterfeiting [aka "the Federal reserve system"].
In short, if you have a government in the first place, you simply _must_ have a deceptive ,centralized system in place [e.g centralized, top-down government run banking systems,or something else that performs the same functions], in place to mask the continual deficit under which all governments everywhere are doomed to operate.
For governments to generate actual, real world fiscal profits, or even break even on a continuing basis, would be a complete refutation of Austrian human action theory.
Meaning, if the Fed goes, another equally onorous system [or worse] system will take its place, giving the illusion that "something has been done" to many [including yourself, Mr Rockwell?].
The problem is not the Federal Reserve.
As you mention elsewhere, alluding to drugs/ symptoms/cures, as I see it,the Federal Reserve itself is a symptom-a symptom of government, _not_ the disease itself.
The disease itself is government, getting rid of the Fed is merely "tilting at windmills" in my opinion. Regards,onebornfree.
Reply from The Daily Bell
"The problem is not the Federal Reserve."
Yes, the Fed is fine, the Trade Towers were holographs and the planes were part of a larger video game technology. You are ill this week and taking medication? ...
 |
Posted by Mountainview on 03/17/11 09:58 AM
After the announcement of QE2 had a negative effect on long term bonds, I expect QE 3 to be a stealth event. No announcement !!! But their is no way around it. Marc Faber is already talking about Q 18...
Zimbabwe like monetary conditions are no more out of scope for the US. Look at the US Dollar- Swiss Franc exchange rate today !!! Some investors seem to jump boat already!!!
|
Posted by Gnome on 03/17/11 09:47 AM
Allow me to share my own similar metaphor.
An intravenous amphetamine drip goes into America's body economic (ABE). The drip is the only treatment available to Dr Bernanke. His thumb rests on the drip's button. When ABE gets a hangnail Dr Bernanke presses the button to release a dose of amphetamine. When ABE gets depressed Bernanke presses the button. When ABE gets cancer Bernanke presses the button even though it aggravates ABE's cancer. When ABE starts to die Bernanke keeps pressing the button until a rather sad ABE regains an arguably alert state that passes for consciousness.
|
Posted by AmanfromMars on 03/17/11 09:27 AM
"It is made for us by our lords and masters in Washington. Here are the meth dealers. Guess what choice they make." ..... Lew Rockwell
Lords and masters of nothing worth pimping, Lew, and that is how out of touch they are, with both the future reality and virtual reality, and in the latter sphere of influence, are they easily recognised and dealt with appropriately.
[blockquote]Alternative Maladministrative State of the Union Address
Posted Thursday 17th March 2011 08:58 GMT
This appears to be Uncle Sam's Intellectually Bankrupt and Bankrupting Policy ........ Click to view link ....... a Recipe for Dollar Disaster and Market Meltdown could not be better written by either Fool or Idiot Savant.
Click to view link [/blockquote]
Man aint helpless no more, bubba. Intelligence has kicked in and the natives are being energised in so many different new ways.
