Janet Yellen’s 78-Month Plan for the National Monetary Policy of the United States

Adventures in depravity are nearly always confronted with the unpleasant reality that stopping the degeneracy is much more difficult than starting it.  This realization, and the unsettling feeling that comes with it, usually surfaces just after passing the point of no return.  That’s when the cucumber has pickled over and the prospect of turning back is no longer an option.

In late November 2008, Federal Reserve Chairman Ben Bernanke committed a fait accompli.  But he didn’t recognize it at the time.  For he was blinded by his myopic prejudices.

Bernanke, a self-fancied Great Depression history buff with the highest academic credentials, gazed back 80-years, observed several credit market parallels, and then made a preconceived diagnosis.  After that, he picked up his desktop copy of A Monetary History of the United States, by Milton Friedman and Anna Schwartz, turned to the chapter on the Great Depression, and got to work expanding the Fed’s balance sheet.

Bernanke’s dirty deed commenced with the purchase of $600 billion in mortgage-backed securities, using digital monetary credits conjured up from thin air. Continue reading

Posted in Inflation, MN Gordon | Tagged , , , , | Leave a comment

To Hell In A Bucket

“No one really cares about the U.S. federal debt,” remarked a colleague and Economic Prism reader earlier in the week.  “You keep writing about it as if anyone gives a lick.”

We could tell he was just warming up.  So, we settled back into our chair and made ourselves comfortable.

“The voters certainly don’t care about the federal debt,” he continued.  “They keep electing the same spendthrifts to office.

“And the politicians know the voters don’t care.  They also know that making more and more promises is the formula for getting reelected.

“Deep down, the aging masses know they need massive amounts of government debt to pay their social security, medicare, and disability checks.  On top of that, many of the so-called gainfully employed are really on corporate welfare; they hang their hats on government contracts to fund their paychecks.

“You know as well I do how this crazy debt based fiat money system works.  The debt must perpetually increase or the whole financial system breaks down.  Continue reading

Posted in Government Debt, MN Gordon | Tagged , , , , , | 15 Comments

The Government Debt Paradox: Pick Your Poison

“Rule one: Never allow a crisis to go to waste,” said President Obama’s Chief of Staff Rahm Emanuel in November of 2008.  “They are opportunities to do big things.”

At the time of his remark, Emanuel was eager to exploit the 2008 financial crisis to raid the public treasury.  With the passage of the American Recovery and Reinvestment Act in February 2009, Emanuel’s wish was granted.  The Obama administration had the opportunity to do big things.

Politically, the passage of the Recovery Act was a huge success.  Washington was able to dole out funds to their preferred projects like never before.  What could be better for a Congressman than to direct massive amounts of funds to infrastructure, healthcare, energy, security, law enforcement, and just about everything else?

Some Congressman even directed money to bridges and buildings that were then named after them.  No doubt, this flattered their egos.  But what it really did was memorialize their political swindle. Continue reading

Posted in Government Debt, MN Gordon | Tagged , , , , , , , , | 6 Comments

How to Make the Financial System Radically Safer

Clear thinking and discerning rigor when it comes to the twisted state of present economic policy matters brings with it many physical ailments.  A permanent state of disbelief, for instance, manifests in dry eyes and droopy shoulders.  So, too, a curious skepticism produces etched forehead lines and nighttime bruxism.

Nonetheless, these are small prices to pay for the simple delight that comes when a central planner opens their mouth and inserts their foot.  Last Friday, for example, Fed Chair Janet Yellen gave a speech to her friends and cohorts at the annual central banker’s powwow in Jackson Hole, Wyoming.  There she patted herself and the financial regulatory community on the back for what she believes has been a successful execution of financial regulations:

“The events of the [2008] crisis demanded action, needed reforms were implemented, and these reforms have made the system safer.”

How Yellen knows the reforms have made the system safer is unclear. Continue reading

Posted in MN Gordon, Politics | Tagged , , , , | 1 Comment