The danger in the market: Fed out of tricks and stagflation looming
"Our stimulus, which was launched in the wake of the 2008 crash, may have prevented a deeper contraction in the short term, but it also prevented the economy from purging the excesses of artificial boom that preceded the crash."
When you don't purge the boil, you get a more general and damaging infection. If the market isn't allowed to correct for poor decision-making, the problem just gets worse.
When you don't purge the boil, you get a more general and damaging infection. If the market isn't allowed to correct for poor decision-making, the problem just gets worse.
Yes, TheFed is a big problem, but never forget who put it in place (GOVERNment), as well as the Keynesian "progressives" who continue to make everything so much worse.
Cui bono. Banksters.
it was one president, one senator, and four banks that did it...back in 1913
Do the Executive and Legislative branches of government play a major role in the economy? Yes. The real question, however, is should they.
Analysis of history shows that when Calvin Coolidge did nothing and allowed the markets to correct in the 1920's that they literally "roared" back from the interference of Woodrow Wilson. Compare that to the malaise caused by Hoover and Roosevelt in the 30's and how it stretched well into the 40's. The economy then took a major hit in the 70's after the introduction of the "Great Society" programs under LBJ which we are still suffering from today. Look at the marginal improvement under Reagan compared to Carter for another example of how the best economic policy is to get government out of the way. And the latest example is to look at the costs to the economy of all the government regulation: a cost which the GAO currently tallies at over a Trillion dollars annually and growing with every rule laid down by the Executive Branch.
That being said, one of the things they track are consumer price indexes - which in my opinion, are skewed anyway. The Chinese manipulate currency to push the prices of their products artificially low to the American market, many people prefer organic foodstuffs these days (and I do - they taste better) and but pushes the average cost of whatever higher when cheaper alternatives are still present.
Fuel is always a variable, but the states tweak their per gallon VAT, so its inconsistent from year to year in terms of the 'real' cost of something versus the taxation on it.
I can go to the farmers market these days (in California at least) and buy anything for the same or less in terms of produce cost than it was 10 years ago. The changes are an increasingly convenience-driven economy.
One of the things the author was pointing out, however, was exactly that and the evidence was the inflation numbers. He's not apologizing for the Fed at all - he's pointing out that their policies were stop-gap at best and would do nothing to address the real problems - problems which still lie before us.
i don't think the author builds a case and his conclusions are not supported by the article.
Schiff has made some good observations in the past. I just don't see his rationale here.
I would also point out that economists for quite some time have been lamenting the fact that most of the QE money hadn't really trickled down into the economy yet, which was why we hadn't seen inflation due to an expanding money supply. It may be just getting there now.
I think the author also points out correctly the fact that we are much more leveraged as a nation even than we were in 2008.
What isn't pointed out in the article is that two of the main three legs of investment are currently in really bad shape. Bonds are in the toilet as returns are near zero - especially on Treasuries. The Housing market is still trying to recover from its original malaise (though there are plenty who say that's over and done with, all one has to do is look at median home prices). And stocks - despite all that extra investment money are still historically bad for a year start.
I guess we'll wait and see. I'll bet that by June or July we'll see if there is anything to his prognostications or not.