The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Meanwhile, Down At The Intersection Of Orwell And Kabuki. . .

Posted on | February 4, 2012 | 4 Comments

by Smitty

Last night I went to a new ‘salon’ (I think it may be a snooty bar or something) called Empire Unplugged, for their inaugural talking head fest on the Federal Reserve. The video is kind of lousy, and still pulling in to Final Cut Pro X for what I hope will be a stimulating series of posts.

To whet the appetite, Reuters has an article about “Bicycle Pump” Ben Bernanke pushing still more hot air:

“The basic reason for low long-term rates, which are also a feature of every other industrial economy, are low inflation, slow expected growth and the fact that the dollar is a safe haven,” Bernanke said.
Paul Ryan, the committee’s Republican chairman, took issue with the central bank’s new 2 percent inflation target, saying a Fed policy statement last week suggested it would be willing to tolerate higher inflation nonetheless.
Bernanke pushed back against that idea: “We are not seeking higher inflation, we do not want higher inflation and we’re not tolerating higher inflation.”

As Bill Quick notes, energy costs are substantially up. However, as Stacy noted this morning on the job numbers, integrity is not our government’s strong suit.

Returning to the topic of interest rates, pegging the prime at 0 seems both to crush the value of passbook savings accounts over time, as well as render lending to the sort of people who have money in passbook savings accounts an unprofitable idea. Bernanke seems to have argued against his current policies in a paper a dozen years ago: “Japanese monetary policy: a case of self-induced paralysis?” which is oddly challenging to track down on the internet.

If I was the paranoid sort, I might be tempted to speculate that current Federal Reserve policies are about destroying liberty and increasing dependence upon the state. But our elected officials are nice boys; they wouldn’t do anything like that.

via Capflowwatch on Twitter


4 Responses to “Meanwhile, Down At The Intersection Of Orwell And Kabuki. . .”

  1. Anonymous
    February 4th, 2012 @ 12:36 pm

    Doesn’t zero interest equate well with zero dividends and zero rent and zero taxes? Kinda allasame, doncha think?

  2. EBL
    February 4th, 2012 @ 12:37 pm

    OT but Rasmussen just showed Santorum tied with Obama in a head to head match up.  FYI. I see a new TOM post on this one…

  3. richard mcenroe
    February 4th, 2012 @ 2:00 pm

    You don’t understand Smitty; the words don’t have to MEAN anything, they just have to fill the silence, the way your retriever will bark the minute you stop talking to it.

    It’s just white noise, meant to soothe the infants.

    Speaking o’which, how’s WYB?  Haven’t heard much from him since he was took poorly.

  4. Adjoran
    February 4th, 2012 @ 2:59 pm

    Bernanke’s policies are virtually identical to the ill-fated Bank of Japan strategy of addressing their own banking crisis a couple decades back:  keep interest rates near zero for easy credit, keep the currency weak to help exports, and figure growth just HAS to come along and save the day.

    In Japan, they now call it “the lost decade.”

    Like the Japanese, Bernanke supposed he could ease or avoid the pain of recession, but all he has done is postpone it.  You can’t have creative destruction until the destruction part is finished. 

    It isn’t a proper part of the FRB’s mission to “fix” the economy – that’s something Greenspan imagined he was doing and markets gave him credit for, when in reality he was just cruising on the benefits of a strong and sound currency courtesy of his predecessor’s single-minded focus on the money supply.

    In a way the Governors resemble climate scientists:  when they quietly do what they know how to do, they perform a useful function – but when they get the idea they are saving the world, they become reckless and dangerous.