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This excellent article by Austrian theory economist Frank Shostak appeared Friday on Mises.org. — JH Bernanke Loosens Up December 21, 2012 On Wednesday December 12, 2012 Fed policy makers announced that they will boost their main stimulus tool by adding $45 billion of monthly Treasury purchases to an existing program to buy $40 [...] Insanity n. Mental illness of such a severe nature that a person cannot distinguish fantasy from reality, cannot conduct her/his affairs due to psychosis, or is subject to uncontrollable impulsive behavior. (See here.) The above is a legal definition as distinguished from the popular quote (misattributed to Albert Einstein), “Insanity is doing the same thing [...] Economic policymakers are like children in that they are held only partially accountable for their mistakes and misdeeds. And just as children learn to selectively deny responsibility to get away with naughty behaviour, so policymakers learn that they, too, can conveniently disown the ‘unintended consequences’ of their actions. It is thus refreshing to see that [...] Ben and I are stranded on an island, Robinson Crusoe-like and I, on my east side of the island, have been planting yams, collecting coconuts, and doing a little fishing. Ben decides to hunt on his west side and offers to trade a boar hindquarter for some yams. We negotiate and make a deal: 20 yams [...] Here is the Fed Open Market Committee’s announcement of November 25, 2008 announcing the implementation of QE1, a $600 billion bond purchase program: This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial [...] I’ll have more on this shortly, but the Fed has announced an open-ended bond purchase program (QE3): “… until such improvement is achieved … “ Here is their statement: Release Date: September 13, 2012 For immediate release Information received since the Federal Open Market Committee met in August suggests that economic activity has [...] Many participants expected that a [new large-scale asset purchase program] could provide additional support for the economic recovery both by putting downward pressure on longer-term interest rates and by contributing to easier financial conditions more broadly. In addition, some participants noted that a new program might boost business and consumer confidence and reinforce the Committee’s [...] July 26, 2012 The above-the-fold headline of [last week's] Wall Street Journal, “Fed Moves Closer to Action”, signals an impossibly deluded Federal Reserve utterly blind to the damage its machinations are bringing to the U.S. and global economy. Though the Fed’s policies are the single greatest barrier to economic growth, Ben Bernanke, its walking, talking contarian indicator [...] FRANKFURT—European Central Bank officials signaled they are prepared to dramatically ramp up the ECB’s crisis response by renewing the central bank’s dormant government bond-purchase program. “Within our mandate, the ECB is willing to do whatever it takes to preserve the euro and, believe me, it will be enough,” ECB President Mario Draghi said in [...] This week’s data builds a further case for a declining economy and likelihood of the Fed doing another round of QE. These data hit all of the Fed’s marks for action: joblessness and unemployment, declining industrial production, low price inflation and possible price deflation, and declining retail sales. These are the things that the Fed [...] Federal Reserve Chairman Ben Bernanke delivered a bleak new assessment of the U.S. economy to lawmakers on Tuesday but remained guarded about what, if anything, the Fed would do about it. Chairman Bernanke remains guarded because he’s run out of “arrows” in that metaphoric quiver that reporters use to refer to Fed policy options. [...] |
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