A Rogue Institution and a Clear and Present Danger to Liberty in America
The comments below are an edited and abridged synopsis of an article by David Stockman
There has never been more gibberish, double talk, and lies than from Fed Chairman Powell. The Fed has become a dangerous rogue institution that has seized power over the financial system.
This is based on theories that eventually lead to a massive speculative blow-off, even as they suck vitality out of the Main Street economy in the interim.
The theory is simple: The Fed believes that credit expansion creates greater economic growth and full employment. It believes that there is no practical limit to how much debt the household, business and government sectors of the economy can tolerate or any notable adverse trade-offs from ever-higher leverage ratios.
Lower interest rates foster more debt issuance. When economic growth falters, the Fed pushes rates even lower. This has gone on for more than three decades, and interest rates have practically been obliterated.
The Fed is so caught up in groupthink and recency bias that it is not even aware of where its monetary dishonesty has taken the nation’s finances and economic foundation. Each new economic crisis leads to the same knee-jerk policy spasm: less interest, more debt.
It also leads into intellectual deceit, the false claim that even tiny upward moves in interest rates are a mortal threat to the economy and must be suppressed with even more intervention.
In a debt-saturated system, the Fed’s massive bond purchases never transmit anything outside of Wall Street. This money-printing madness only drives bond prices higher and cap rates lower. This means relentless and systematic inflation of financial asset prices.
The bottom 90% don’t own enough stock or even inflated government and corporate bonds to shake a stick at. Instead, what meager savings they have languish in bank deposits, CDs, or money-market funds earning nothing.
So, when Powell says he’s only trying to help the average American, you have to wonder whether he is the greatest fraud yet to lead the Fed. It is a rogue institution endangering prosperity and liberty in America.