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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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From: Eva	7/14/2011 11:57:17 AM
	2 Recommendations of 4904

update -- trotsky, 10:39:32 07/14/11 Thu Addicted to Monetary Heroin Russia's prime minister Putin calls them 'hooligans' - the merry pranksters at the Federal Reserve. He is understandably worried about the value of his country's foreign exchange reserves. Yesterday, the chief hooligan showed up on the Hill to bring us his assessment of the economy and to explain what the central planners are likely to do next. In a remarkable change of tune compared to his June press conference script, the Bernank hinted at the possibility of additional money printing efforts in the not-too-distant future. Trying things that don't work over and over again and expecting different results is a mark of insanity as it were, so we are beginning to harbor doubts about the good chairman's mental state. The prepared statement revealed some of his most cherished (and quite wrong) beliefs about how the economy works, while also inadvertenty showing why the central planning he is tasked with is a theoretical and practical impossibility. We look at the decisive passages and explain in some detail why we believe that the proposed policies will continue to be doomed to failure. People have lately begun to worry that the authorities are about the repeat the so-called 'mistake of 1937'. The myth that the depression became worse due to a withdrawal of fiscal and monetary stimulus in 1937 is one of the most enduring next to ideas like 'FDR ended the depression' and analogous memes. One can however not deduce points of economic theory by attempting to interpret historical data. One must proceed exactly the other way around: if one wishes to understand economic history, one must interpret it in light of a correct economic theory. The data of economic history can otherwise be used to defend just about ANY position. There is in any case a period of history that seems far more applicable to the Fed's current dilemma - the fiat money supply inflation under the French revolutionary assembly in the late 18th century. Similar to Bernanke today, the revolutionaries were 'puzzled' why their attempt to create 'economic stimulus' by printing money only seemed to work for ever shorter periods of time, while the unintended consequences became worse and worse. This did not keep them from trying however, and in the end they managed to destroy two currencies and an entire economy. They had become addicted to monetary heroin, with predictable results. acting-man.com

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