I have to wonder whether Mish has justification for what he is saying in a recent blog. When I examined the policy of the Fed some years ago, I assumed that the error of the Fed at that time was due to a lack of basic understanding of the economics of banking and getting the inflation index defined wrongly. Perhaps, my assumption is correct. The other hypothesis could be that of Mish in which the inflationary bubble was engineered.
Alternatively, one could say the governors of Fed and the economists in the banking system were very much asleep at the wheel, poorly trained, had not read enough economic history, inadequate to the task of understanding criminality in banking, non familiar with the process of competitive forces and the merger movement, conducive to unproven technologies in finance or perhaps drunk or intoxicated, lacking in understanding of the economies of scale in banking finance and predisposition to greed.
Maybe, the leadership of George Bush was to blame and it is a story of persistent greed overriding common sense, a form of addiction in which one lies to oneself about the outcome. If one cannot tell lies from truth, then one continues in self deception and takes everyone along.
Whether we like it or not the strategy of the Fed ignores the economic history of inflations following a war financed on excessive debt. Weakening the dollar and keeping interest rates low in an attempt to spur on growth is reading the economics text book written in America, which we should realise by now is incorrect.
We don't like to think there are sinister motives behind the Fed's move, which gambles on a deflationary psychology but our trust is weakening, like that of Mish. When we say that credit demand drives the system we are saying just that. Does the Fed expect another round of credit demand in face of an emerging foreclosure crisis? How do we ever get out of this mess now?
http://globaleconomicanalysis.blogspot.com/2010/11/bold-faced-lies-of-day-from-geithner.html
Will not time reveal the lasting importance of friends and mutual respect? Be kind to those who think well of you and those you know and try to add positive elements to your world. Promote peace in your heart and sunshine in the minds of those around you by your own good works. Elevate the level of discussion by thinking less of the issues and more of how you can reduce the tension of stress that arises with honest disagreement. Relax by breathing more deeply and consciously.
