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Author Topic: The Fed 'is a god that has failed'  (Read 393 times)
Denker
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April 05, 2016, 05:45:15 PM
 #1

That commentay by George Gilder sums it up!

http://www.cnbc.com/2016/04/05/the-fed-is-a-god-that-has-failed-george-gilder-commentary.html

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Why does Wall Street keep recovering after recessions but the economy seemingly never does?

The reason, as I document in my book, "The Scandal of Money: Why Wall Street Recovers but the Economy Never Does" is that Washington and the Federal Reserve together have created a closed loop economy where the Fed creates money for the government and the S&P 500 and Main Street is left out.

The Fed decides what money is worth and who receives it and how much. The Fed prices it at zero interest rates, allegedly to stimulate economic growth. But whenever something is free, it's distributed by queue, and only the privileged, connected people in the front of the line get any, not the innovators who create growth and opportunity for Main Street. Trump voters are wrong if they blame Mexico and China, but they are right about one big thing: The economy is rigged against them.

The Fed takeover of the economy has turned Main Street into Mean Street; it has gelded Silicon Valley, reducing our most creative entrepreneurs to climate cranks obsequiously petitioning in Washington.

Almost two-thirds of jobs created between 2002 and 2010 came from 23 million small businesses, according to the Small Business Administration. But venture capital investment in 2014 of $48 billion is just one-third of the 2000 total (in 2015 dollars), according to the National Venture Capital Association. There were half as many IPOs in 2015 as in 2000, and they were mostly focused on a few large deals. Back in 1999, there were seven times more IPOs than mergers and acquisitions for tech companies. Today merger and acquisitions outnumber IPOs by almost 36 to 1.

The Fed regulations and money manipulations have displaced an open market of IPOs by an exclusive game of horse trading among "qualified investors" who get rich and leave Main Street out, and fail to create new jobs.

And Wall Street? The once powerful engine of capitalism has been nationalized by the Obama bureaucracies feeding on fines and fees. We've had a covert socialist coup in Washington and it must be reversed or the free enterprise engine of growth and opportunity is in jeopardy.

The Fed began as a necessary "lender of last resort" during financial crises. But today, the Fed regulates the entire financial sector, from hedge funds to pawn shops. It issues and values the money by manipulating interest rates and manipulating money. Today the Fed serves the Washington bureaucracy and a few banks that are growing bigger. Through these banks, it effectively can regulate the entire economy.

What the Fed cannot do is becoming increasingly obvious: magically manipulate growth, which is the product of learning, into being. The Fed won its vast new powers because both Democrats and Republicans wanted an alibi. Rather than legislatively reform this administrative state that is smothering our economy, we prefer to have the Fed just issue money to paper it all over.

This process reached a pinnacle during the Obama Administration when the Fed balance sheet rose fivefold.

Like all command economies, the Fed is failing to spur growth. This failure has become so obvious that leading economists such as Ken Rogoff of Harvard and former Treasury Secretary Larry Summers now advocate the abolition of cash, so that interest rates can go below zero, meaning that through the Federal Reserve, the government can steal your savings without your representatives in Congress having to take political responsibility for levying a tax.

The first step to economic growth is recognizing the Federal Reserve is a god that has failed. Manipulating money cannot command growth and opportunity but it can suffocate innovation and entrepreneurship, which is always unexpected, and not well-connected in Washington.

What we are doing now is having money's value determined by international currency trading. Ten banks control 77 percent of all currency trading. When currency value is more varied and volatile than the economic activity that it measures, the horizons of economic activity shrink until today the famous "flash boys" trade by the second rather than investing for the future.

Currency trading is by far the biggest industry in the world economy. It is a runaway scandal of money. The banks make money off it. But the rest of us don't even get a measuring stick that's valid to gauge our savings, assure our retirements, or expand investment in business.

This is the first recovery in decades when small business jobs are actually shrinking. All the expansion is coming from the closed loop economy between the Fed, the bureaucracies and the big banks.

Declaring that the government monopoly on money is the source of all monetary evil, Friedrich Hayek, the great Austrian economist, predicted that capitalism would be saved by monetary competition from the private sector, which today can come from bitcoin and a new tie to gold. As the great British scholar Matt Ridley explained: "The government monopoly of money leads not just to the suppression of innovation and experiment, not just to inflation and debasement, not just to financial crises, but to inequality, too."

The first step to a new prosperity is to give up the god that failed and break the government monopoly on money.

We don't have to have a formal gold standard: A combination of bitcoin for the internet and treating gold in tax terms as currency, not an investment, would go a long way to restoring money as a measure of learning and growth, and jump-starting growth.

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Narosya
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April 05, 2016, 07:41:08 PM
 #2

The Fed is doing to much to affect the market or the economy, it is not good for the market economy.
NUFCrichard
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April 05, 2016, 08:16:22 PM
 #3

To be honest, with the world economies up to their necks in debt, unemployment at record highs (participation officially) interest rates already at or near 0, with growth also at about 0 - the fed are doing a pretty good job of keeping everything from crashing down.

I personally feel that the longer they hold back the crash, depression and new monetary system, the worse it will all be when it finally arrives.  But I have to give it to them, they are holding everything up amazingly well right now, if you didn't read zerohedge or a few other alternative webistes, you could easily believe that everything is a-ok!
tyz
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April 05, 2016, 09:59:34 PM
 #4

LiteCoinGuy was posted the article a little before you. https://bitcointalk.org/index.php?topic=1426966.0

The article's comment is absolutely correct. The Fed wanted to stimulate the economy and has failed completely when one considers the amount of money printed in relation to economic growth. Now there is no way back.

Based on Goethe: Spirits that it has cited // It commands ignore.
Kakmakr
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April 06, 2016, 07:08:35 AM
 #5

The Fiat system is being manipulated by governments to stimulate economic growth and this is where things fall apart. You cannot print <toilet paper> money to solve financial problems indefinitely. At some stage, these fake economies built on top of debt, will fail and when this happens even the rich will suffer.

Our governments are creating a problem for the next generations and they simply do not care about the impact this will have on their children and their children. ^sad^

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April 07, 2016, 04:44:24 PM
 #6

Very good article Fed and not only Fed but also EBC is serving to banks and big financial institusions
and in fact thay dont care of economy.it is really tragic and will create huge economic poblems in future


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pitham1
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April 08, 2016, 04:08:15 AM
 #7

Quote
Declaring that the government monopoly on money is the source of all monetary evil, Friedrich Hayek, the great Austrian economist, predicted that capitalism would be saved by monetary competition from the private sector, which today can come from bitcoin and a new tie to gold. As the great British scholar Matt Ridley explained: "The government monopoly of money leads not just to the suppression of innovation and experiment, not just to inflation and debasement, not just to financial crises, but to inequality, too.

I don't think Hayek had Bitcoin in mind when he made that statement. Private money was supposed to maintain its value much better than what the public sector has done, but would presumably do its work better.

countryfree
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April 08, 2016, 06:34:42 AM
 #8

The Fed is God? Please, stop insulting God! The Fed is man-made, an invention just like dynamite, which has made fortunes for a dedicated few, but brought mass destruction to million others.

If you're looking for a trading/lending place,
better avoid Poloniex, as it socializes losses.
Learn more about it on this topic.
KoinKartel
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April 08, 2016, 01:55:17 PM
 #9

To be honest, with the world economies up to their necks in debt, unemployment at record highs (participation officially) interest rates already at or near 0, with growth also at about 0 - the fed are doing a pretty good job of keeping everything from crashing down.

I personally feel that the longer they hold back the crash, depression and new monetary system, the worse it will all be when it finally arrives.  But I have to give it to them, they are holding everything up amazingly well right now, if you didn't read zerohedge or a few other alternative webistes, you could easily believe that everything is a-ok!

I agree. The fact that they're delaying the inevitable is only going to multiply the magnitude of the eventual crash.

They aren't holding anything up at all... all they're doing is injecting the same poison into the economy that caused this recession in the first place. It's like prescribing aspirin to some drug addict that's suffering the effects of some weekend cocaine binge, instead of removing the route cause of the issue: the cocaine.

All they're doing is masking the symptoms. They aren't treating the actual disease. In fact, through trying to suppress the symptoms they are FEEDING the disease.

But, we can all only speak as spectators.

Who knows, the fed just might actually have something up their sleeves to pull the economy out of the abyss. Until we're sure, the only thing we can do is execute hedging strategy and position ourselves to take advantage. If the economy fails, there are multiple ways to benefit from this... If the fed pulls another rabbit out of the hat and things start to move upwards, there are also multiple ways to benefit from that.

So, either way, interesting times are ahead

Koinkartel.com (http://koinkartel.com)
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