The Fed’s Bubblenomics

 

 

But where are the bubbles this time? Arguably the most obvious ones are in stocks and in alt-currencies. (For the record I am very much pro-Bitcoin, Etherium, Litecoin, the whole bit. (So to speak.) But there is a LOT of hot money in cryptos. That can’t be denied.)

China just pumped $46 billion into its system in an effort to keep the game going over there. (This sort of thing has been happening periodically in China since 2009. In 2015 it looked like the wheels were going to come off, but they barely stayed screwed on.)

There are other places such as very high end real estate. (In some places.)

(From Mises)

The bottom line is what lessons have been learned by policymakers, economists, financial analysts and others who are interested in understanding how the Federal Reserve conducts its policies “to promote optimal macroeconomic performance.” If the Federal Reserve’s critics are correct, that the Fed’s “groupthink” ignored the warnings of individuals during the 1990s and early 2000’s, then the public and members of Congress should call for a reassessment of the central bank’s mission and policies—and its very existence.

If Federal Reserve officials are “blameless” for the economy’s booms and busts, then how can the average American small business owner, employee, corporate executive and retiree manage their economic and financial affairs knowing that they will have to live through more painful economic cycles in the years and decades ahead? In other words, if a market economy is always susceptible to booms and busts, then how can the Federal Reserve better “manage” the U.S. economy to avoid a painful episode like the Great Recession of 2008 – 09 in the future?

But based on the evidence compiled during the research phase of this study, the Federal Reserve cannot achieve its goals. If it could, the US economy would not have had financial bubbles in the 1990s and early 2000s.

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