Muck’s Minute #3

THE INSANITY OF FEDERAL MONETARY POLICY

I sat down this evening with a perfectly good subject on which to pontificate Muck’s Minute #3.

After several Russian iced teas, The subject changed to what you read about today – assuming you have the patience.

Do you have any idea about how incompetent the Federal Reserve (and all the other “central bankers”) are in administrating our fiscal policy and the fiscal policies of those other countries of the world? Were you aware that our US Federal Reserve no only bailed out numerous banks and insurance companies in this country, they also bailed out central banks in a number of European countries and others as well? They did.

Unfortunately, our central bank(s) – the Federal Reserve and all the regional banks attached thereto, bailed out bankrupt banks in the USA, Europe and a dozen other countries scattered across the globe to attempt to keep the status quo running in place and prevent the collapse of the world banking system.

Did they have that mandate? Of course not. Was it a good idea? Not in my opinion. Was it necessary to prevent another global depression? Probably, except that the result of such intervention and money printing will just put off what is inevitable in the intermediate term and will much worse than the situation would have been if we’d had just allowed a reset after Lehman Brothers folded.

I am not in favor of a world-wide financial collapse by any means. Such violent actions tend to result in wars, destroying even the small possible to grow and prosper, dragging otherwise prudent and productive nations down the tube to bankruptcy and depression. Unfortunately, with todays massive “improvement” in technology, communication, interaction and interdependence it would appear that the world will likely survive or self-destruct all at the same time.

Likely, those in the heartland of human ancestry (i.e. Africa) will have a much lesser fall than the rest of us, simply because they are still mired in societies of hunter-gatherers, dictatorships, military governments and all the rest of the “governing styles” that limit the standard of living and wellbeing of their populations.

We, however; America, Europe, Australia, some South American and recently liberated Eastern European states – not to mention Asian countries – a mixed batch if there ever was one –
will catch it in the neck.

The Federal Reserve and Central Banks of countries in the list above have absolutely no clue what to do – thrashing around, wallowing in a mud wrestling contest – with Japan already using a snorkel to breath while under the surface of the mud – all trying to depreciate their currency more than the next guy to enhance devaluation so their products will be more marketable to the rest of the world.

In a word: insanity.

Not only is everyone trying to depreciate their own individual currency relative to other countries currencies to which they they export, they are trying to increase inflation of prices within their country (lowering its’ external value) so as to gain the benefit of screwing any middle class,internal savers and investors they have left AND depreciate the awful debts that are accruing on their national balance sheets. This includes the poor ex- USA. We are doing it too. In spades. The USA’s true inflation rate is running slightly below 8% and unemployment is at 24% (using data from Shadow Stats.com). If you happen to have $100.000 in a broker’s account and have no where to invest it that will earn more than 1.5%, you are loosing 6.5% of the purchasing power of that money A YEAR…… that $6,500.00 down the shitter.

I have concluded that either the US Treasury and the Federal Reserve keep two sets of book – one showing the mark-to-fantasy figures that are published and the other showing the true figures — Or our goose is cooked – big time. No one can formulate accurate data or plan constructive action or manage anything without accurate and true data. It’s impossible. If the Fed and Treasury are using Federal Reserve data – believing it to be true, we are well and truly doomed as every decision an action is based on false data which is GUARANTEED to fail.

Just like it has in the past.

Do we never learn from history? Not much. Mr Bernanke is bailing out to his bomb shelter at Princton University at exactly the right time. Too bad he couldn’t time anything else right.

The end game grows ever closer. Be aware..

MA

Author: MuckAbout

Retired Engineer and Scientist (electronic, optics, mechanical) lives in a pleasant retirement community in Central Florida. He is interested in almost everything and comments on most of it. A pragmatic libertarian at heart he welcomes comments on all that he writes.

10
Leave a Reply

avatar
  Subscribe  
Notify of
Hollow man
Hollow man

Thanks for the article. I really don’t think the fed or the o nut job administration are even working with each other. Each has a seperate goal. The fed to save their own ass the Obama bunch to turn us into His homeland of Kenya at worst or Soviet Russia at best.

Vmromk
Vmromk

Until lazy ass Americans wake with pitchforks in hand to abolish the criminal operation known as the Federal Reserve, they should expect no improvements of any kind.

AWD

Thanks Muckster. Central banks allow central planning (communism), where the owners of the banking cartel siphon money from the people, and everyone becomes equally poor proletariats. Central banks actually control governments, since the criminal politicians can’t help going into debt (by money loaned by central bankers) to buy votes and make people utterly dependent on the government. The Fed and government will soon be insolvent, then the totalitarian plans come into play and what little money people have left is confiscated. The only reason the government has been allowed to grow into a deadly Leviathan is the central bank. They both need to be shut down.

DC Sunsets

The author is confusing symptoms with causes.

CBs are not debasing their currencies. They are issuing debt, which debases their currencies. They are issuing vast amounts of debt in the mistaken belief in macroeconomics that demand, even if it arises from unbacked credit emission, can generate supply (and supply means jobs, GDP growth and “prosperity”) like before.

The basis for this is a complete inversion of the lynchpin of all economic understanding, Say’s Law.

Say’s Law properly understood is that in order to consume you must FIRST PRODUCE. Product is defined as something that can be sold at a profit in a free market.

Modern alchemists disguised as “economists” ignore the market’s role in defining “product” and argue that anything that is “produced,” even if it’s digging a ditch and just refilling it, is a “good.” Even the most wasteful, damaging spending by our Clown Congress thus counts toward GDP.

Issuing debt unbacked by any prior honest product simply debases all other product, including “money” derived thereby. This is the Great Axiom of Truth completely ignored by the highly educated idiots running every economics department and advising our idiot rulers.

If this debasement occurred via the straight printing of banknotes or adding base metal to precious coinage then the truth of the criminality would be easily seen and thus lead rapidly to repudiation (hyperinflation and revolution.)

Instead, our “fiat world” allows optimistic people to embrace the facile lies of regime apologists and we are buried in mountains of unpayable IOU’s.

As long as the herd buys into this paradigm (signaled by low interest rates) the credit inflation will continue. Trees don’t grow to the sky, however, and a loss of faith in the value of those IOU’s can only lead to a waterfall collapse in the money supply.

This is how measured, crushing, compound inflation of the last 80 years leads to a panic of deflation of just a year or two.

It remains astonishing that the inflection point has not yet arrived.

bb

Muck about, you need to do somemore mucking about and find out how much GOLD is in or at that building in Kentucky.Until we find out what the central bank has we are just Pissing in the wind.I bet all the gold is gone and nobody will know where it is or who took it.That’s my guess.

DC Sunsets

Do the math.

If a 10 year T-note goes from 3% to 4% with the same coupon, the capital value of the note collapses about 8% !!

When the time arrives that confidence collapses, if the Fed monetizes a $trillion in IOU’s but average rates spike a couple percent, try cutting $10 trillion in value off the current estimate of $62 trillion existing $USD denominated debt.

The Fed will be pouring $ into a leaky bucket, with more falling out than they can pour in. They could create credit inflation for a long time, but now that there’s a galaxy-sized reservoir of preexisting debt afloat, the Fed cannot avoid the consequences of rising rates when the mood shifts.

Credit bubbles, even those that last a lifetime, must eventually end in credit collapse deflation. Until it rains, it looks like it will be sunny forever. Until credit collapse arrives, it looks like credit inflation is permanent.

Nonanonymous

With 20/20 hindsight, and with DC’s estimate of a credit collapse deflation correction lasting 2 years, wouldn’t it have been better to let the bubble burst in 2008 than suffer through 4 years and counting of recovery? Or was the bail out to allow the 1% time to position for the fall out? That would seem to be the premise of Mauldin’s book, protecting your savings from the coming crisis.

Who is going to save us? I know the answer, but I know everyone is probably tired of hearing it. There is no salvation in the coming collapse except by the grace of God. There, I said it.

Plan for the best, prepare for the worst, and that preparation should be to accept Jesus as Lord, and believe God raised him from the dead. There is no other salvation under the sun, notwithstanding all the finest intellects this world can gather together in one place, collectively.

I would rather spend my time investing in my eternal future, than one with an uncertain intermediate future and certain end. Absolutely, plan for the best, but do not neglect that which is incorruptible.

“Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven” (Matthew 6:19-20a, ESV)

It doesn’t get any more plain, or simple, than that. I’m just not inclined to play the devil at his own game.

ecliptix543

Good article, MA :). I see you survived our state’s brush with the arctic apocalypse last week. I hope all’s well as can be with you and yours – take care out there and I look forward to reading the next piece in your series!

TeresaE
TeresaE

Thanks Muck, love hearing your thoughts and comments.

Unbelievable how long this con game has lasted.

This unbelievability will only be surpassed by the unbelievability of how fast it all falls apart.

Was watching a “news” segment on the obsolescence of Edison’s old lightbulbs. What the “reporters” failed to mention, the “new” bulbs are almost 100% Asian produced.

So, not only will the collapse create hunger, homelessness and great need, odds increase we will be facing the reset without lights.

Unless, of course, we choose to believe China will continue shipping us things we need when we can no longer afford them.

Happy Monday!

Discover more from The Burning Platform

Subscribe now to keep reading and get access to the full archive.

Continue reading