Loose Monetary Policy Has Been Working, So Far
Posted by CircuitGuy 9 years, 7 months ago to Economics
This article is about how so far people in favor of tighter monetary policy (everyone here but me?) appear to have been wrong, so far. Loose monetary policy is working, or at the very least is not causing a problem, so far.
It may be overstating it to say loose monetary policy "saved" the economy. Monetary policy is important, but much less so IMHO than central bankers think. All the value is in serving one another in mutual exchanges. What we use to trade affects short-term ups and down, but the value is in creating things other people like.
I suspect the Fed will gently start letting off the gas pedal, and we won't see a spike in inflation or unused production capacity.
I don't understand why Treasury yields are so low, but Congress could use a reminder that it won't last forever. If the media aren't wigging out about the steep cuts, they're not cutting spending enough.
It may be overstating it to say loose monetary policy "saved" the economy. Monetary policy is important, but much less so IMHO than central bankers think. All the value is in serving one another in mutual exchanges. What we use to trade affects short-term ups and down, but the value is in creating things other people like.
I suspect the Fed will gently start letting off the gas pedal, and we won't see a spike in inflation or unused production capacity.
I don't understand why Treasury yields are so low, but Congress could use a reminder that it won't last forever. If the media aren't wigging out about the steep cuts, they're not cutting spending enough.
SOURCE URL: http://finance.yahoo.com/news/tkt-150750657.html
Imo, history shows that empires in decline debase their currencies and other currencies follow their lead (because that is the nature of looters.) The result is that the risk averse flock to the currency of the empire in fear. This temporarily supports the empire's currency. Eventually the profligate ways of the failing empire become to great to ignore and the collapse occurs. It is unavoidable.
It is not working.
(The policies of Iceland are the only rational ones thusfar.)
Victor Sperandeo: the coming Hyper inflation
https://www.youtube.com/watch?v=vZO5kcQV...
He starts with premise once the gov't starts borrowing it *cannot* stop. If we accept the premise, I agree with his claim that eventually there will be a fiscal crisis which leads to a monetary crisis. My claim is some point along the way, which should have been years ago, people will become aware and make the simple changes to solve the problems. The changes are simple but painful, but not as painful as hyperinflation.
It was nice that when he is criticizing Keynesian economics, he clearly states that the policies he is criticizing are actually contrary to Keynes. He is upfront that he's condemning a perverted version of Keynesian economics, not Keynesian economics.
His last point about the three branches is powerful. I notice it more when it's policies I don't like. The branches don't balance each other as they should, and the Executive takes too much power.
Someone asked him the question of what to do. He said hold 5% of net worth in commodities, preferably ones you can get your hands on. If you're going to hold a significant portion of net worth in cash instruments, he says, don't hold it all in one currency. I strongly agree with both suggestions. I would add that holding gold or cash is not investing. It's insurance. Insurance doesn't create value; it takes a bit of your wealth in exchange for mitigating risk.