The View From 1776
Friday, October 01, 2010
A Glimpse Of Reality
Even the nation’s socialist journal of record occasionally differentiates between reality and liberal-progressive mythology.
Read The Elizabeth Warren Fallacy, by New York Times columnist William D. Cohan.
Experience in coming years will demonstrate that nothing in the Dodd-Frank Wall Street Reform and Consumer Protection Act will have prevented the next speculative bubble in the financial or business communities.
The only preventive is compelling the Federal Reserve to abandon a definitive policy of promoting inflation. Today the Fed’s announced policy is to create 2% annual inflation, a rate that will, over a 35-year adult working life, steal half the value of your savings as a concealed tax to finance the socialist welfare state.
The Fed’s primary responsibility instead ought to be to maintain a stable currency. Easy money policy distorts economic action and encourages people to take on excessive debt.
Flooding the economy with fiat dollars, each worth less than the preceding one, guarantees that bankers will again seek outlets to lend their resulting excess reserves, and those outlets will, as in all such bubbles, become progressively more speculative, at higher interest rates.
It’s impossible to predict the exact nature of the next speculative bubble, but we can be certain that there will be one for which the Dodd-Frank regulatory atrocity makes no provision.