There is no short term pain if the Fed
keeps pumping when price inflation is presented as reasonably low. So they will pump.
There is no short term pain for the Fed to inject trillions
when the previously inflated bubble bursts - as was the case in 2008.
Therefore, no matter the public statements, they will keep
pumping. For many reasons, price
inflation will remain reasonably low; and as sure as my fingers are typing
these words there will come another fantastic bust.
And the Fed will continue to inflate.
The long term cost is in productivity (meaning standard of
living improvements), as assets get shifted to the unproductive and
unprofitable and away from the productive and profitable. Capital is being destroyed. No one at the Fed cares about the long term
costs, and if they did then the politicians would take over the money printing
job.
My gut tells me we will be living in such a world for some
time. And, some day when push comes to
shove, major governments will default outright (and will even allow some
further decentralization in Europe) before they allow faith to be lost in
regulatory democracy.
BM: "Capital is being destroyed."
ReplyDeleteWe should never lose sight of this key point.
Gpond, I have thought about this often. If you are interested, here are a couple of easy reads with my views on the subject:
Deletehttp://bionicmosquito.blogspot.com/2012/08/destroying-wealth-of-nations.html
http://bionicmosquito.blogspot.com/2011/03/wealth-of-west.html
gpond, thank you. And I have a choice on this; I prefer this filter as opposed to other options...and I want some type of filter.
DeleteThanks for sharing the other 'wealth destroying' articles. I am a regular reader. I am always surprised that you don't get more comments on your always thought-provoking posts here. I am glad you get some coverage on EPJ and LRC. You certainly deserve it. Do other outlets also publish your articles? If so, I would enjoy learning about that.
ReplyDeleteAnd, yes, a filter is useful and necessary, I think. Though, sometimes this one is quite difficult for a non-robot like me to get past.
Your comments are very kind.
DeleteCertain posts get many comments - currently I am in the middle of a dialogue on the Wilson / Hitler post.
Both LRC and EPJ have been very gracious. Beyond this, I have had a few things picked up or linked to by other sites (I even had one of my posts on medieval Europe translated and posted on Mises Sweden!). I will check the sites out if I become aware of it (and always try to send a "thank-you"). The ones that I find of continuing interest are included in the "about" page of this blog.
I have not done anything to optimize or enhance the traffic to my site. I enjoy writing for the discipline that it instills, as well as for documenting my learning over time. For me, this is enough.