The people in the FED think they know what they're doing. But here is an organization that, from 1914 to 2008, accumulated $800 billion of Treasury debt. It did this through two world wars. It did this in the Great Depression. And then, in a period of five years, added $3.2 trillion to its portfolio. This is not the response of a group of professionals who understand what they are doing. This is not the response of a group of technicians who have a systematic plan to direct the economy. This is the Keystone Cops. Yet these people really are in charge of monetary policy, which means they really are in charge of the amplitude of the business cycle. They cannot suppress it permanently, but they can make it much, much worse. They can hold off disaster, but they cannot avoid disaster. We saw that in 2008 in 2009. There is going to be another similar event, except it will be of greater magnitude.The banking cartel.
Then the question will be this: who will represent the critics of the Federal Reserve? There will be millions of critics at that point. The Federal Reserve can run, but it cannot hide. It will be left holding the bag. It will be blamed for the cycle. It will not escape criticism next time. The problem is, it is not clear which critics of the Federal Reserve will gain the ear of the public, and it is not clear whether Congress will actually listen to the voters. Central banking is at the heart of the modern economy, and it is a central planning agency that is attempting to control the lives of several billion people worldwide. This can be done for a while, but it cannot be done indefinitely.
We do not know what is to replace central banks, but we do know this: failure on the magnitude of what is coming cannot be hidden. Next time, or perhaps a time after, the public will understand that the Federal Reserve is the cause of the problem, and that it must be abolished. Milton Friedman finally came to that conclusion, after having defended the legitimacy of central banking throughout almost all of his career. He finally gave up.
Friday, June 20, 2014
Gary North reports:
Posted by Steve Bartin at 8:24 AM