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"The Trouble With the Fed Is That They Believe Impossible Things"

The Maven  ( Original )
MAR 23, 2018

When those in power act do things they know to be damaging to others to pursue their own self-interest, that’s bad enough. But true danger, maximum peril, exists when those in power honestly believe that doing things that are truly destructive to humankind are beneficent and right.

Ladies and gentlemen, your US Federal Reserve Bank.

Jim Grant: “The 2007-2009 real estate debacle is the monetary equivalent of a chain reaction on a foggy California freeway. The trouble with our monetary mandarins is they [the Fed] believe impossible things.

They have persuaded themselves that the central bank can pick the interest rate that will cause the GDP to grow, payrolls to expand, and prices to levitate by just two percent a year, as they measure it.

It is impossible as experience and common sense attest. Yet, they hold it to be true. ... William F. Buckley famously and persuasively said that he would rather be governed by the first 400 names in the Boston phone directory than by the faculty of Harvard.

Unaccountably, this Congress has entrusted the value of the dollar that we own, that we transact to an independent committee dominated by monetary scholars. In one short generation we have moved to the PhD standard from the gold standard."

Grant is correct. The result has been a series of economic bubbles with increasing amplitudes over time.

The PhD standard - that may very well bring us a round trip to the ’09 lows. In its place will be what history has defined as tangible and trusted stores of value.

ORIGINAL SOURCE: Consequences of Replacing the Gold Standard with the PhD Standard by Mike Shedlock at The Maven on 3/23/18