Mad Hatter Economics?

"How do you know when you're through the looking glass? A fairly good indication is when the price of gold, which normally moves up in response to monetary easing, instead plummets in reaction to one of the largest rate cuts in Fed history, Apparently, yesterday's 6% drop in gold resulted from the 'hawkishness' shown by the Fed in only cutting rates by 75 basis points. ... It is a testament to how low the bar has been set that the Fed can slash rates in the face of a collapsing dollar and soaring commodities prices and still be viewed as hawkish on inflation. Is it just me, or is Ben Bernanke morphing into the Mad Hatter? ... [I]t should be clear that the Fed sees inflation as the only politically acceptable 'solution' to the problems it created. ... The Fed is concerned, but only to the extent that the markets stay focused on bogus CPI numbers and fail to notice severe price increases throughout the economy. ... Steve Forbes ... proposed that the government suspend 'mark-to-market' rules for one year so that holders of unsellable mortgage-backed securities no longer have to recognize losses. ... Forbes believes the markets can be spared unnecessary pain if participants can simply pretend that their holdings are worth par. ... But the most bizzare idea was introduced .... [by] Holman Jenkins Jr. [who] recommended that the government buy and 'bulldoze' foreclosed homes in order to prop up the values of those that remain standing. ... At the moment foreclosed houses are only unwanted because their prices are still too high. ... Jenkins' thinking is formed by the same perverse logic that led the Roosevelt Administration to destroy farm animlas and crops druing the 1930's because he wanted to prop up food prices", Peter Schiff (PS) at http://www.gold-eagle.com/, 21 March 2008.

I love PS. I had the same reaction he did to Jenkins' proposal, this is just like killing pigs and dumping milk in the 1930s. Only an idiot could think destroying real goods can make us richer! This is the "broken windows" fallacy exposed by Frederic Bastiat in 1850. Only an idiot. I read Forbes and have for decades. However, I have little use for its current owner, Steve, who I see as a "legacy" of little or no talent. Welcome aboard PS to the world of Alice in Wonderland economics. I've been living in it since spotting Humpty Dumpty at Treasury, my 5 November 2007 post.