Tuesday, November 11, 2008
Bernanke's Last Act
"Now, after the [Fed's] interest rate cuts on Wednesday, the conclusion for a new story is being written. As it happens, we're essentially watching the end of the Ben Bernanke Story. ... There is every reason to believe that the Fed made this month's cuts with the greatest reluctance. After nine rapid-fire reductions that took the Target Rate to 2% from 5.25% in just eight months, the Fed had been holding pat from late April to this month's first cut, the emergency interest rate reduction of October 8. ... As if he had decided to prove the point that, in the words of philosopher George Santayana, 'A fanatic is someone who redoubles his efforts as he loses sight ofhis goals,' former Fed governor Laurence Meyer says that it won't be enough to lower the rate to 0.75% or 0.50%, it has to be, and will be, cut to 0.0% next year. ... The basic problem here is that, at its core, capitalism is a system that wants, and is supposed to reward, the behavior that these rate cuts are punishing--thrift, savings and delayed gratification. ... It's the failure of the economic policies so long dominant in America to bring long-term prosperity that is really seen here", my emphasis, Julian Delasantellis (JD) at http://www.atimes.com/, 30 October 2008.
I agree with JD. We are apparently replicating Stalin's economics, in that some of Stalin's economists believed capital was a "free good" in their workers' paradise. Boy were they wrong. But they realized it in the 1930s!