Wednesday, March 2, 2011
3/2 10:10
The stock market is continuing in it's small 3rd wave on it's way hopefully to 1315 SP futures. Going over Ben's prepared testimony yesterday I remain struck by his head-in-the-sand approach to policy, as if the rest of the world did not exist. The reason that material price increases do not hit companies nearly as hard as they did 30 years ago is because we don't produce much of anything physical here. Likewise, as long as government checks keep going out and the Fed keeps rates at zero the American prosperity illusion keeps food costs at a low proportion of disposable income in the developed world while crucifying the third world. Ben's response: "Let them eat cake". His actual retort to criticism is that thirld world central banks have tools at their disposal to ameliorate the effect of food inflation. Right.
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Ben is a reminder that you can be smart and blind (to the obvious) at the same time.
ReplyDeleteI do agree with your thinking, that unfortunately it will take a long time (decade or more) to fix the problems they have been creating.
DennisP
Dennis, other nations cannot effectively combat the policies of the reserve currency nation. This will accelerate the replacement of the dollar. Ben was asked about this today and his response was that he is not seeing any moves to replace the dollar. Duh. It's happening behind closed doors. He also minimized the impact of this as having only a slight effect on interest rates. The more I watch his public statements the less repect I have for academics. Every nation has enemies, economic and political. A foreign political enemy sees the benefit of undermining credibility of it's rival. Ben does not appreciate how much he is contributing to the future success of America's rivals, who will garner business, contacts, talent, and prestige as a result of the dollar's fall from grace. This feeds right into military alliances as well.
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