According to Owen Ullmann in an op-ed published by USA Today, there are some unsung “heroes” in the battle against the coronavirus pandemic — the brave and courageous bankers at the Federal Reserve.
I think Ulmann misspelled “villains.”
Ulmann writes that the Fed “has taken extraordinary steps to prevent the global economy from crashing into irreversible catastrophe as business around the world grinds to a virtual halt.”
This is like praising the arsonist for trying to put out the fire he set by throwing more gasoline on it.
The Fed certainly has taken extraordinary steps. Just a few days ago, it announced QE infinity. It committed to buy an “unlimited” amount of US Treasury bonds and mortgage-backed securities. It also announced a new program to buy corporate bonds for the first time ever.
In Ulmann’s Keynesian wonderland this is fantastic news.
The Fed can create unlimited amounts of dollars — that’s right, trillions, if required — to ensure that banks have enough funds to make emergency loans to businesses large and small.”
Yes indeed. Printing new money out of thin air so companies, governments and individuals already drowning in debt can borrow more money is the prescription for saving the economy! Free money for everybody!
According to his bio, Ulmann has been covering the Federal Reserve for more than 40 years. Given that fact, it’s staggering that he could remain so completely oblivious to the fact that these very same policies set up the 2008 financial crisis and that the Fed doubled-down after that crash to blow up an even bigger bubble setting up the meltdown we’re witnessing today. In simplest terms, the Fed wrecks the economy over and over again. Easy money created by the Fed blows up bubbles. Bubbles pop and set off a crisis. Rinse. Wash. Repeat.
Meanwhile, the Ulmanns of the world cheer on this monetary malfeasance perched on a throne of ignorance.
Ulmann said because the Federal Reserve is “an independent agency” (I could write an entire article on the absurdity of calling politically connected bankers “independent.”) the central banks “can move immediately and with creativity.”
The Fed certainly did move immediately. It took months to fire all of its ammunition during the 2008 financial crisis. This time, it managed to empty its magazine in a matter of weeks. But there is nothing creative about anything Powell and Company have done. It’s just the same play from the same played-out playbook it’s been operating out of for decades — cut interest rates, print money out of thin air and hope that the “stimulus” keeps the economic bubbles inflated.
Ulmann writes, “We can only hope that this unparalleled social and economic disruption is short-lived, and normalcy will return in the coming months. ”
But things weren’t normal before coronavirus. The bubbles blown up by the Fed were already leaking air and the Fed was already engaged in “extraordinary” monetary policy more than a year before coronavirus reared its ugly head. There never was “normal.” The dot-com bubble wasn’t normal. The housing bubble wasn’t normal. And the most recent everything bubble wasn’t normal either. These were all products of the monetary policy Ulmann praises today.
Source: SchiffGold
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